The best payment gateway(s) for startups: what to choose for different business models

Last update: 10 July 2021 (please, see important updates on Adyen, CurrencyCoud, TransferWise, plus new sound payment gateway – Tipalti).

INTRODUCTION

Many international payment gateways exist on the market already, and startup founders often struggle to choose the best one. In this article, I will present in detail (Part I) the top payment gateways (some of them are underappreciated), and make few suggestions (Part II) as to which one is better suited for specific business models (SaaS, marketplace, online service, etc.). One note here: this “rating” is my personal opinion based on my experience, in-depth analysis of the matter, hundreds of hours spent in discussion with products’ support and sales teams, other founders, and studying analytical materials. Indeed, you will see some info here which is not even presented on the official sites of some payment gateways.

Part I.  The best complex international payment gateways:

Tier 1:

• Stripe (International)
• Adyen (International)
• BrainTree (International)
• PayPal (International)

Tier 2

• 2Checkout(International)
• WePay (USA)
• PayOnline (Russia & CIS)
• CloudPayments (Russia & CIS)
• allpago (Latin America)
• QVO (Latin America)
• PayU (Latin America)

The best specific payment gateway (s):

• TransferWise
• Dwolla
• Plaid
• CurrencyCloud
• Tipalti
• Payoneer

Part II. Which payment gateway is the best fit for your startup?

PART I. Top payment gateways for startups

Section 1. Complex payment gateways

1. STRIPE (USA)

All hail the King?

1. General overview

I believe everyone heard about Stripe already. The team under the leadership of Collison brothers keep developing a fantastic product. It might be used for online stores & online services (Payments), subscription-based businesses (Billing) and marketplaces (Connect). It has excellent User Interface (UI), User Experience (UX) alongside with elaborative API documentation. There are several other features you better check on their site, but key points you can see on the screenshot below:

As of now, Stripe is open to merchants from 32 countries: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, United States + Request an invite for (beta): Brazil, Estonia, Greece, India, Latvia, Lithuania, Malaysia, Mexico, Poland.

If your business is located outside the said countries, Stripe is not your option for now. Plus, if you are a platform (marketplace), your merchants may use Stripe only if they are from non-beta (non-invite) countries.

Notwithstanding with that, if everything were great with Stripe, every startup would use this payment gateway. However, it is not the case. So the real obstacle to absolute market dominance is their pricing model, it is especially true for projects with high-value items (i.e., a price of one item is high -> Stripe fees are higher).

So, let’s break it down a bit.

b) Stripe pricing fees

Credit and debit cards

Stripe does not charge any set up or monthly fees. The basic pricing fee applicable to every transaction is 2.9% + 30¢ per successful card charge. The following cards and payment methods are accepted: Visa, Master Card, Discover, JCB, American Express, Diners Club, China UnionPay, Apple Pay, Google Pay.

For international cards – an additional 1% fee is applied. That is if your customer’s card is of another currency than your payout currency, Stripe will charge you 1% for cross-border payment.

That is 2.9% + 1% + 30¢ = 3.9% + 30¢ to all international (cross-border) transactions.

Additionally, Stripe charges a 1% conversion fee above the daily mid-market rate.

Example: let’s say we have an online service with registration in Sweden. Our payout currency is Sweden Krona (SEK). Basic charge rate for Sweden consumers will be 2.9% + 30¢. If a consumer is from USA, then the fee comprises of: 2.9% + 1% (cross-border) + 30¢, i.e. 3.9% + 30¢. But we also need to add a conversion fee of 1% above the market rate. If the currency exchange rate is 0.11 SEK/1 USD, the Stripe charges 1% above this daily rate on every transaction + 3.9% + 30¢ (i.e., 4.9% in total if there was a currency exchange).

I hope it is clear enough.

Payment methods for large transactions

Get paid with ACH direct debit, ACH credit, or wire transfers.

ACH Debits 0.8% · $5 cap

Local payment methods

ACH, Bancontact, Giropay, iDEAL, Sofort, SEPA Debit, Alipay, WeChat Pay, SEPA Direct Debit = for all methods fee is 2.9% + 30¢

Pricing for projects with billing (recurring revenue): 0.4% on recurring charges, free for your first $1 million

Pricing for marketplaces (Connect):

The per-transaction fees are taken out at the time of each charge: 2.9% + $0.30 for card charges, or 0.8% with a $5 cap for ACH debit payments (U.S. customers only)[See more]. Payments from outside the U.S. would incur a 1% cross-border fee, and non-USD payments would incur a 1% conversion fee above the daily market rate.

In case you as a platform use Custom or Express Stripe accounts for merchants (starting at 0.25% of account volume, per-account fee). If you use Standard Stripe accounts for merchants, then no additional fees.

Difference between using Standard vs. Custom & Express accounts for platforms (more about account types):

Standard

Custom or Express

Partner with Stripe to add payments to your platform Hosted onboarding and verification International support in 32 + countries Stripe Dashboard for sellers Dynamic risk-based KYC/AML checks

Multi-party payments, fully customized by the platform owner Build branded onboarding flows Platform management dashboard Control payout timing and funds flow Automate 1099 generation and delivery Starting at 0.25% of account volume, a per-account fee may apply The fees for Express or Custom accounts would be bundled together and billed to your platform’s Stripe account the first week of the following month

Unfortunately, it is not the end of the fee “burden” for platforms. Some more:

– $2 per active account per month. An account is considered ‘active’ during any month it processes at least one payout

– $0.25 per payout. Many platforms choose weekly or monthly payouts instead of daily payouts to save on fees.

– 0.25% cross-border fee on the account volume for merchants outside the US or Canada

Overall, one likely need a calculator and an Excel spreadsheet to do some numbers.

Pricing for startups with POS terminals (e.g., clothes showroom): starting at $59 per device. In-person payments cost 2.7% + 5¢ per transaction

c) Pricing fee discounts for businesses with volume

Stripe typically able to review businesses for potential volume discounts once they’re consistently processing net $100,000 per month ( or $150,000 per month for businesses utilizing Custom or Express Connect accounts) for at least three consecutive months.

