Payment Processor Comparison

Payment Processors: Definitions

Transaction Fees: a fee charged on each individual transaction processed by a provider.  The fee is comprised of a certain percentage of the total sale plus a fixed transaction charge. They are commonly referred to as the “Discount Rate”. These fees can potentially fluctuate depending upon your monthly gross sales and, in the case of credit card processing, the type of card used. A typical example is 2.9% + $0.30. So if you make a $100 sale, the charge in this case would be $3.10 ($2.90 + $0.30)

Monthly Fees: These are fixed charges that occur on a monthly basis, regardless of whether you process any transactions during that particular month. Typical examples include a statement fee and/or gateway fee.

Payment Processors: A Comparison

PayPal, GoogleCheckout

These providers offer payment processing on per-transaction basis. There are no monthly fees, setup fees, or monthly minimum requirements. Customers will be taken to the provider’s website to enter payment information, and will see payments made to your email address on their receipt and statements.

PayPal Website Payments Pro, Merchant Account

These services have monthly fees and transaction charges. They may also have monthly minimum transaction fees. They typically must be integrated with shopping cart software (such as 1ShoppingCart, Shopify, cart66, etc). They can also include setup fees. This configuration will most likely require you to have an SSL certificate to securely collect payment information (even if not required, it is strongly recommended). Customers will stay on your site to enter payment information. Customers will see payments to your business name as registered with the provider.

2Checkout, Clickbank

These services will process payments on your behalf. There are two categories of this type. Some will charge per transaction and others will charge a flat monthly fee, often dependent upon the number of customers or transactions you have. They may include a setup fee.

These transaction charges are typically higher than those with other processors, but your technical requirements are less, since they are providing the payment infrastructure. For example, you will not need an SSL certificate to use these services.

Many of these services will require your product to be approved before you can sell through their system. They may also limit the number of products you can make available or the number of customers you can have.

Customers will go to the processor’s website to enter payment information, and will typically see charges from the payment processor (e.g Clickbank) for your products and services. This can lead to confusion as to what the charge was actually for.