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26Jun/12

Payment Startups: Recurly – Subscription Billing Made Easy

By Martin Schuppelius
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Payment Observer has details on multiple companies that provide funding, atm, and credit card processing services. Get more information and details here.

Subscription business models for web-based service are gaining popularity. But building an own recurring payment service is complex and costly. Fortunately there are some innovative companies that provide full service recurring billing solutions. One of our favorite solutions is Recurly. Other popular services are: Aria, Chargify, CheddarGetter, Sassy, Spreedly and Zuora.

Recurly’s features

Software as a Service) solution for the management of recurring payments so that the merchant can focus on their business. The core features include automated recurring billing, handling of expired or declined credit cards, customer upgrades and downgrades, and all customer communication. On top of the basic functionality, Recurly provides some advanced features such as: multiple subscriptions, trial periods, coupons, discounts and one-time payments. Recurly can connect to Salesforce, MailChimp, and QuickBooks and integrate into the customer’s workflow. Recurly stores and transmits credit card data PCI-DSS compliant, so merchants only have to complete a simplified process to ensure PCI compliance. Last but not least Recurly’s backend interface is really nice designed and lets users easily set up new subscription plans, update customer information and monitor transactions.

Recurly’s transaction interface (click to enlarge)

Pricing and availability

Recurly charges a monthly fee of $68 plus 1.25% +$0.1 for each successful transaction. The merchant also has to pay for a dedicated merchant account and the payment gateway or payment service provider. Depending on the type of business and country this roughly adds another $50 per month plus 2%-4% per transaction. Recurly supports most of the popular gateways in the U.S. (e.g. Authorize.net Braintree, Beanstream, Chase Paymentech, Cybersource, Litle&Co., PayPal PayFlow and WebSite Payments) and throughout Europe (e.g. Ogone, PayPal, SagePay, and Wirecard). Unfortunately Recurly charges $200 per month for the multi-currency add-on that enables merchants to accept multiple currencies within one account. It’s worth mentioning that Recurly natively supports V.A.T. for European companies.

Wrap-up

Recurly provides a convenient and easy to set up service to accept subscription based payments. What makes Recurly stand out from its competitors is it comfortable interface and support for international payment gateways and currencies.

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22Jun/12

Payment News – June 22, 2012: Windows Phone 8 Wallet, AppCharge, BancBox, Facebook Credits

By Martin Schuppelius
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Learn more about some of the service providers that advertise on Payment Observer.

Microsoft Windows Phone 8 Will include a Mobile Wallet Service

Microsoft’s new operating system for mobile phones Windows Phone 8 will feature a mobile wallet for credit, debit and loyalty cards that supports NFC payments. The service looks similar to Apple’s Passbook App, but also features NFC-based Tap to Pay payments. The mobile wallet will come preloaded on all Windows 8 smartphones. It’s still unclear when the service will be commercial available. Read more…

AppCharge: Yet Another Square Clone?

Square. The reader works with iOS and Android devices and the App is available for free at the respective marketplace. So far the company has not disclosed details on transaction fees and availability.

BancBox Starts Customizable Payment Service Platform

here.

Facebook to Phase out its Virtual Currency Facebook Credits

Surprisingly, Facebook has announced to move away from its virtual currency Facebook Credits. In a post on their developer blog the social network company says that it is updating its pricing to local currency instead of Credits. It has only been one year since Facebook made Credits the mandatory virtual currency for games and applications on the Facebook platform. Most developers on Facebook still use their own virtual currency inside their games instead of adopting Credits for in-game purchases. As a result users have to convert their real-world money twice (real-world currency -> Credits -> In-game currency) to make in-game purchases. By discontinuing Facebook is not stepping out of payments but streamlining the payment flow, eliminating unnecessary currency conversions.

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21Jun/12

Online Merchant Guide: How to Accept Credit Card Payments – Part 1

By Martin Schuppelius
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Learn more about some of the service providers that advertise on Payment Observer.

Over the years, credit cards have become the most popular payment methods for online purchases worldwide. Although new payment solutions like PayPal or Bitcoin are gaining traction, credit cards have established as default e-commerce payment method. This is particularly the case for international transactions – there is almost no way around credit cards for online merchants that want to sell international. In this article we take a closer look at the credit card payment ecosystem. The next article will focus on how to choose a merchant account and payment service provider.

How credit card processing works

Credit card processing involves several parties, the customer, the bank that issues the credit card to the customer (issuing bank), the merchant, the merchant bank (acquirer bank) and last but not least the credit card network (e.g. Visa, MasterCard or American Express). In most cases online merchants also use a 3rd party payment service provider (PSP) that bundles a variety of payment methods and acts as a gateway that can connect to multiple acquiring banks and credit card associations. Furthermore a PSP can offer additional services such as risk management, reporting, fraud protection and multi-currency support.

Credit Card Processing: Authorization

(more…)

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18Jun/12

Payment News – June 18, 2012: GlobalCollect, BOKU, iZettle, Square

By Martin Schuppelius
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Need a cash or credit card processing solution for your business? Payment Observer has more details you can learn by visiting their website.