Stripe will take a look at the mix of card types your customers use on your site or platform, and then calculate a new rate if applicable. For example, rates for businesses withdomestic Visa and Mastercard transactions would skew lower. Rates for businesses with a higher percentage of international or American Express transactions would skew higher. Since each business is different, Stripe team will not be able to tell or estimate what the discount would be without first seeing the card statements on the relevant transaction volume.

d) Ways to reduce the applicable fees (save some money)

Suggestion 1: For large payments, utilize Stripe’s ACH Debits, which have a fee of 0.8% and is capped at $5. It is applicable only for the USA market, i.e., “ customers <-> merchants.” So if one wants to implement an option on their sites/services/platforms where customers can pay using international “ACH,” Stripe will not be enough (we will discuss an option in the next sections).

Suggestion 2: You can pass along Stripe fees to your customers. In this case, Stripe will charge your customers any amount that you set. To do this, you can increase the final charge amount to account for the Stripe fee. However, as you increase the total amount, the Stripe fee also increases, as it’s a percentage of the total. This means you’ll also want to figure out what gross amount you need to charge such that, after Stripe deducts its fee, you receive some predictable net amount.

This math can get a little tricky, so Stripe team created a handy formula, so-called Stripe Fees Calculator, to help with this:

It’s essential to ensure that passing on fees to your customers complies with any applicable laws that pertain to you. If you are unsure whether any such rules apply, you should consult with your legal counsel. Please, take a look at the Stripe’s commentary on this issue. In short, a surcharge ban applies to marketplaces/services with merchants and customers in EEA. More legal analysis is needed here for sure for each particular case.

Suggestion 3: Another way to reduce the transaction fees incurred by the startup is to bundle transactions together (this helps keep the fees low on smaller operations). Please, see some help from Stripe supports docs here on this matter.

You will also find more on “Stripe vs. Braintree” a bit later.

e) Some more relevant tweaks

There are some more benefits Stripe as a payment gateway provides to founders. For certain type of businesses, a founder needs to have a possibility to give a customer a chance to cancel the booking/payment and get the money back in full fewer transaction fees. For example, if it is a SaaS service, you may want to provide a customer with a 5-days guarantee within which he/she might want to cancel the payment and receive money back. For such kind of purposes, Stripe provides an ‘auth and capture‘ feature [details here]. The funds would first be ‘authorized,’ or set aside in the customer’s bank account. You’d then have up to 7 days to ‘capture’ the funds (any amount up to what was initially authorized) before the funds are automatically released back to the customer’s bank account. So if a customer does not request a cancellation within the first five days, you can capture the funds from his/her account, and the billing proceeds regularly. Another example, for the travel industry, you can offer customers a chance to pay a deposit first and then have, e.g., three days to request it back in full if they decide to cancel a booking. If they do not cancel within the first 3 days, the deposit is yours for good and the customers are offered to pay the outstanding balance.

 

2) Adyen (Netherlands) (official site)

You unlikely heard much or at all about Adyen if you are an early startup. Yet, if your company is in the growth phase (e.g., Series A and up the ladder) with high transaction volume and growing revenue curve, – you must take Adyen seriously as it is a payment gateway of another league. Call it “The King of Kings” if you want.

If your company’s financials fits the Adyen’s requirements, you should probably turn on a “Billions” tv-series and feel proud to be a member of the club. Because such membership will give you such fee rates and development possibilities you have never dreamt of.

Please, be advised, Adyen does not turn anyone away – even if they are just getting started with your next big idea. If you want to integrate on Adyen’s full IC++ model instead of being on blend with other competitors, you can check them out.  On average it takes, for a one-man development team, between one and five working days to have a fully working integration.

It is a common misconception that Adyen does not cater to startups – but that is somehow wrong. Some of the biggest companies started processing with Adyen when they were small. Thus, the Adyen’s approach that they never turn anyone away because they are ‘too small’ should be really appreciated.

However, since my first publication of this article in spring this year I have got a bunch of letters to my e-mail account from founders who had wanted to join Adyen but they were refused due to low transaction volume of the business. That being said, though Adyen is very open to starting-up founders and companies it still takes into account your current situation in terms of what you do and how far you have gone. Overall, it is still an amazing option in payment gateway comparison.

Let’s break it down.

1. Adyen Pricing or let’s label it as “Stripe vs. Adyen”
   

One general rule applicable to all companies: Adyen does not charge any setup fees, but there is a monthly minimum of 100 Euro in transactional fees due to Adyen (i.e., 1000 transactions per 0.10 Euro each).

Credit cards

The credit card commission is charged per transaction, and consists of three parts (referred to as Interchange++):

• Acquirer markup: 0.60%
• Interchange fee: customer bank fee
• Card Scheme fee: fee from the card scheme

Payment method	Processing fee	Payment method fee
Mastercard	€ 0.10	Interchange++ (average total 0.90% – 1.10%)
Visa	€ 0.10	Interchange++ (average total 0.90% – 1.10%)
Cartes Bancaires	€ 0.10	Interchange++ (average total 0.90% – 1.10%)
Bancontact	€ 0.10	Interchange++
American Express	€ 0.10	3.95%

As you see, a standard processing fee for credit cards is 1.1% (in contrast with 2.9% of Stripe & Braintree). Moreover, NO cross-border fees.

Other leading payment methods:

he full list of payment methods and applicable fee rates is here

Pricing for projects with billing (recurring revenue):

The standard fee rate applies to recurring revenue projects – cir. 1.1%. Plus, Adyen has a bundle of very useful tools for subscription-based businesses that might help to reduce churn, analytics dashboard, numerous integrations with payment methods, etc.

Pricing for marketplaces (Adyen MarketPay):

Overall, this payment gateway has similar marketplace features as Stripe, or BrainTree does which is split payments (how you split payments between your platform, sub-merchants), the possibility to move funds from one sub-merchants account to the other or from platform-to-merchant (vice-versa); payout to merchants cards or bank accounts (auto or manually).

Pros of Adyen – a) payout to US and EEA cards within 30 minutes; b) possibility to settle currency needed for payout or receiving payments (i.e., you can settle a EURO account to receive payments in EUR, so as no currency exchange costs incurred); c) very easy onboarding process for sub-merchants; c) pricing fees: as mentioned earlier, the basic rate is 1.1%.

Pricing for startups with POS terminals: Adyen undoubtedly has one of the most developed POS payment systems on the market. It lets companies to choose a relevant POS terminal whether it is a countertop (e.g. Verifone P400), multimedia (e.g. Verifone M400), Portable (e.g. Verifone V400M), Handheld (e.g. Verifone E285). Its backend system is built with a comprehensive analytics dashboard.

