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Ask HN: Is there a cheap way to get money from customers (Not PayPal etc)
41 points by Murkin on Nov 18, 2009 | hide | past | favorite | 24 comments
Hello everyone

As part of my site, I need to allow users to transfer funds to the site's account (later to be used for online purchases).

It seems that the most common option, is using PayPal. But, for small transactions (<500$) the fee is close to 4%. That cuts very deeply into our profit margin.

Can anyone recommend other (cheaper) ways to allow users to transfer funds to a site ?



You can do a bit better with a merchant account. Both merchant accounts and Paypal tend to be skeptical of pre-payment arrangements, since they don't make nearly enough off of you to absorb the risk of you taking the money and running.

That said, 4% is cheap and it will go down as you process more orders. (The magic number is $3,000 per month to get your first .4% knocked off, and there is a sliding scale after that.) Note that it takes rather a lot of effort to get as far as $3k a month relative to what it takes to sell $12 worth of marginal product, which suggests to me that your time is better spent elsewhere, unless you are selling a product which has intrinsically low margins. For those of us in software or SAAS Paypal is pretty much the only cost we have to pay out of our last dollar in sales every month.

See also their micropayments option, which is not advertised but costs 5 cents and 5%. The inflection point is at $12 transactions.


People see the 2-4% that credit card processors take and view it in comparison to cash - something they see as having no cost per transaction. What people don't see is the cost of taking cash - it gets stolen, it gets you robbed, it needs special help(armed guards) getting to the bank.

You're online and stuck with credit cards and 2-4% fees, but that's just the cost of doing business. Money cost money to transfer. Build it into your model.


I don't think people trust any of the none popular gateways. Just add the cost of Paypal's fee to your product's cost and use different payment methods. credit card, Paypal, Google checkout, money orders and checks.


I think 4% is fairly small: A lot of payment methods ask more, ranging from 30% from Apple for in-app purchases, to 50+% for SMS payments. Here in the Netherlands we have Ideal, which mostly has fixed costs, but that is only attractive for bigger payments. When you have small payments, a fixed fee of E1,- isn't that nice... In the end 4% isn't that bad, and for credit cards is hard to get under 2.5% - 4%, unless you have an amazon-like scale. I would also check how easy it is for customers to pay you: If you make 1% more, but lose 50% of your customers, that might be a bad deal (or it can be good, depending on your type of business).


I'd be less worried about the cut they take and more worried about their annoying capacity to take a disliking to you and shutting down your account without warning while taking your money, and never, ever telling you why.

Make sure you have a backup.


And also how they deal with customers who reverse charges (happens more than you'd think). Not to mention dealing with actual fraud.


If there was an answer to this question, I don't think PayPal would be in business.

At this point, PayPal is like Microsoft Office -- it's the de facto standard, no matter how crappy the product is. Sorry.

I know this is a really shitty answer to your question, but I think it's the truth.

If anyone else has an answer, I would love to hear it, and there is no irony or malice in that statement -- as a developer who uses PayPal for donations as payment for my software, I would love a way to get a bigger cut of the money.


Would you prefer a bigger cut, or more dollars in your pocket? That isn't a very hard question for most people, but they act like it is.

For example, assuming your average donation is somewhere in the region of $10, you're paying somewhere in the 6 ~ 8% region to Paypal. Yeah, annoying. But if you cut your costs of payment processing in half, that only increases your net income by something like 3.1%.

There are much, muuuuuuch easier ways to get a 3.1% increase, particularly if (like most folks who accept donations) you have never attempted to optimize anything about your business. For example, most folks I know who accept donations are afraid of appearing commercially motivated so they create a discrete donation button and then place it down a rabbit hole in a mythical kingdom surrounded by lakes of fire and cloaked with Grumble's Greater Enchantment Of Decreasing Conversion.

Instead, move it to above the fold on your page, increase the size of the button, and prominently (and without sounding ashamed of yourself) ask for the donation around places where you provide value to your users (which is when they are the most inclined to say yes, because they're feeling all warm and fuzzy about you).


3% is as low as you can get with Amex. 2% is as low as you can get with Visa/MC. The only other thing consumers can pay you with is an ACH transfer (which is like a check) and even that costs money for both ends sometimes -- but the systems that let you write "electronic checks" are clunky and weird and 90% of your customers will want to use their credit card for fear of giving you their bank account numbers. That puts you back at 2-4%. So you're definitely on the high end, but you're going to save max about 1%. Is 1% of your revenue worth the cost of setting up your own merchant account (it will be a few weeks of work if you run your own payment system). If you use an off the shelf shopping cart system, go with authorize.net and it should work out of the box.


Two previous threads:

http://news.ycombinator.com/item?id=526517

http://news.ycombinator.com/item?id=432284

both have good info


https://www.revolutionmoneyexchange.com/

Payments to you from your customers are free, and it's free to transfer money to and from a bank account.

Apparently AmEx is buying Revolution Money... hopefully they aren't planning to kill it off: http://news.ycombinator.com/item?id=948464


Can't think of already available service for this problem right now. However there is one solution I think you would have already though of this but here we go; Assimilate the cost till it reaches a bit bigger sum. That is if you have multiple purchase from the same customer.


I'm trying to find a similar alternative service with an API and also keen to use something like TipJoy to collect smaller funds of $1 or less. But i just visited their homepage just to see the "Tipjoy is shutting down" message.

Does anybody known any alternatives?


Paypal has a small value transaction system I believe. I think it takes 8% rather than a standard per trasaction fee + ~2%.

It makes it reasonable up to about 10$


Check? Look at how NearlyFree does it: https://www.nearlyfreespeech.net/about/mailing

Cost of handling at some volumes may be more than 4% though.


Check out Moneybookers. http://www.moneybookers.com/app/help.pl?s=fees


From a user's point of view, Moneybookers is truly, truly awful. I couldn't use PayPal for a while because I had to change my account country, and I was forced to use MoneyBookers to add money to my Skype account. Suffice to say that I will never use a service that requires me to use MB - or at least, I'd have to really, really want it.


Would you elaborate? I never tried Moneybookers myself but always thought they were good.


Orcaone.com offers a cheap platform for collecting money whether on mobile or desktop web. They also have open API's. www.orcaone.com.


you should checkout http://noca.com/


Any info on the traction of noca? How do consumers react to this new form of transaction? Is the merchant seeing lower conversions due to consumer unfamiliarity?


I have found the best non-PayPal solution to be iTransact (http://www.itransact.com/marketing/referral/S33oOO). They combine the gateway and the merchant account, and have lower fees than their competitors.


I've heard very good things about Amazon Payments.


Any experiences with Google Checkout?




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