GlobalCollect Integrates Mobile Payment Service BOKU

BOKU customers can pay for online purchases by entering their mobile phone number and confirm via a SMS message. They will be billed directly via their mobile provider. The partnership shows that carrier billing has become a mainstream payment method for all kinds of digital goods and services.

iZettle Secures €25M, Eyes International Growth

Read more…

Square Now Processes $6B in Payments, Surpasses 2M Users

Read more…

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6Jun/12

Guest Post: The Easiest Way to Increase Conversion

By Martin Schuppelius
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Payment Observer spotlight company. See more details here about one of the up and coming service providers in the financial services for small business.

Magnus Fredin, Vice President Sales Europe of Klarna. In this article Magnus takes a closer look on how online shops can increase their conversion rate by offering the right payment methods.]

Advertising campaigns, tweaking of product prices or displays, or even complete website re-launches are all measures commonly taken by online merchants to increase sales. When thoughtfully applied, these actions are likely to prove effective. However, there are faster and cheaper ways to increase your sales. The number one e-commerce metric is a site’s conversion rate. Increasing the rate of visitors that leave your shop as actual customers will decrease the cost of acquiring customers and boost your sales.

Offering the right payment methods is crucial. If you were to ask online shoppers throughout Europe, they would to a great extent say that invoice after delivery is how they would like to pay for ordered goods. In Germany, Europe’s largest e-commerce market generating 21 billion Euros in 2011, as many as six out of ten consumers would choose this payment method, before all others. However, merchants hesitate to offer invoice because of the potential credit and fraud losses it entails. Meanwhile companies such as Klarna cover these risks. They enable even smaller merchants that do not have the resources for internal invoicing, to offer their customers their preferred method of payment.

Preferred Payment Methods in Germany – TNS study commissioned by Klarna (2010)

Another basic requirement for a satisfying conversion rate is having an intuitive and simple checkout. According to a study conducted by TNS Germany on behalf of Klarna, apart from feeling uncomfortable disclosing sensitive information (68%), the second most frequent reason for dropping out of a shop is a complicated checkout (60%). So, a rule of thumb regarding the checkout: “as simple as possible, asking only for the most necessary information”. Looking back at the invoice, this underlines its power as a conversion tool. Instead of bank account and credit card numbers, the customer only discloses name, address and birthdate – informations customers know right off the top of their heads. Safe, fast and simple.

Avoiding hurdles
Trust is key. Requiring a registration in your online shop is an impediment for the shopper. Registration takes time, and let’s be honest: your potential customer doesn’t only shop at your website. Being the shop that doesn’t require registration and remembering passwords might just give you that head start you need to become the customer’s preferred choice.
Customer data use and protection is a sensitive topic. Being absolutely clear about this will gain your customers’ trust and save you unnecessary trouble. A dedicated page with information about data protection compliance and policy will help you climb a notch on the cautious customer’s list and might save you some customer service errands.
Simplicity and safety aren’t mutually exclusive. Filling in your forms should be as easy as possible for the consumer. Mark the fields where information needs to be entered clearly, e.g. “Street name and number” instead of just “address”. Also, in case customers miss a field, show them exactly where, what needs to be filled in. The easier and more understandable the checkout process, the greater the probability that the visitor becomes a customer; especially during those last steps until the finish line.

Eight tips for an optimal payment process

  • Ask only for the most necessary customer information, as easy in the process as possible
  • Logical flow: Let customers choose payment method, and then fill in personal information
  • Let go of mandatory customer registration
  • Explain how you treat consumer data in an understandable way
  • Have visible contact information
  • Mark information fields clearly
  • Show the customer where what information is missing or if the disclosed data is incorrect

About Klarna: Klarna provides a payment service for e-commerce. With Klarna, online merchants can offer their customers the option to pay after the delivery of the goods. Klarna assumes all credit and fraud risk so that sellers will always receive their money.

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31May/12

Infographic: Top Performing Payment Gateways

By Gary Merrett
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Payment Observer spotlight company. See more details here about one of the up and coming service providers in the financial services for small business.

Web application performance monitoring company New Relic has published an interesting infographic on payment gateway performance. New Relic pulled the data from all their customers that called an external payment gateway during the 20th of April 2012. The data derived from more than 100,000 total gateway calls. In New Relic’s sample PayPal was the most popular provider, accounting for nearly 60% of all transactions followed by Authorize.Net, USA ePay and Stripe. Google Checkout came in 5th but turned out to being the fastest gateway. Enjoy!

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22May/12

Meet Dwolla – A Disruptive Online Payment Startup from Iowa

By Martin Schuppelius
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Payment Observer has details on multiple companies that provide funding, atm, and credit card processing services. Get more information and details here.

$1 million in transactions per week milestone and is now processing more than $1 million per day. The company raised a $5 million Series B round of financing led by Union Square Ventures in February this year and most recently won Ashton Kutcher as investor.

The name Dwolla is a conjunction of “Dollar” and “web”; a good description of what Dwolla is: an online, cash-based payment method.

How does it work?

