Treefrog Interactive Inc.

Payment Gateways for Canucks

Bottom line: PayPal works just fine for small businesses with few transactions and just getting their feet wet, and Internet Secure seems to be the choice if you want the least headaches.

Businesses that want to do business on the Internet and be able to take credit cards have no choice but to deal with a payment gateway. They can't deal directly with the credit card companies – and even if they could, most would be better off using the services of a company specializing in online transactions. The difficulty is deciding which gateway to use – and the choices are plenty.

No matter what we build for you at Treefrog if you are selling online – you need to connect to the credit card companies in order to collect money, and you don’t want to deal with them directly (even if they would let you).

Here are a few we will discuss:

Paypal
Google Checkout
Authorize.net
2Checkout.com
PSIGate
InternetSecure
Moneris
Beamstream
TicketMaster

 

 

Paypal

Let's get this out of the way right off the bat: The 800-pound gorilla in the online payment gateway world is PayPal. Everyone knows about PayPal, and chances are you've used it at some point. A subsidiary of eBay since 2002, PayPal is likely the first company that comes to mind when thinking about payment gateways. And it's for good reason. PayPal is a known – and dare I say, trusted – brand among consumers.

While PayPal is practically a necessity if you do business on eBay, the average ecommerce site may find themselves overpaying for services by using this known brand. PayPal's fees are based on a percentage of the transaction plus a $0.30 fee, but once transaction sizes get to a certain level, it becomes necessary to buy a PayPal Pro account, which has an additional monthly fee tacked on. This has to do with maximums that PayPal puts on buyers' accounts ($2,000 per credit card in a 90-day period when purchasing from standard PayPal merchant account). Does that sound convoluted? Here it is, simplified: Nobody wants a deal to fall through simply because the buyer has used PayPal too much, so the Pro fee is a necessary evil if your business deals with larger sales.

A big stroke against PayPal is that funds collected are not deposited into the merchant's bank account. Instead, they drop into a PayPal account, and the merchant has to go through a process to get the funds from PayPal. It can be painful, and it takes time.

For small businesses, though, PayPal is the way to go. It's known. It's trusted. And from a technical standpoint, it's fairly simple to get up and running. For most small businesses, passing off the final transaction to the PayPal site will be just peachy, but the Pro account offers access to the API so you'll be able to complete the transaction right on your very own site once we do some customization.

*Note that we used to hate PayPal, as in the past your potential clients used to have to create an account and run through hoops in order to pay. This is no longer the case, so we have changed our minds accordingly.

 

Other Options

 

While small businesses that need to process only a few transactions a month are best to stick with PayPal, those with higher online sales volumes won't find PayPal cost-effective in the long run and will want to look at alternatives. There are several – and most offer up their APIs to tie their technology directly into your shopping cart or will allow you to pass the customer to their sites for the final transaction. It comes down to a matter of choice in how you want to do it.

Claiming to have over 212,200 merchant users is Authorize.net. If the claim is accurate, that would make U.S.-based Authorize.net the largest Internet payment gateway service provider. However, with its US$99 setup fee, US$20 monthly fee, US$0.10 transaction fee and US$0.25 batch fee, as well as its inability to process Canadian dollars, Authorize.net would be a poor choice for Canadian businesses.

Likewise, 2Checkout.com (aka 2CO) is another odd choice, in that it takes a roundabout way of dealing with online merchants. Instead of registering merchant accounts, businesses must register as resellers with 2CO. A one-time US$49 setup fee and 5.5% plus $0.45 transaction fees apply. Additionally, 2CO doesn't offer the ability to integrate its payment gateway service into a merchant's website. In fact, it's expressly forbidden in its terms of use to ask for credit card information at all. It does have the ability to process charges in Canadian dollars, though. It's still probably best to skip it, especially because their system is really ugly.

PSiGate is another payment gateway, but after a bad experience with the company's services in the past, the Frogs wouldn't ever recommend using them. Run away! (Yes, that was years ago, and yes, we are still furious, PSiGate)

While there are smaller providers around, the top Canadian services are InternetSecure, Moneris and Beanstream.

 

InternetSecure: Always our Recommendation

 

Oakville, Ont.-based InternetSecure promises lower rates and no hidden fees. It does have a $49 setup fee, as well as a $35 monthly fee and $0.29 transaction fees. Unlike most payment gateway service providers, InternetSecure can provide merchants with full credit card processing solutions, including online and offline (phone, in-person, etc.). Granted, with its monthly fees, choosing InternetSecure doesn't make much sense for very small businesses with few transactions, but once you have higher transaction volumes per month, go for it.

Our experience at Treefrog has been stellar with Internet Secure. They have been attentive to our technical needs, quick on replying – and have even gone to bat for our clients with the Credit Card Gods. Their website and marketing stinks in general, but their service is excellent.

 

Moneris

 

Moneris, which is the only other provider that offers full credit card processing solutions, is more challenging. While it's a good system once it's up and working, getting to that point might be a headache (possibly caused from banging your head against the wall). The company provides services to Canada and the U.S., but the systems are entirely different. Trying to port one to the other requires a lot of work. Of course, a pass-through system is also available. In some cases, the technical documentation is problematic. Try getting the same technician on the phone twice. Ugh.

Additionally, Moneris' policy is that it won't talk to anyone without a Moneris account, which means if you're working with a developer (say, like Treefrog), you'd better bring a large pair of scissors to cut through the red tape. The policy can drag out implementations.

Moneris is also not the most forthcoming about their rates. With much prompting and needling, Moneris sales provided the following general fee structure, but noted it was only a guideline: $50 monthly fee and a two to three per cent transaction fee. Once a merchant applies for an account with Moneris, it will take between 12 and 15 business days before it's processed. Having said this – if you are willing to take it to the mattresses – Moneris can often be wrestled to rock bottom fees if you have a good history with them and are willing to get cranky.

 

Beanstream

 

Finally, there's Beanstream, a subsidiary of LML Payment Systems. Similar to Moneris, Beanstream is less than forthcoming about its rates and says they vary based on the size of company, volume of transactions, etc. It did provide two basic fee packages, however. The first package has a $49 setup fee, a $20 monthly fee, and $0.25 transaction fees. The other package seems to be for much higher volumes, with a $199 setup fee, a $29 monthly fee and $0.15 transaction fees. The company claims a “what you see is what you get” pricing model, with no hidden fees and no additional fees for “logical” features (such as getting report statements or recurring billing, both of which are extras with some other providers).

Treefrog has worked with a number of Beanstream clients successfully without any issues. What’s funny is none of the clients have had any loyalty to them, and readily questioned other options.

 

TicketMaster

 

Would you believe, TicketMaster is in the gateway game as well. Having said that – despite the fact that we have set up a number of systems using their API – we can’t find information anywhere on where to contact someone to get pricing. ‘Nough said.

So what's the best choice? As already noted, PayPal is ideal for the small business with limited transactions because of its ease of implementation and cost-effectiveness low-volume levels. However, if you need the money deposited directly into your account – forget about it.

As businesses see their sales volumes rise, though, the provider that seems to cause the fewest headaches (from a financial and technical perspective) is InternetSecure. Its pricing scheme is not only more straightforward than some of its competitors, it also offers the added benefit of being a full credit card (and Interac) processing service provider.

Plus, we love them, and they have never done us wrong.

Go, Internet Secure, Go!

(Tell them we sent you, and they might send us a free hat, would you?)