Adyen offers:

• Shoppers pay in their language and currency anywhere in the world (DCC)
• All relevant payment methods are certified out-of-the-box
• Global support for POS payment methods such as Alipay, UnionPay and WeChat Pay

b) Ways to reduce the applicable fees (save some money)

In addition to low fee rates & lack of cross-border fees (applicable in Stripe and BrainTree), Adyen clients may reduce the transactional expenses by using ACH for large payments, pass the fees onto customers (do not forget about possible legal restrictions), and may bundle several small transactions into a bigger one.

Few more points: Adyen has a developed network of local payment partners and payment gateways. It allows companies to accept payments locally in new markets (which Adyen does not support officially). As a result, your customers avoid additional surcharges originated from their issuing banks.

Unfortunately, Adyen still operates mostly on the European markets, and some countries cannot exploit its potential and possibilities. For example, Adyen is not working in Russia (though can accept payments from the Russian market). It is sad in the sense that we cannot use Adyen for Russian merchants, so we have to say NO for now to “Adyen Россия”

3) BRAINTREE (USA) powered by PayPal (official site)

BrainTree is another popular payment gateway acquired by and now powered by PayPal (though there is PayPal as a separate payment solution). Businesses (i.e. domiciled) from 40 countries may use BrainTree (United States, Canada, Australia, Europe, Singapore, Hong Kong, Malaysia, and New Zealand). Being a high-quality product BrainTree does also have a sound interface (easy to use by founders), customer support, documentation, and API. Yet, Stripe leads with a number of features and additional add-ons, but do not take it as a decisive factor right away; maybe you would not need all of them, as a result, you might find BrainTree a fit-for-purpose payment system.

a) Braintree Pricing

Credit and debit cards

BrainTree has similar payment methods and fee rates to Stripe. In particular, it does not charge any setup or monthly fees. The basic pricing fee applicable to every transaction is 2.9% + 30¢ per successful card charge. The following cards and payment methods are accepted: Visa, Master Card, Discover, JCB, American Express, PayPal, China UnionPay, Apple Pay, Google Pay, plus Venmo (the US only).

For international cards – an additional 1% fee is applied. That is if your customer’s card is of another currency than your payout currency. BrainTree will charge you 1% for cross-border payment + 1% if currency exchange applies.

Payment methods for large transactions

Get paid with ACH direct debit, ACH credit, or wire transfers.

ACH Debits 0.75% per transaction · $5 cap. ACH is offered only to clients who:

• Are located in the United States
• Transact in the US in USD
• Are processing with Braintree Direct
• Are in good standing (i.e. not on a chargeback program)

Local payment methods

ACH (USA only), Bancontact, eps (Austria), Giropay (Germany), iDEAL (Netherlands), Sofort (Europe), MyBank (available to Italian customers), Przelewy24 (Poland), SEPA Direct Debit = for all methods fee is 2.9% + 30¢

Braintree pricing for projects with billing (recurring revenue):

Unlike Stripe, BrainTree offers billing solution for subscription-based businesses on a regular fee rate of 2.9% + 30¢ of every transaction.

Pricing for marketplaces (BrainTree for Marketplaces):

General information about the product may be found here. So it is supposed to be working the same way like Stripe Connect, as of now, BrainTree for Marketplaces is closed as a product for unforeseeable future maybe because there is an ongoing beta-testing process inside PayPal with their new product PayPal for marketplaces. I do not know for sure, of course, but it seems this way. I will update this section as there are any changes in place.

As their sales team suggest, “many marketplaces still use our Braintree Direct solution to accept 100% of funds for each transaction. Once they have received the funds in their business checking account, the business can then use a third-party solution to distribute the funds to sub-merchants. Some of these solutions are – Payoneer – Dwolla”. So, my suggestion is to look after this payment gateway’s sub-product and try for a bit as it goes live.

 

b) Braintree pricing fee discounts for businesses with volume

BrainTree reviews businesses for potential volume discounts once they’re consistently processing net $80,000 per month for at least 3-4 consecutive months. The reduction rate will be calculated based on the type of cards (and payment methods) the customers use on a site or platform.

c) Ways to reduce the applicable fees (save some money)

Again, as with Stripe, companies may reduce the transactional expenses on fees by using ACH for large payments, pass the fees onto customers (do not forget about possible legal restrictions), and may bundle several small transactions into a bigger one.

d) Some useful extensions (add-ons which might leverage its value in the sense of Braintree vs. Stripe)

Number 1: BrainTree Extend

This add-on allows a company to share the customer’s payment information with partners/third parties within and beyond the BrainTree network using secure BrainTree Vault. Simply speaking, you, as a site or platform owner, use BrainTree Vault as a secure place for keeping your customer’s credit card information, then you provide access to this Vault to third parties you work with. Such integration may significantly help certain types of businesses to increase revenue through:

• sell more on your partner’s sites/platforms;
• add loyalty, reward programs, other value-added services;
• connect to your platform third-party processors and aggregators;

Some examples:

• Skyscanner shares (through BrainTree Extend) payment information with airlines so customers can book a flight directly on Skyscanner’s platform without being redirected to the airline site;
• SlickDeals allows its customers to purchase products directly on their app and website, and thus not redirecting them to the deal-originator website. Using Braintree Extend, Slickdeals shares tokenized payment information with third-party merchants

Number 2: Payouts to local and international merchants through HyperWallet (solution for marketplaces)

BrainTree has a HyperWallet add-on which offers marketplaces to mass payout to their merchants in cir. 200 countries. It is very impressive and can significantly reduce the costs for marketplace companies. As we know already, BrainTree for Marketplaces is not working, so HyperWallet maybe used only in a bundle with Braintree Direct (for pay-in). What important is that HyperWallet is open, as a rule of thumb, only to businesses with the high (or expected high) volume of transactions monthly. So it is not the very gateway for payments online you look up to when you just start your business journey.

 

4) PayPal (USA) (official site)

One caveat before we proceed to details: I do not think that PayPal is a really top payment gateway for tech startups right now, but the very reason it is in this list – for startups in certain countries and territories PayPal might be a lifesaving gateway for payments online as customers around the world trust this brand. Thus, I think it just needs to be listed and compared. Additionally, quite often in such countries, there are national or regional players that outperform PayPal in terms of fees, development & integration possibilities (we will touch them shortly later).

