Which Online Payment Solution Should Your Startup Use?

With a wide range of options and new players continuously entering the industry, it can be difficult to know which online payment solution will best compliment your startup’s ecommerce platform.

We took our top choices in the market and break down the pro’s and con’s for you to help you make an informed choice.

Before we get into the actual solutions, we think it’s important to cover the basic lay of the land to accepting payments online, and go into some important trends happening in ecommerce.

After that we will give you our top payment solution choices, their features, and what you need to know to make the best choice for your startup.

Differences between Merchant Accounts + Payment Gateways, Combined Solutions, and Simplified Solutions

Old School

The most traditional solution for online payment processing in the ecommerce world involves the combination of a merchant account and a payment gateway (like Authorize.net, CyberSource, Merchant One, and eWay amongst others).

These require a merchant account (a separate bank account that allows you to accept credit card payments), and an online gateway which connects your online store and the merchant account.

It’s basically the virtual equivalent of brick-and-mortar POS machines, connecting your bank and the card holder’s bank to complete a transaction.

Using this option you have to apply for both which can take some time, and will need to connect both to your store once approved.

This process stops you from being able to start accepting payment immediately. A pro to this option is that you get more personalized customer service and greater control over security rules and customizations.


The next evolution of payment solutions (like PayPal) combined the merchant account and payment gateway into one solution. These solutions provide a quicker setup, accept all major credit cards, and don’t charge monthly fees or setup fees for a basic account.

The con is that your customers are often redirected off of your website to pay for an order, creating a less favorable checkout experience.

New School

New companies have been disrupting the space in recent years (like Stripe) are aimed towards removing all the complexities from accepting online payments. These solutions are similar to previous combined solutions, but also integrate seamlessly with your ecommerce website’s checkout page.

These new solutions also take away the need for a merchant account or a payment gateway, often meaning fewer fees. The take away is although they are simple to use, if you hit a problem there often isn’t the greatest customer support (most is done through email with no customer service number).

The New Landscape of Ecommerce is Quickly and Continuously Moving Towards Mobile


According to global media measurement and analytics company comScore, overall digital commerce is projected to grow by 16% which would put the market at $61 billion in revenues.

Mobile commerce is growing even more rapidly (25% last season) and will double the growth of desktop and laptop ecommerce.

Ad-tech software company Steelhouse analyzed its data from millions of online transactions from 500 top US retailers, and discovered mobile commerce insights none of us can argue.

They found that consumers spend 82% of their mobile time within apps they have downloaded versus the remainder on mobile and e-retailer sites. They also discovered that mobile in app marketing campaigns convert any where from 5 to 10 times the mobile web rate.

International Landscape

International Mobile Payments

According to Internet Retailers’ 2016 Mobile 500 guide, the bulk of mobile ecommerce revenue growth worldwide is from China, Europe, and Latin America.

Important Insights to Online Buyer Behavior

When choosing the right payment solution for your company it is important to have an understanding of trends in buying behaviors. Here are some key insights for this year:

  • Consumers don’t live on one channel. They are using multiple channels and expect retailers to give them what they want, when and where they want to buy it.
  • Accenture.com found that 54% of digital consumers are cautious about the information they share due to lack of confidence in the online security that protects their personal data.
  • Small screens are in, and companies who optimize their mobile web experience will capture the growing market share.
  • Customers expect the checkout process to be accurate, and want an accurate price including things like shipping rates, coupons, discounts, and tax included.
  • According to Nielson Norman Group, 56% of people attempting to buy from your platform are capable of struggling through the user design to completion of their purchase.
  • Nielson Norman Group also shows that only 5% of visitors are interested in buying something at the current visit, and half of those make a buying attempt that same visit.
  • One of the top reasons consumers give for shopping online is for easy payment procedures.

What do these stats mean for your payment solution choice?

Ecommerce shoppers are spending more money on their mobile devices, and their likelihood of purchasing increases even more when they use mobile apps.

