E-Commerce Payment Systems

Credit Card Accepting 3rd Party Processors - All Product Types

Is PayPal the Only Alternative to Expensive Merchant Accounts?

In our research, we have discovered over 35 alternatives to standard merchant accounts much like PayPal.  Although PayPal may be the biggest in terms of numbers, it is not necessarily the lowest cost.  PayPal is now owned by eBay, but other credit card processors may also be used by merchants on eBay. Among the many alternatives there are several content specialists in areas like digital and software,  multi-currencies,  multi-language, multi-countries, high-risk content and others.  Most of these alternatives are described on this page.  To see a table of these alternatives where you can view selected specialties and compare monthly costs, visit the Maculator™.  For an in-depth analysis of all the 3rd party alternatives see the article A Closer Look at Third Party Credit Card Processors. 

Do you really need a merchant account?  For your new ebusiness, a merchant account may be necessary to accept credit cards directly online.  If you're just starting out as a small business, ebusiness,  or home business, however, you may consider using alternative payment options such as the popular auction resources on the internet or the PayPal service which uses its own merchant account to process credit card transactions.  This saves you the cost of minimum fees of $30-$50 a month for merchant account services.  If you're already selling more than $3,000 to $5,000 a month in commercial transactions, then you're probably better off using your own merchant account.  The Maculator™ can help you calculate exactly how much each provider will cost you on a monthly basis depending on your monthly sales volume. 

A popular alternative for e-commerce payments today, especially on web auction exchanges, is the credit card accepting 3rd party system like PayPal and 2Checkout.com.   These services allow you to make payments to anyone with an e-mail address, even if they do not have an account.  The recipient has to set up an account to receive the money, but there is no cost for this personal service.  You can also place a PayPal  or 2Checkout.com button on your web page to accept payments by setting up a professional or commercial account.  To receive funds in this way, you are charged discount and transaction fees. Other 3rd party alternatives are 2CheckOut, Affero, BTClick&Buy, CCAvenue, CCBill, CCNow, ClickBank, DigiBuy, DigitalCandle, FastPay, iBill, iKobo, ImagineNation, InstaBill, Jettis, Kagi, MembershipPlus, Moneybookers, MultiCards, MyPaySystems, NoChex, Pay-Line, Paymate, Process54, Reg.Net, RegNow, RegSoft, Share*It, StormPay, SWREG, V-Share and Verotel..  All these services accept credit cards online, in auction portals or in e-mail links and handle the payment process for you using their own merchant accounts. 

Why not just go with the lowest cost or most popular 3rd party services like PayPal or 2CheckOut?  Most merchants haven't even heard of the many alternatives explored on this page.  One reason may be to take advantage of the marketing directory services provided by several providers.  The extra sales generated from these services may justify the cost?  Several alternatives also provide downloading services for digital products like software or e-books.  This gives you the option of downloading the items from your own website or from those provided by the 3rd party systems.  It may also be advantageous to have more than one type of payment service on your website, just in case a customer may have had problems with one of them or may have heard of negative talk about one.  Once a buyer has used a 3rd party account for one purchase, she may feel more comfortable using the same service on other websites.  For digital products, you may wish to have the same product listed on several alternative directories?

If you have a high risk content business, like information services, media or images, you may need a 3rd party provider that is prepared to deal with high risk content.  The risk may come from customers who complain about the quality of the content they receive.  Sometimes other family members use credit cards without authorization to purchase content.  Naturally, these services will charge more because of the extra costs involved in underwriting these types of accounts.  International businesses with banks or customers in different parts of the world may need a solution that provides multi-currency support.  All of these types of providers will be identified and described on this page.

To use one company's merchant account to accept payments for another company is called factoring, and is forbidden by Visa and MasterCard.  The company that holds the merchant account assumes the risk for all products sold, including chargeback penalties and other costs for sellers who deliberately commit fraud.  The credit card accepting services listed here are called Aggregators and they may limit the types of products that can be sold, such as ClickBank and DigiBuy who handle only digital items or products that can be downloaded from a website.  Each of these systems handles transactions differently and offers a range of unique services. 

There are also a few services that do away with credit cards and merchant accounts altogether by setting up their own unique accounts.  These systems can handle e-commerce transactions and possibly other POS methods.  Some of these E-Cash systems are eCharge, InternetCash and Praxell.  These will be described in a section below the 3rd party providers.

What's the Maculator™ ? 

Because the discount rates change based on higher monthly sales levels for many of these 3rd party providers, it's difficult to compare the monthly cost of one against the other unless you have a program like the Maculator™.   Some providers have as many as 4 to 15 different rates based on the average ticket and sales volume.  You can also use the drop-down filter to select free fees, multi-countries, multi-currencies, multi-languages, digital products, high-risk content, and other selections.  The Maculator™ allows you to enter your expected or current monthly sales volume and calculate the monthly cost and the cost percent of sales for two selected providers simply by selecting preloaded rates for any of the providers listed on this page and pressing the Maculate button.