The reasons why many other founders and I do not find PayPal to be the most convenient tool is a lack of relevant tools in the stack, tedious process of integration & development, as well as its manner to handle chargebacks & refunds, or long support reaction to dispute resolution. I am not saying it happens constantly, but it happens. For the sake of fairness, they try to make things better (some inside info), growing their team (support as well), so let’s see how it goes. I believe everyone is interested in PayPal success, meaning, that PayPal owns BrainTree, Venmo (payment system as well), and they have a large user base. So let’s just hope it will improve its gateway for payments online.

1. Paypal pricing (fees)

Fee rates vary a lot depending on the volume of processing transactions through PayPal. For example, for early projects with a volume of less than 5000 USD per month, the fee rate is 3.9% + 10c. The fee of 2.9% applies only to companies with a volume of more than cir. 25 000 USD per month. The fee rate might be reduced if the volume exceeds 50 000 USD per month and it remains in such a pace at least for three consecutive months. Plus additional fee of 1%-2% if it is a cross-border payment and (or) currency exchange takes place.

Pricing for projects with billing (recurring revenue):

The fee is the same as per the above-mentioned description. A customer must have a PayPal account to subscribe to the services provided by the company. How a subscription-based model works with PayPal, please, see here

Pricing for marketplaces & other platforms (PayPal for Partners):

Please, be advised, that PayPal for Partners is a relatively new product from PayPal and it is opened only to selective beta-testers. You need to contact a sales team in your country to inquire about the possibility.

PayPal for Partners is a payment system for marketplaces and other platforms (e.g. crowdfunding) which let their user (merchants) accept payments from customers. It is like Stripe Connect, BrainTree for Marketplaces, or Adyen. There is no information whatsoever as to the benefits of the product because just a few companies (beta-testers) use it. However, PayPal states that merchants will be able to accept payments in 25 currencies across the world (which is not so great in comparison with other players on the market, to be honest). Existing documentation on the product, please, see here

Pricing rates appear to be the same as the basic ones – from 2.9% to 3.9% + 10c per transaction (+1-2% if a currency exchange is needed)

That is it. There is nothing more I can add on PayPal; it is a well-known product which might be good for some startups, yet, usually, it is mainly used for traditional e-commerce stores or transfers within the system. It is surely not a cheap payment gateway as many believe at the beginning of their journey. And of course, we will follow the development of PayPal for Partners project.

5) Other complex payment gateways (including, national ones)

There are several other complex payment solutions on the market, and its number is constantly growing. It is especially true for some national countries or even regions, where the key players like Stripe, BrainTree are not supported yet. For example, CIS (Russia, Belarus, etc.), Africa, Asia, Latin America – each have cir. 3-5 strong players. We have analyzed about 15 leading payment systems from the said regions for our needs, but it is a complicated task to structure & edit all the info here (likely, it is not necessary). Thus below I would present only some excerpts. Hope, you will find it valuable as well.

a) 2Checkout (USA) (official site)

2Checkout has been present on the market since 2006, and it is a well-known payment gateway for sure. This is a multifunctional  solution which has different “fit-for-purpose” packages. It offers merchants a possibility to accept payment locally and internationally (200+ countries & territories) in 100 currencies; integrate with cir. 120+ Carts (Shopify, Wix, Ecwid, etc.); supports 29 Languages for checkout localization.

In particular:

1) “2Sell” for online services/stores.

2Sell Pricing: 3.5% + $0.35 per successful sale. Plus, as with other payment systems, you will be charged an additional 1-2% fee if you accept payments from shoppers outside your own country (applies not to all countries though).

For an additional fee, you can use such add-ons as “2Convert” (to increase a conversation rate), “2Bill” (to add a subscription model to the platform), “2Comply” (Tax and VAT compliance be handled).

As for the onboarding process, analytics possibilities, API docs – it is in place and well done on the part of the service.

2) “2Subscribe” for subscription-based projects. It has an “in-house” Revenue Recovery Tools which help owners to recover up to 20% in revenue per the Service statements.

2Subscribe pricing: 4.5% + $0.45 per successful sale. Plus, as with other payment systems, you will be charged additional 1-2% fee if you accept payments from shoppers outside your own country (applies not to all countries though, see a specific list on their site). For an additional fee, you can use such add-ons as “2Convert” (to increase a conversation rate), “2Comply” (Tax and VAT compliance be handled).

Overall: evidently, this is not a payment gateway for marketplaces or platforms with numerous merchants, but it is an option for SaaS/Software companies as well as for those which are sell-oriented (physical and digital goods). But it offers such add-ons as TAX and VAT compliance which is valuable because payment systems are everywhere, but high-quality compliance solution is not. It is the very reason, why Stripe right now is working over the same thing and wants to launch in the nearest future.

The fee rate is a bit lower than PayPal (for small volume projects) but higher than Stripe and others.

2Checkout competitive advantage is not in the fees, but in its access to companies in different countries + TAX & VAT compliance.

b) WePay (USA) powered by CHASE Bank (official site)

Actually, it is one of the best payment gateways aimed specifically for platforms and their merchants in the USA and Canada (existing clients FreshBooks, GoFundMe, etc.). Only US and Canada based users (merchants) may accept payments with WePay on the WePay supported platforms. Accordingly, only the US and Canada based platforms can use it. But of course, merchants can accept international customers/cards.

WePay does not usually offer some kind of basic package for platforms, but rather work with them on an individual basis to come up with the most convenient “bundle” of tools and infrastructure.

WePay is not limited to processing of online payments but also lets platform’s merchants to accept payment on POS (delivery sites, stores, etc).

WePay is proud of its anti-fraud infrastructure so much that it offers 100% coverage for payment-related risks. Meaning, that if a platform would be exposed to fraud losses, WePay reimburses the costs. So along with Stripe, Braintree, WePay is considered to be a decent payment gateway for US, given you have merchants and customers from/within the USA and thus you do not incur additional transactional costs (conversion, cross-border, etc.).

 

 

c) PayOnline (Russia & CIS) (official site)

PayOnline Pricing:

If you consider doing business in Russia (e.g., you find that adding a Russian-based payment system is reasonable for your payment flow and revenue, for example, you need to connect Russian merchants), then the following two payment gateways are the best choice.