Mobile spending is significantly increasing on a global level, with China, Europe, Latin America, and the US leading in revenue increases.

This means that startups should look to a payment solution that encompasses and accepts a many types of currencies (especially in the above regions) and that integrates seamlessly with mobile, and gives mobile users an optimal experience to easily checkout on their devices.

Consumer are on multiple channels and expect safe, secure, easy checkouts. Users feel safer with well known brands, so startups should consider using a trusted payment platform, that integrates on multiple channels to capture their diverse browsing habits and ease their worries of security.

With such a small percent of users ready to buy at the time of browse and a high percent chance they will struggle to complete a purchase, startups must use straightforward, simplified check out processes to narrow the margin of error on the user end.

A Comparison of Our Top Payment Solution Choices

In this section we will cover 4 top payment solution choices based on the current state of ecommerce and solutions that meet the changing landscape.

There are many different factors to consider when you are choosing a payment platform. We broke down each solution by its strengths, how it measures up to key factors, and what kinds of companies the solution works well for.


1. Stripe

Stripe is a San Francisco based credit card processing company who built their product for developers, making it easy for ecommerce businesses to accept credit card payments in a seamless, cost-efficient way.

Launched in 2010, they have received around $300M in funding and are backed by prominent investors like American Express, Sequoia Capital, and Elon Musk.

Some companies that use Stripe: TED, Twitter, Kickstarter, Shopify, Salesforce, Lyft

Customer experience: Stripe offers users a simple and seamless checkout, with optional customer address and additional fields.

The checkout process works as part of your own site checkout page so customers aren’t directed off your page. Customers do not need a Stripe account to checkout.

Payments Accepted/Fees/Contract: Stripe has one standard fee for all users: 2.9% + 30 cents per successful charge.

If you process more than $80,000 or more than 10,000 transaction per month then you might qualify for a lower fee.

Stripe doesn’t have monthly contracts, set up fees, minimum charges, card storage fees, or failed transaction fees. Stripe charges a .5% fee per Bitcoin transaction in the US, and add an extra 2% fee to process payments in different currencies.

Stripe accepts major international credit and debit cards including Visa, MasterCard, American Express, Discover, Diners Club and JCB.

Ease of use: If you have developing experience, Stripe is a great choice. If you lack a developing background you’ll probably will need to use some integrations or hire someone to help you integrate Stripe into your website.

On the customer end, Stripe is very easy for customers to use to make payments online through website and mobile.

Customer Support: Stripe has a few ways to receive support including email-based support, social media help accounts, its online knowledge base (self help), and Freenode-based chat support.

Unfortunately, Stripe does not have a direct call helpline, so you won’t be able to get a live person on the phone to walk you through any issues.

Strengths: Since Stripe was designed with developers in mind, the solution makes it simple to integrate a variety of online payment processing tools and plugins through its API.

Stripe allows you to easily offer coupons, subscriptions, accounting integrations, meets PCI requirements, seamless mobile checkout, along with many other features.

Its most exciting new feature called Relay allows businesses to capture the growing mobile in-app market by allowing consumers to purchase an item instantly through a “buy” button within other mobile apps like Twitter and Facebook.


2. PayPal

There is no denying that PayPal is one of the most well known brands around the world. The eBay owned company gives businesses and individuals the tools needed to take online payments with or without a website, and access the funds instantly.

Some companies that use PayPal: PayPal is used by many of the top brands worldwide including: Adidas, Ebay, Overstock, Netflix, Nike, Delta, Coca Cola, and many more.

Customer experience: Unfortunately, when it comes to the checkout process with PayPal, users are redirected off the merchant site and redirected to the PayPal screen. This leads to higher risk of cart abandonment.

Customers do not need a PayPal account to checkout, and although the checkout process is not ideal, customers recognize and feel secure checking out with the PayPal brand.

Payments Accepted/Fees/Contract: A basic PayPal plan is has no set-up fees, no monthly fees, and no termination fees. PayPal charges a standard 2.9% + $0.30 per transaction, but goes up to 3.9 percent + $0.30 per transaction with international payments.