You can also save the calculations for the two providers selected and then select different providers or change your expected sales volume in order to compare numerous providers and scenarios in one view. The Maculator™ saves hours of time trying to calculate the monthly costs of the providers on your own.  Some of the providers' rates loaded in the Maculator™ are not published on the web and were learned only by corresponding with these providers.  Now you can save hours or even days of your precious time researching the actual monthly costs for various 3rd party providers simply by clicking a few buttons.  You can also enter the rates for 3rd party providers and merchant accounts not listed on the Maculator™ and compare their monthly costs simply by pressing the Maculate button.  Check out the Maculator™ and see for yourself!
  

Major 3rd Party Credit Card Accepting Providers

PayPal has approximately 11 million users, processes 150,000 payments per day, and attracts over 20,000 new users each day.  It is a major player on eBay and other auction sites. An attractive feature of PayPal is the relatively low fee of 2.2% or 2.9% depending on your volume of business.  With no setup fees, this is an attractive option for e-commerce vendors.  The buyer does not have to set up a PayPal account before being able to use his or her credit card to buy your product.  To make things easier for buyers, PayPal now gives buyers the option of storing their personal information in a secure account which enables them to make future PayPal purchases with less hassle.  Through PayPal the consumer retains all the protections provided by his or her own credit card issuing banks and institutions such as Visa and MasterCard.  The buyer is also protected by the fact that the seller does not have access to confidential information such as credit card numbers.  If the buyer demands a refund or obtains a chargeback through the bank, PayPal makes the adjustment on the vendor's PayPal account.

PayPal initiated a new merchant service called the Website Payments Pro in early 2005 which provides an integrated shopping cart interface and a Virtual Terminal.  The Virtual Terminal allows merchants to accept credit cards by phone or mail and process the transactions through the online terminal interface.  This added functionality will cost $20 a month but there is a Free Trial offer until October 31, 2005.  The Website Payments Pro turns your online shopping interface into the same shopping cart system available to merchants with a regular merchant account.  Buyers will also have the option of using their own PayPal accounts if they so desire.  Compare rates for PayPal with the Maculator™.

2Checkout.com also provides a purchase link or button and shopping cart service.  Your purchase links can also be applied to existing shopping carts. Additionally, all products you sell are listed in a shopping directory by category.  When your link is clicked on the shopping directory, you website is viewed under a small half-inch 2Checkout.com header frame.  2Checkout.com charges a one-time setup fee of $49.00.  The discount rate is 5.5% and the transaction fee is $0.45.  With 2Checkout.com you can sell products and services, including recurring billing.  International vendors are accepted.  Compare rates for 2Checkout.com with the Maculator™.

For 6% and a $1.00 minimum discount fee, Affero accepts donations on behalf of beneficiaries that may include any good cause as well as non-profit organizations.  Free membership allows you to recommend a cause to which anyone can contribute.  Affero also includes a forum for discussion on worthy causes.  Compare rates for Affero with the Maculator™.

BTClick&Buy has a complex 18-tier rate scheme based on item prices and monthly revenue in GBP (£) currency ranging from 32% for GBP 0.50-0.99 prices and monthly revenue below GBP 10,000 to 5% for GBP 50.00+ prices and monthly revenue above GBP 50,000. Additional setup fee will be determined based on services provided.  BTClick&Buy is a total solution for online content and services.  Features include session management, fraud prevention and customer service.  For more information, contact the BTClick&Buy team directly at  sales@btclickandbuy.com. To compare rates against providers with other currencies, use the Currency Converter.  Compare rates for BTClick&Buy with the Maculator™.  

CCAvenue™ is based in India.  Currencies include INR and USD.  The Premium Scheme offers a USD $600 setup fee, a $120 annual fee and a 5% discount rate.  The Economy Scheme offers a $200 setup fee, a $60 annual fee and a 7% discount rate.  A 5% Rolling Deposit of the final payment amount will be maintained by CCAvenue™ for 180 days.  Services include secure gateway, Visa and MasterCard authorization verification, merchant reporting system, virtual terminal interface, shopping cart interface and auction payment collection support.  Compare rates for CCAvenue™ with the Maculator™.     

CCBill accepts many types of accounts including high risk content.  It offers 4-tier rates from 11.5% to 13.5% of total weekly sales for merchants hosted by Cavecreek Wholesale Internet Exchange (CWIE).  For unhosted accounts the high end goes to 14.5% for weekly sales volumes below $5,000.  Compare rates for CCBill with the Maculator™.  