PayOnline is on the market for a long time. Some features:

• It has English-speaking support; they also may create a checkout form for your project in English if needed. They can accept international payments as well.
• PayOnline can hold payments max up to 4 days (i.e., “auth and capture” functionality);
• API docs are in place, and support can provide English-version if needed;

Pricing: Fee rates depends on the volume of transactions per month. For example: If your volume is less than 10 000 USD → 2.9%, if it is cit. 200 000 USD → 2.5%, more than 600 000 USD → individual pricing.

d) CloudPayments (Russia & CIS) (official site)

I believe CloudPayments is currently the best payment gateway based in Russia. Some proof is that the leading Russian bank, Tinkoff Bank, bought equity in the company. If you do not know Tinkoff Bank, it is a very developed bank from IT perspective, and it is light years ahead of all competitors in Europe or likely the USA.

So as for the CloudPayments, it offers companies different solutions: accepting payments, recurring billing for subscription-based projects; it has a solution for marketplaces as well. Such fundamentals as clean and elaborate API docs, English speaking support, the interface for onboarding of merchants – are in place. Based on my extensive discussions with their sales team and some founders who use the gateway, I can say that CloudPayments can do everything one needs in terms of building a “fit-for-purpose” payment flow (to work with Russian/CIS merchants & customers).

CloudPayments Pricing: starting fee rate is 3.9%, but it goes down to 2,3% and sometimes even less, depending on your transactional volume.

One caveat here for all Russian-based payment gateways: in Russia, there is a law which requires for online businesses to have a so-called “online-cashier”, i.e. a physical terminal which processes payments and passes the information to the Russian tax authorities. Thus, if you, lets say, as an international startup see the necessity to use Russian payment gateway, you will have either a) apply for an online cashier for your platform (to work with Russian merchants and a payment gateway itself); or b) your Russian merchants get online-cashiers and you, as a platform, do not. It is a tough issue to decide upon. Thus you will definitely will have to think about it in due. Maybe, you will see no need to use Russian payment solutions and working with Russian merchants, and thus, excluding any hassle with online cashiers and compliance issues to it. But in this case, you will have to come up with a model as to how you are gonna payout to your Russian based merchants with as lowest transaction fees as possible. I will cover some options later down the road in Part II.

e) QVO (Latin America) (official site)

QVO is a complex payment gateway which can be used for traditional online retailing, subscription-based projects (recurring billing), and marketplaces. Though it is official site in Spanish, and there is no translation into English, the sales team can speak English, and if you consider working in LatAm with local merchants, QVO might be a good fit.

In particular, their pricing strategy is quite appealing:

guess you understand that, as usual, the bigger transaction volume you have, the lesser fee you are charged with.

f) allpago (Latin America) (official site)

AllPago is a leading payment gateway in Latin America and enables companies to create a payment flow they need whether it is SaaS, online retail or marketplaces. It allows merchants to accept payments made by international cards, local payments (e.g., Bolero), PayPal, and so on. See the full list of methods for each supporting country in the region.

The key disadvantage of AllPago is that it is open only for a platform with a transaction volume of more than 100 000 USD per month as they “incur sizable costs to develop integration with a merchant and for this reason we currently work with merchants” (c).

g) PayU (Latin America) (official site)

It is a branch of the international payment gateway PayU but with a focus on Latin America. It also supports different business models. Good API docs, lets merchants to hold payments for max. 5 days before the disbursement; can support merchants-non-residents but in this case, the platform needs to provide to PayU additional documents on behalf of non-resident-merchants (plus different pricing conditions as a currency exchange issue pops up).

Pricing: Fee rates depend on the volume of transactions per month. For example: If your volume is less than 10 000 USD → 3.5%, if it is cit. 200 000 USD → 2.5%, more than 600 000 USD → individual pricing.

Section 2. Specialized payment gateways

1) TRANSFER WISE (USA), official site

TransferWise is an online payment gateway (quasi-online bank) that allows customers (person/business) to send & receive international bank transfers easier, cheaper, and faster up to 8x than traditional banks. This statement is supported by an independent study TransferWise ordered to a renowned research company, see the results below:

Paypal vs. TransferWise: TransferWise is 14x cheaper to send & receive funds than PayPal:

So how does TransferWise work?

You (as a company in our case) register with TransferWise and open a borderless account in one or several currencies TransferWise supports (US, UK, Euro, Australia, New Zealand). Then you transfer money from your local bank to your borderless account →you can hold money in one or several currencies → if you need to send money to a foreign bank account (e.g. your contractor or employee), TransferWise exchanges (using real market exchange rate) your settled currency into the one of the receiving party → you send money to the receiving party’s traditional bank account for minimum fees and currency exchange rates as described earlier.

More about TransferWise pricing here You can calculate how much will it cost you to send a particular amount of money to the international bank account and compare it with your local bank’s wire transfer fees.

More specifics on the process for a startup:

For an American registered business you can use us to receive bank payments in USD, EUR, GBP, AUD and NZD and pay out to over 40 currencies (please see the full list here ).

They also only offer bank to bank payments and do not provide clients with a payment gateway to receive card payments. But, Important!: TransferWise can accept payments from Stripe now. SO, for example, you can set up a Stripe checkout for receiving payments and then your customer’s money will flow directly into your borderless account with TransferWise (of course, if you need this scheme).

Be also advised, that for some countries, TransferWise does help you to make bank transfers only to a personal bank account (like Russia), but not to business accounts. So, for example, if I, as a platform, want to use TransferWise to send money to local Russian merchants (company) → I would not be able to do this. Thus, contact TransferWise for more details on your particular situation. Their support and sales team are very responsive.

You may send USD out globally, and the recipients (merchants) do not have to own a TransferWise account – they can just provide their banking details to you.

However, it’s important to note that you must send out the same currency as the recipient’s bank account is denominated in. When it comes to sending out USD, then we do have some limitations as well – namely, it’s possible to send USD to bank accounts inside the US and the following countries: see here. Note that if the recipient receives USD outside of the US, then it will be a SWIFT payment with some intermediary bank fees.