Dwolla is not a bank or credit card processor. The company provides a digital wallet and payment network much like PayPal. Transactions are made directly and instantaneous between Dwolla accounts, without using the credit card or ACH (=Automated Clearing House, the electronic network for financial transactions in the U.S.) infrastructure. Dwolla is partnering with U.S. bank Veridian Credit Union to securely deposit the funds of their users.

social media contacts (non-Dwolla users have to sign up to claim the money).

Fees

Unlike credit cards and PayPal, which usually charge 3%-5% for each transaction, Dwolla charges a flat fee of just $0.25. Micro-transactions less than $10 are free. By default the recipient is responsible for paying the fee, but there is also the option that the sender takes over the fee (e.g. for charity donations). There are no additional fees, even for merchant accounts.

Merchant Features

Business can sign up for a merchant account to accept payments through the Dwolla network based on their Dwolla ID or email address. Dwolla provides innovative solutions for retail merchants as well as for online shops. Users can locate nearby retail stores that accept Dwolla via Dwolla Spots or Proxi. To verify the incoming transactions Dwolla provides a web-based Dwolla Kiosk App. Check out the embedded video to see how Dwolla Spots work:

For online merchants Dwolla offers plugins for all main e-commerce shopping platforms and an API to their payment gateway.

The downside is that Dwolla is only available within the U.S. The company is focusing on national expansion and has currently no plans to expand internationally.

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14May/12

Payment News – May 14, 2012: AmEx, Citi, Dwolla, ISIS, Jumio, MasterCard

By Martin Schuppelius
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Learn more about some of the service providers that advertise on Payment Observer.

Online Payment

  • FISync technology that enables users to integrate their bank accounts directly with the Dwolla platform.

Mobile Payment

Cards

  • Citi Ventures, Citi’s venture arm, invests $3.3M in online payment and ID verification company Jumio. Read more
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10May/12

iDEAL – The Most Popular Online Payment Method in the Netherlands

By Martin Schuppelius
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Payment Observer has details on multiple companies that provide funding, atm, and credit card processing services. Get more information and details here.

Credit cards are the most popular payment method across the globe. This is also true for online payments; most online transactions are made using credit cards. Over the last few years a number of alternatives to credit card payments, especially designed for e-commerce (e.g. PayPal) have emerged. But there are also successful local online payment methods.

One of the most successful ones is the

How does it work?

With iDEAL customers can pay for online purchases directly from their bank account. All major banks in the Netherlands, such as ABN AMRO, Rabobank and ING Bank support iDEAL. The iDEAL service is operated by Currence, a bank association that coordinates the payment systems in the Netherlands. To accept iDEAL payments a merchant can sign up at a certified bank or payment service provider.

Acceptance and use of online payment methods (source: Currence iDEAL factsheet)

This is how iDEAL works:

  • The customer selects that he wants to pay with iDEAL and selects his bank during the checkout.
  • He is then redirected to his banks login page to authorize the payment using a TAN.
  • The bank verifies the transaction and initiates the transfer to the merchant’s bank account.
  • The customer is then redirected back to website and the shop will get a conformation of the payment.
  • The merchant will receive the payment within 1-2 working days on his bank account.

Advantages

Compared to other payment methods iDEAL offers some advantages for merchants and customers. Millions of customers already use online banking and can use iDEAL without signing up or registering for third-party services. Also customers don’t have to share personal information such as account number with the online merchant. Merchants benefit from the real-time confirmed, guaranteed (by the customers bank) payments that cannot be reversed (no chargebacks).

The transaction fees depend on the size and sales volume of the merchant but are usually much lower (especially for larger transactions) than the fees for accepting credit card payments.

Limited to the Netherlands

iDEAL is based on the Dutch domestic transfer and is only available to customers of the participating banks in the Netherlands. There are planes to adapt iDEAL to the Single Euro Payments Area (SEPA) standard so it can be used also for cross border payments within the E.U. There are similar local direct online banking services in other countries such as Secure Vault Payments in the U.S.

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4May/12

Payment Startups: PayPal Competitor WePay Raises $10M

By Martin Schuppelius
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Need a cash or credit card processing solution for your business? Payment Observer has more details you can learn by visiting their website.

Ignition Partners. The fresh funds will be used to scale WePay’s workforce and technology. It is expected that the company will launch several improvements including a mobile application in 2012.

Who is the “PayPal-rival” that reported a 10x growth in 2011? WePay was founded in 2008 by Bill Clerico and Rich Aberman with the goal to create an easy to use payment collection platform. The company is now headquartered in Palo Alto, CA and has raised a total of $20 million in funding. Among their investors are well known names such as Y Combinator, YouTube founder Steve Chen, and PayPal co-founder Max Levchin.

WePay started as an online group payment for individuals. Over time, the product portfolio evolved and WePay is now offering a range of payment solutions: sell items and tickets online, send bills online and accept donations online to individuals, small and medium-sized businesses and large merchants. WePay charges a fee of 3.5% ($0.50 minimum) for receiving credit card payments and a flat fee of $0.50 for bank payments. Currently WePay’s services are only available for users in the United States.

Check out the embedded video to see how WePay works:

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