CCNow provides the marketing service of an Online Mall and major search engine registration as well as a streamlined purchase interface.  Merchants pay $9.95 a month and a 9% discount for the domestic account.  The international account rates are $11.95 a month and 11%.  For monthly sales under $100 the discount rate is waived but the monthly fee is collected.  Compare rates for CCNow with the Maculator™.  

FastPay is a UK provider for businesses with a UK address. It's free to sign up, pay money in and send money by FastPay. It's 9p (pence) to accept a FastPay payment and there's a fee of 2.9% when withdrawing money.  To compare rates against providers with other currencies, use the Currency Converter. FastPay accepts:

• Debit cards: Switch, Solo, Visa Delta, Electron
• Credit cards: Visa and MasterCard
• Bank accounts: UK current accounts with most banks.

Compare rates for FastPay with the Maculator™.

iBill Internet Billing Company is another option that charges between 12% and 15% of your sales for its services which include a complete solution with a gateway and shopping cart.  The lowest rates are applied to businesses with sales volumes above $25,000 a month.  iBill accepts various types of businesses including those with high risk content.  Rates are slightly lower for material products to be shipped than rates for digital products that are downloaded through the iBill servers.  iBill also handles subscription services for various periods of time.  Compare rates for iBill with the Maculator™.

The iKobo Merchant Account gives you the ability to accept credit card and bank account payments on your website or online auction. iKobo is also one of the world's leading money transfer companies - serving 170 countries.  The discount rate is 2.99% plus $0.29 per transaction.  Have funds directly deposited to a US bank account or receive a Visa PLUS debit card to withdraw money at 800,000 ATM's worldwide.  iKobo supports shopping carts and subscription billing, as well.  iKobo also provides shipping confirmation and transaction history reports.  This is a relatively low cost alternative, especially for international trade. iKobo also offers an unusually generous affiliate commission program that extents to 10 levels of downline affiliates. Compare rates for iKobo with the Maculator™.

With the ImagineNation IAMS (ImagineNation Associate Merchant Service) you get a free PeddleGold storefront that you host on your own.  This is an easy way to start your online business without having to be an HTML expert.  You get the IAMS credit card processing service and the storefront for $18 a month plus a 4.6% discount and $0.55 transaction fee.  PeddleGold is a very robust storefront with support for a variety of functions usually found only in much more expensive solutions. PeddleGold is a session managed storefront. You never have to worry that a potential customer has turned cookies off in their browser, disabling your store.  Compare rates for IAMS with the Maculator™.

InstaBill offers a 10% discount rate and a USD 5.00 minimum item price which includes
credit card processing costs, membership management software, shopping cart and merchant
control panel.  With InstaBill you can sell products or services to any Visa, MasterCard or American Express cardholder in the world.  Merchants have sold to consumers in 143 countries.  Compare rates for InstaBill with the Maculator™.  

Jettis is another 3rd party provider that accepts merchants with high risk content.  Jettis charges a discount rate of 12% to 13% depending on you monthly volume.  Below $300,000 the rate is 13%.  Below $400,000 in monthly sales the rate is 12.5%.  Above $400,000 the rate drops to 12%.  In addition there is a setup fee of $249.99 and a monthly minimum fee of $39.99.  There are also transaction fees from $0.22 to $0.70 based on the number of transactions a month and the type of gateway you use.  Jettis also provides software and support for tracking and paying your affiliates who help to market your products.  Compare rates for Jettis with the Maculator™.

Kagi lists your products for you on the Kagi website and handles the transactions for all types of credit cards and checks for domestic and international orders.  Most vendors display their products on their own websites, and connect to Kagi to execute the sale.  Kagi sells physical and electronically distributed products.  Depending on the product price and the monthly volume, Kagi's discount rates range from 5% to 10% and item fees range from $1.25 to $5.00.  Kagi will fulfill your download orders if you wish for an additional 2% and $20 monthly minimum, otherwise there are no monthly minimum fees.  For physical CDs, Kagi can also help in the duplication of your CD orders for a reasonable fee.  Kagi also provides optional registration services for your software products and can generate unique license numbers in a number of ways, based on your preferences.  Compare rates for Kagi with the Maculator™.

Moneybookers has three rate levels based on the method of payment.  The lowest rate of only 2.0% is for purchases made by pre-paid account.  This rate is one of the lowest of all 3rd party processors, however the buyer controls the method of payment, not the seller.  Higher rates of 5% are for purchase through verified Visa or MasterCard and the highest rate of 8% for unverified cards.  Purchases are final upon execution: no funds will be charged back if buyer complains although merchant account may be limited or closed if fraud is determined.  Use the Currency Converter to compare with other  currencies.  The Moneybookers chargeback policy is especially attractive to merchants who have had chargeback problems with other credit card processors.  Compare rates for Moneybookers with the Maculator™.  