Important: TransferWise does not open you a business account for your startup if you, founders, have HQ for business decisions (are located in) countries beyond TransferWise supporting range. For example, if you have a C-Corp in the USA and would like to open an account in the service, but you, founders, live, e.g. in Kyiv (Ukraine), Moscow (Russia) or other – TransferWise will not open you an account. Because for them the HQ is not the place of your company’s incorporation – but the place where founders reside.

To recap: the balance you hold with TransferWise is quite similar to a regular bank account, to where you can receive funds and from which you can also send them out. The only difference is that it’s a multi-currency one, allowing you to convert between different currencies, there are some limitations from where you can receive funds (see here).

2) DWOLLA (USA), official site

Dwolla is a payment gateway which works exclusively with and within the ACH Network in the USA. Dwolla allows companies to pay, collect, facilitate payments made through ACH. This payment gateway is used by US-based companies to work with customers and merchants from the USA. It is a valuable tool if you want to save significant money on transaction fees (e.g., accepting large payments from customers OR on a payout to your merchants).

You can use Dwolla to send payments to your users (merchants), receive payments from your users (customers). It has a great dashboard with all necessary analytics on transactions made making it easy to oversee the financial activity of your platform. Dwolla integrates with Plaid as well (read next).

Important: Mass payments are supported as well. Example: GOAT (sneakers marketplace) uses Dwolla to make automated mass payouts to its merchants from the USA. Dwolla supports Same Day ACH payment which is allows to make and receive an ACH payment the same day. But it has a higher fee for every transaction.

Pricing: Start (Beta) package

For businesses wanting a pay as you go: API integration; 0.5% per transaction (Minimum $0.05, Maximum $5.00); $0 per month (no setup or monthly fees).

I will examine Dwolla from the practical standpoint more in Part II.

3) PLAID (USA), official site

Plaid is a very specified payment gateway and provides the technical infrastructure to companies to work with ACH transfers within the USA and Canada only. However, if it is your case and you plan to work on those markets (with USA/Canada merchants & customers) AND if a mean price of the item (physical/service) you, as a site or platform, offer to customers is relatively high – then Plaid might be a valuable tool.

How it works: Let’s imagine, your startup is a marketplace for used motorcycles aimed at motorcycles fans with an avg. Price around 5 000 USD per item let’s say your platform charge a commission fee of 8% off every transaction made on the platform. If you decide to use a traditional payment gateway with 2.9% processing fee, it is kind of gross to lose more than 200 USD on transactional fees only, leaving you with 5% of revenue. Sometimes there would be a return of the purchase by the customer – you, as a platform, would not be able to retrieve a transaction fee from the payment gateway, because it is not a chargeback. I guess you get the point.

Yes, you can say that some platforms like Stripe and BrainTree let companies integrate ACH Direct Debit as a payment method for customers. I agree. But as you know, for a usual ACH payment to go through, a customer will have to confirm his/her bank account (like getting 0.54 USD to the account and make a verification), and the whole process takes 2-4 business days. And it is only for confirmation. Now, will there be customers who decide to give up the cart/purchase after 2-4 days? Of course, there would be some. I do not know precise numbers as it varies from market to market. Another thing, will there be customers who decide to use a credit card payment method instead of Direct Debit to buy a motorcycle (given that a customer does not know about transaction fees a platform is obliged to deal with)? I am quite sure; there would be some too.

Here Plaid comes. It allows platforms (sites) to integrate an ACH payment method, and Plaid’s Auth product instantly authenticates bank accounts for ACH payments using online banking credentials. This eliminates the need for entering account/routing numbers or deal with micro-deposits. Accordingly, customers may make a payment with ACH straight away, and a transfer is processed usually the same or the next day. It is similar to a certain extent with Dwolla tool “Same Day ACH” (for which you will have to pay a higher fee)

Plaid works with any payment processor you choose, however, we also have tokenized integrations with Stripe and Dwolla.

On the example with Stripe, you would be creating a Stripe bank token for your customers when they log into Plaid Link, and you make an Auth call for that specific account. When you are ready to initiate a payment for that customer, you can send that bank token to Stripe, and they will execute the payment. You can do this for one time or recurring payments. You wouldn’t need that customer to go through the Stripe payment flow if they linked with Plaid to pay with ACH, because you are exchanging the tokens on the back end to execute the payment.

Pricing:

4) CURRENCY CLOUD (USA) official site

What is CurrencyCloud about?

Currencycloud is a global payments platform built on smart technology that takes the complexity out of moving money. Developers use our API building blocks to build customized payment solutions. Whether you want to embed our payments infrastructure into your products or services or build on top of it, we’ll fit into your business in a way that works for you. We take care of all the intricacies and regulatory hurdles involved with cross-border payments, giving you the tools to globalize your business (c)

So, first of all, CurrencyCloud (as a competitor to a certain extent of TransferWise) provides you with virtual bank accounts (EU & USA). You can use these accounts both for collecting customers’ payments and for making payouts to customers or merchants. You can use CurrencyCloud with Stripe or any other payment acquirer if needed (usually you need). But what differs CC from TransferWise is that TransferWise works with Stripe only, CC can work with any payment acquirer, and can provide you with a “white label” payment method.

Evidently, CC is not the best fit for recurring billing (SaaS projects) through with some sort of creativity, I guess, it is possible to adjust the tools for subscription-based companies as well. It fits the most the platforms, online-retailers with high avg. price of the item.

All clients of CurrencyCloud work within the interface of the CurrencyCloud Direct for making transactions.

Make payments:

• Schedule payments with confidence to over 200 countries via international wires, local bank transfers or ACH
• Access to 35+ currencies means we’ve got you covered in all major markets
• Choose your speed: standard or priority, for online payments delivered in less than 2 days
• Moreover, No SWIFT deductions – invoices paid in full without SWIFT charges.
• MASS Payouts (schedules if needed)

 

 

Collect payments:

As I mentioned, CC can integrate with acquirers and payment gateways like Stripe. They do not literally integrate, but rather instruct an acquirer to sweep funds to your Currencycloud account. Usually, you need an interface (acquirer like Stripe) to work with payments from customers.

Depending on the number of merchants you have on the platform and their jurisdictions, Currencycloud could accept payments directly from consumers in certain jurisdictions. So this could be an option alongside another payment gateway and could be branded as, e.g., “Nuriev Pay” or something along those lines. CurrencyCloud works with a great number of jurisdictions and currency pairs, but not with all of them of course. Thus, for certain countries (meaning for accepting payments from certain countries), you will likely need another payment gateway.