If you want to use PayPal’s Advanced or Pro membership (allowing customers to pay directly from your site instead of being redirected) you will have to pay a monthly membership of $5 (advanced) or $30 (pro option).

The benefit to the monthly memberships are that members selling of $10,000 in business each month can benefit from fee drops as low as 2.2% + 30¢ per transaction.

PayPal also has a chargeback fee of $20, and a refund fee which is a fixed fee portion of the original transaction fee.

Ease of use: PayPal is easy to use for the non-technical merchant lacking developing experience, where users can copy code from PayPal’s website and paste it into their own site.

You can set up a buy button in about 15 minutes with just a few lines of HTML on your site.

Customer Support: PayPal offers many customer support solutions, and is one of the benefits to using the service.

These include a community forum, a “quick answers” page, a knowledgebase, email support, phone support, and social account support on Twitter and Facebook. Never underestimate the benefits of having live phone support!

Strengths: There is no question that PayPal’s greatest strength is in its trusted, well known brand name, and allows users to make payments via browser, mobile, and in app.

It’s discounted rates add value to companies as they continue to grow, and for companies who process lots of low-value transactions (under $4), PayPal offers a much more competitive rate than competitors at .5% + 5¢ per transaction.


3. Authorize.net

Authorize.net has been in business since 1996 and is one of the most widely used payment gateways on the Internet.

It has received the Achievement in Customer Excellence (ACE) award for 5 consecutive years. The brand’s seal is known and trusted worldwide as a secure payment platform.

Some companies that use Authorize.net: The company has over 400,000 merchants worldwide.

Customer experience: Authorize.net allows customers to make a purchase directly on your site, and assures them you are a trusted and established business. The checkout page look and feel can be controlled to reinforce your company’s brand. Companies who have the Authorize.Net Verified Merchant Seal on their website are seen as credible by users.

Payments Accepted/Fees/Contract: Authorize.net charges a $49 setup fee + $25 for a monthly gateway, along with 2.9% + 30 cents per transaction fee. If you already have a merchant account, the company offers a Payment Gateway Only plan. There are no annual renewal fees and no charge to cancel services.

Ease of use: The service is very popular and easy for developers to integrate. Development is minimal which will save you money if you need to hire a developer. The solution offers several methods for linking websites to the payment gateway, and retail merchants can integrate the gateway via third party POS solutions.

Customer Support: Authorize.net prides themselves on having excellent customer service 24/7. They have an online support center, a toll-free phone support center, online chat options, an e Ticket system, and web form email.

Strengths: Authorize.net is known for its excellent customer support systems, and its trusted brand seal to let users know their information is secure. The system also provides a top-notch fraud protection system, which is beneficial for those merchants who want help managing and keeping fraud to a minimum.


4. Adyen

Adyen is a payments technology company providing a single global platform to accept payments worldwide.

The technology allows business to process payments across online, mobile, and POS with an option of over 250 payment methods.

The company is headquartered in Amsterdam and San Francisco, and now has over 3,500 businesses using its service.

Some companies that use Adyen: Adyen has some well known clients including Facebook, Uber, Airbnb, JustFab, Netflix, Spotify, Viagogo, Dropbox, Groupon, Evernote, Booking.com, Yelp, Vodafone, Mango, and SoundCloud.

Customer experience: Adyen has flexible skin technology that carries the look and feel of the brand website into the payment page, keeping a consistent experience for the user.

The skins will automatically detect the screen size of the user’s device and adjust the page accordingly.

With it’s single-page payment screen, customers can enter payment details and finalize their order on the same page, and they can choose to have their payment details remembered and stored for future purchasing.

Payments Accepted/Fees/Contract: Adyen doesn’t charge setup fees or monthly fees. It does have a set .10 EUR per transaction fee and a minimum of 1,000 transactions a month (meaning whether or not you hit 1,000 they will still charge that amount monthly.

Adyen applies an Interchange + pricing model in order to calculate the costs for credit card transactions.