MultiCards has 5 plans with discount rates from 5.9% to 11.9%.  The plans are designed to meet the needs of your processing volume, whether you have orders totaling $100 or $5,000 or more per month. If your orders total $100, then Plan 0 was designed for you. If your orders total $15,000 or more , then Plan 4 is the way to go.  You must determine the best Plan for your business. You may also change Plans within the first 6 months of each membership year. However, MultiCards will only allow you to move to a lower rate Plan as your volume increases. You will only be allowed to go back to a higher rate Plan at renewal time.  Each plan has a different setup fee from $95 to $775.  The higher the setup fee, the lower the discount rate.  The 3 plans with the lower rates also have an annual charge of $150 to $350.  There is a monthly maximum income of $15,000 for all plans except Plan 4 which has no monthly maximum and has the highest setup fee and a discount rate of 5.9%.  MultiCards is based in the Netherlands and has additional offices in New York and London.  Compare rates for MultiCards with the Maculator™. 

 NoChex rates of 2.6% plus 20p GBP (USD 0.30) transaction fee offers UK sellers one of the lowest rates available for buyers using all UK cards.  NoChex has no setup or monthly charges.  The NoChex chargeback policy favors the seller. Use the Currency Converter to compare with other currencies.  Compare rates for NoChex with the Maculator™.  

PayMate offers five plans for Australian merchants, each with a different monthly fee starting at zero for the Standard Account and ending with AU$33.00 for the EBusiness Account.  The lower the monthly fee, the higher the discount rate which range from 1.7% to 2.4%.  The maximum ticket also varies from $200 to $10,000 depending on the plan.  PayMate rates to accept USD are 1.5% more than regular AUD rates.  Use the Currency Converter to compare with other currency providers.  Seller bank must be Australian.   Buyer pays fees as well as Seller. Compare rates for PayMate with the Maculator™. 

Process54 offers one of the lower discount rates for high risk content 3rd party processors.  The Direct Merchant Account has a 4.49% discount rate and a $0.35 authorization (transaction) fee with a $50 monthly gateway fee.  The Billing Solution provides a 6.95% discount rate and a $0.40 authorization fee.  International merchants may be pleased to know that all countries, not just the U.S.A., are welcomed!   Compare rates for Process54 with the Maculator™.

Effective May 1, 2004, StormPay offers 4-tier rates from 6.9% up to 11.9% for 10% chargeback ratio.  If you have a 2% chargeback ratio or lower, StormPay offers a discount rate of 6.9% plus a transaction fee of $0.69.  For higher chargeback ratios the discount rate varies from 8.9% to 11.9% for a chargeback ratio of 6.01% to 10%.  StormPay no longer charges the buyer a 9.9% added fee to their transactions.  StormPay offers a generous referral program for affiliates that extends to 6 levels and pays 2.5% of fees paid for each level!  The StormPay chargeback ratio pricing scheme is a reasonable way to keep costs low for merchants who know how to maintain a high quality customer satisfaction profile. Keep in mind that most other processors won't accept chargeback ratios any higher than 1% without heavy penalties or closing your account.  Compare rates for StormPay with the  Maculator™. 

TransactIndia is based in India and offers two plans for merchants with a setup fee of INR 2,500 or 15,000 and an annual fee of INR 1,000 or 2,400.  Respective discount rates are 7% or 5%.   Use the Currency Converter to compare with other currencies.  For Indian merchants, compare monthly costs against CCAvenue™ and Transecute.  TransactIndia will retain the first INR 1,000 in your account as a minimum account reserve.  The Premium Account offers a higher setup and annual fees and a lower discount rate. Compare rates for TransactIndia with the Maculator™. 

Transecute, also based in India, charges a 5% discount rate and INR 30,000 (Rupees) setup fee which converts to about $650.  Many currencies may be displayed in the payment form but all payments are converted to INR Rupees.  Use the Currency Converter to compare with other  currencies.  AMX, DSC, Novus and Other Indian cards will be accepted in an upcoming upgrade.  For Indian merchants, compare monthly costs against CCAvenue™.   Compare rates for Transecute with the Maculator™.      

Verotel is another provider that accepts merchants who offer high risk content with a discount rate of 14.5% for initial transactions and 16% for recurring transactions for the Verotel Ticketsclub offer.  The Verotel Pro offer has two options which allow the merchant to handle the cost of chargebacks in different ways.  Depending on the volume of weekly sales, the discount rate for Verotel Pro may be as low as 13%. Verotel also offers plans for 1-900 telephone billing services with discount rates from 20% to 30% depending on the amount of the transactions.  Verotel also provides special support for marketing your services through affiliates.  Compare rates for Verotel with the Maculator™.