CurrencyCloud does not process credit cards, only bank-to-bank transfers.

It’s not as consumer-friendly payment gateway as Stripe or another payment solution but can eliminate high fees. CC essentially produces a virtual bank account number and can display that on your website so that customers can execute an online bank payment to that bank account. CC can either have a sub-account for each of your merchants or one account for the marketplace as a whole. Some advantages of this – they pass along sender information via APIs for easy reconciling, FX conversion is very competitive when needed, merchants are protected from revealing their operational banking details through CC virtual accounts, they can accept local bank payments from USA/ACH, Euro/SEPA, UK/faster payments, and SWIFT in 35 currencies.

This option is only available for merchants in USA, Canada, EU, UK, and several other select jurisdictions.

Important: I am fascinated by CurrencyCloud as a service for its possibilities. But the very disadvantage it has I have stumbled upon is the Pricing Policy which, in my opinion, is unbearable for early-stage startups.

In particular,

“Currencycloud charges between $0.40-$4.50 for all local payments. SWIFT payments range from $7-40 depending on the destination country. The platform comes for a monthly fee that ranges from $2500 – $25000 per month. The initial set-up charge ranges from $5000 – $25000 one-time. Currencycloud does not write checks. There may be an additional spread on currency conversions” (c). As you see, it is just bloodydamn expensive.

5) Tipalti (USA), official site

Tipalti is a really good product on the “pay-out field” which will help you significantly reduce transaction costs.

• The global payments system executes payments to 190 countries in 120 local currencies
• Six international payment methods – US ACH, global ACH (eCheck), wire transfer, PayPal, paper check, and prepaid debit card
• Automatically validates supplier data in real-time using 26,000 global banking rules to eliminate payment errors.
• No phones, emails, or faxes by your finance staff
• Flexible and secure mass payments backed by our money transmitter licenses

It allows also to onboard suppliers efficiently by collecting their payment and tax details, electronic invoice capture, integrates with all popular bookkeeping tools (QuickBox, NetSuite, etc.).

As for Pricing Policy, there are two types of cooperation with companies:

• Tipalti Express
  • Implementation: $0
  • Monthly Software Fee: $29

• Tipalti Standard (Pro)
  • Implementation Meeting: $3000
  • Monthly Software Fee: $450

The Pro version has more possibilities and can offer more flexible implementation (API and etc.). In particular, with the Pro version, you can have several currency accounts within the Tipalti system (e.g. EUR account, USD account, etc.) so as to reduce conversion fees. Given the wide array of possibilities it offers to customers (please, see their site for more details), I consider this to be a sound option for marketplaces, platforms, ad networks and other businesses with a massive pay-out in its core.

6) Payoneer (USA),official site

Payoneer is another payment gateway that is being promoted as a solution for international business. In the past, I knew it mostly as a product for Amazon sellers residing beyond the USA to get paid by Amazon. But since then it evolved significantly and now has a so-called Entreprise 360 product for platforms, which have similar features as TransferWise & CurrencyCloud. Among clients Fiverr, HomeAway, Airbnb.

As a company, you get a Payoneer account, which might be used both for collecting payments (from other Payoneer accounts within the network) or payout / mass payout (also to other Payoneer accounts). The key benefit of Payoneer is reduced commission fees in comparison with banks and complex payment solutions like Stripe, and coverage of many countries and currencies.

Moreover, Payoneer can work with many payments processors so as you can get payments from customers to your Mass Payout account and then distribute among the merchants.

Practical application: let’s say you have a platform with numerous vendors/merchants. To reduce transaction fees, you can request every merchant to sign up to Payoneer and get an account. Then, as you need to disburse money to merchants, you use the Mass Payout option within Payoneer and send it out with few clicks. Whereas if your account in USD, and your merchants, for example, in Sweden Krona, Payoneer would exchange currencies and put Krona on the merchant’s account. The currency exchange rate would be a bit higher than the real midmarket one. Afterward, merchants can easily withdraw money to their local bank account or Payoneer Prepaid MasterCard.

The Collect (payments) feature works similarly. That is you integrate Payoneer API with your checkout form → offer your users to sign up to their Payoneer account → once they logged in, they pay with Payoneer account → money goes to your (platforms) account without fees at all.

Thus, it is not a surprise that some platforms use Payoneer when they have a broad range of merchants from all around the world. They just require each merchant to get an account with Payoneer and get their revenue from the platform to it.

Another cool benefit of Payoneer is that they handle Tax compliance for you and your merchants. In particular, Payoneer eliminates the burden of collecting documents from payees on your behalf, self-service form completion reduces errors and increases payee cooperation, automated process with APIs and IPCNs.

One caveat: Sales team noted that Payoneer (Enterprise 360) was open to businesses with cir. 40,000 USD per month in transaction volume.

PART II. Which payment gateway is the best fit for your startup?

As you noticed, there are numerous payment gateways on the market, and usually, it is a complicated task to pick the right one for your needs. I have covered some practical implementations in the previous sections; plus, I am sure, you are all smart enough to make your mind based on what you have read to the moment. Thus, I will give some basic examples as to what you can do for your startup to build a nice payment flow.

For marketplaces & platforms:

The decision depends much on different factors: 1) what is your company’s place of incorporation; 2) your merchant’s place of registration; 3) average price of the item (single product or service) on the platform; 4) total transaction volume; 5) mass payout needs, etc.

1. Obviously, if you are in a growth stage and can afford Adyen – it is a no-brainer for me. Lowest fee rates, numerous development, and analytical capabilities. It might be a problem only if you are located in a non-supported country.

2) If you are a local company/platform and your country is not supported by big players/ OR see no need so far to expand to international markets → you are advised to seek local payment gateway, they might be even more efficient in terms of fee rates and applicability. QVO (LatAm) is a good example, IMHO. It relates much to LatAm, Asia, and CIS region companies. All of them can accept international payments (so no need to worry about international customers). Their problem, usually, they cannot work with international merchants and support only local companies.

3) If your avg. Product price on the platform is relatively low and you see no real problem with transaction expenses → such players as Stripe, Braintree, some local payment solutions are likely the best choice. They have everything in place from checkout and processing payments to payouts and analytics. In Stripe, for example, you can even bundle many small transactions in one to reduce the fees.