The applicable Interchange will vary and depends on transaction variables such as card type, geographical region, and sales channel.

Ease of use: Adyen works closely with its customer to design payment platforms that work best for each individual customer.

They strive to be a one-stop shop for customers, and offer services handling everything involved in the payment process all in one place. Users are going to want to have a developer on hand to integrate Adyen with their website.

Customer Support: Adyen has great customer support through its knowledgebase, ticket submissions, API playground, and online tutorials.

They also have numbers to reach their tech support team, sales office, and main office. Again, having live support is definitely an added bonus.

Strengths: If you are an international merchant with over 1,000 monthly transactions, Adyen is a great solution. The company designs and develops everything in house, which adds to its trust factor knowing they are not outsourcing tasks.

The service offers transactions online, on mobile, or face to face. Ayden’s top selling factor is the company’s knowledge in helping businesses maximize their conversion rates with tools in their back office where customers can access conversion reports, and their A/B testing tools allowing clients to set up two versions of the payment page to see which converts better.


5. Braintree

Braintree was founded in 2007, and is a one-stop-shop for the services a business needs to process payments worldwide. They provide a merchant account, payment gateway, recurring billing, and other payment services online businesses need.

The company raised $69 million in funding from prominent investors like Greycroft, Accel, and more. The company was acquired by PayPal for $800 million to compliment the company’s services.

Some companies that use Braintree: Braintree has well known clients like Hotel Tonight, Casper, Pintrest, Uber, Airbnb, StubHub, and many more.

Customer experience: Braintree allows customers to make a purchase directly on your site, and displays the trusted PayPal button. The checkout page is customizable to look and feel like your brand, and the platform also makes it easy for subscription and repeat customers.

Payments Accepted/Fees/Contract: Braintree charges the standard 2.9% + 30 cents per transaction fee after processing 50K, 3.9% for multi-currency, and a 1% fee per bitcoin transaction.

There are no minimum or monthly fees, setup costs, or hidden costs. There is a $15.00 fee per chargeback.

Braintree accepts Paypal and most credit and debit cards, including Visa, MasterCard, American Express, Discover, Apple Pay, Venmo, Coinbase, JCB, and Diner’s Club

Ease of use: You will need to have an experienced developer. Most developers can complete a basic integration with Braintree in less than 30 minutes, but these times can vary significantly depending on the complexity.

The platform works with most leading e-commerce billing platforms. Managing your integration only requires a few lines of code.

Customer Support: Braintree has excellent customer support options including a knowledge base, guides, email support team, and a live phone support team.

Strengths: Braintree has fast payout (within 2 days) which is beneficial for small businesses and young businesses to have faster access to receivables.

Their team is composed of highly talented individuals who are constantly innovating the platform to keep up with the latest in mobile payments trends, such as VenmoTouch (a one touch payment processing facility for iOS for quick in-app purchases.

The company also tokenizes credit card information without your company having to be exposed to it.

What payment solution is best for your startup?

If you are still not sure you can run through the list of the following questions with the different options to see which service best suits your business needs:

  • Is it supported by your ecommerce platform?
  • Do you want a payment gateway + merchant account or a combined payment service provider?
  • What are the fees?
  • Is there a contract?
  • Does the provider have a good reputation?
  • Does the payment gateway do what you need?
  • Does the solution support the methods of payment your target market is currently using?
  • Does the solution support the currencies your target audience uses?
  • Are there any hidden fees?
  • Is your terms and conditions in place? (we use Termsfeed for this and privacy policies)
  • Do they offer a seamless integration with your website?

After thinking carefully about these questions, the choice ultimately comes down to your business needs.

Stripe is a great choice if you want to build a customized online storefront or have an Apple Pay enable mobile payment app, while choices like PayPal are great for the non-developer who doesn’t need a ton of advanced features right away.

Regardless of the solution you choose, remember that you always have the option to add more than one of these processors as a payment option, leaving the choice of which to use to your customer.



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