4) If your transaction volume is good enough (it means that you a) have many small transactions; b) have not many but they are big ones; c) both) yet not good enough to meet Adyen threshold, → you should reach out Stripe, BrainTree and see if there is a discount in applicable fee rate to your situation. Likely, there would be a nice discount → your unit-economic might perform better.

5) If you have many merchants from the USA with relatively high avg. price of the product → such payment gateway as TransferWise, Dwolla or CurrencyCloud may be a good option as they help you to significantly reduce the costs on payouts. If you have also customers mostly from the USA with a high avg. price of the product, please, take a look at Plaid as an add-on to receive fast ACH payments from customers.

6) If you have many merchants from around the world and with relatively high avg. Price of the product – TransferWise, CurrencyCloud or Payoneer seems to be a good fit. Just be reminded about Payoneer threshold of 40 k USD per month to enjoy the product.

7) Be advised, that all these solutions aimed at reducing costs on payouts like TransferWise, Payoneer, CurrencyCloud can be integrated with Stripe or some other payment acquirers. It is important because this way you can provide to customers great user experience with making a payment, yet having your funds being swept to your mass payout (borderless) account.

Why do I talk here so much on these payouts features of the abovementioned solutions? Because they really help to reduce the costs, guys.

Practical example: let’s say you are a used-sneakers marketplace with an avg. Price of 500 USD per item. You have a few thousands of sellers/merchants, whom you have to pay out upon the completion of a successful purchase. If you use Stripe as a payment system both for accepting payments and payouts, you will face the following fees:

-from 2.9% + 0.30c to cir. 2.0% + 0.30c off every payment from the customer;

– In case you as a platform use Custom or Express Stripe accounts for merchants (starting at 0.25% of account volume, per-account fee).

– $2 per active account per month. An account is considered ‘active’ during any month it processes at least one payout

– $0.25 per payout. Many platforms choose weekly or monthly payouts instead of daily payouts to save on fees

You see, the math is kinda the following: Let’s say you have 500 active merchant accounts, i.e., 1000 USD per month for sustaining active merchants. Let’s say you have 500 payouts in 2 weeks, i.e., 1000 payouts per month, i.e.–> 250 USD per month. Plus, 0.25% of account volume per account fee. That is total 1250 USD + 0.25% of account volume for payouts + 2.9% + 0.30c for accepting payments.

My calculations might be wrong, I take full responsibility. Overall, It might be peanuts if you have good transactional volume and you can easily disregard this 1250 USD + 0.25% of account volume at all and just enjoy Stripe as there are many things to enjoy in it.

And now, take Dwolla or CurrencyCloud – low fees off every payout only, no additional fees for every account, or account volume. It is likely; you will see more cost-efficiency in using, for example, Stripe for accepting payments and Dwolla/CurrencyCloud/TransferWise for payouts with 500+ avg. price tag.

Please, do not consider my analysis here as discouraging from using Stripe (or analogs like BrainTree). As I said at the beginning and put Stripe in the first place, it is a great product and a payment solution. All I am saying is that you MUST evaluate your particular situation from a transactional standpoint and adjust your decision accordingly.

What I am saying is that in certain cases Stripe/BrainTree pricing model is not the best on the market for high priced items, for example, in comparison to Adyen. But likely the best for relatively small price tags. Again, just make your choice based on your situation. Nevertheless, imho, these are the best complex payment solutions on the market right now. That is why highly likely we will use one of these acquirers (Stripe, Adyen, or BrainTree) as an acquirer for our needs.

I have come up only with few variations; there might be more “bundles”, as YOU CAN USE different payment solutions simultaneously if there is a need! Specifically, you can join local payment gateways for particular needs alongside with international payment systems.

For online retailing & services (not platforms):

Here you do not need to think much about payouts/mass payouts, because the only party that receives payments from customers is you. Thus, the point is to choose the payment gateway with which you can save some transaction fees for processing payments OR whose services/product quality will pay off the fees they remit.

And payment gateways under consideration are the same. Either you go with big players like Stripe, BrainTree, PayPal & 2Checkout (for a bigger variety of supported countries) or you choose a local payment solution (-s) if applicable. Or you can use different payment solutions simultaneously.

Additionally, do not forget that integrations with Plaid, Dwolla, Stripe & BrainTree ACH Direct Debit may help you to accept large payments in ACH or other bank transfers.

For subscription-based services: Everything is a way easier here. If your company is allowed to use Stripe, see no further. It is 0.4% fee for recurring billing + first 1 million free of charge. In comparison, Braintree & PayPal charges the standard 2.9% per transaction.

You can take a closer look to 2Checkout here whose pricing is a bit steep 4.5%, but they provide you with TAX and VAT compliance. It makes life more enjoyable, for sure. If you think TAX and VAT are not no important, look at Stripe, whose team is working over this issue as well.

If your company is not supported by the said companies, you are recommended to seek local payment systems which might provide competitive services.

A personal remark in conclusion:

1. It took about a month to prepare this guide (and 2-3 months to retrieve & research all data). There were certain moments I could mess up a bit with data. I also know that there is a number of syntax mistakes as I did not proofread the guide too carefully. I just wanted to publish this paper in time. That being said, all mistakes are mine. If you noticed any – please contact me in comments or directly, I would appreciate that. Also if you have your own experience with any of the payment gateways presented – and would like to add some points to the analysis – you are wholeheartedly welcome. I will be delighted to see them and correct the paper accordingly.

I hope the information and suggestions I provided in this article will help you to save much time and money both in terms of researching the best payment gateway (-s) and reducing your transaction fees 🙂

2) After my previous step-by-step guide on the incorporation of the company in the USA, I received much positive feedback from you, guys (e-mails, direct messages in FB, LinkedIn, etc., more than 100+ in total). Flattering. I hope this guide will be as good as the previous one, as I did my best to synthesize and review all the information I had collected on the topic through my research, personal experience in past projects, discussions with founders & sales teams.

Some of you kindly offered me e-gift cards on Amazon or PayPal donations after the previous article. Thank you for that. It means a lot, given that it is a fresh blog.

To ease the communication – you can reach me out at “hello@aynuriev.com”. Do not hesitate to use it if you need help.

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