Payment processing options for Australian startups - 2013 Edition

Not that long ago, startups and hobby businesses had very few options for accepting online payments here in Australia. We could sign up with a merchant facility with a bank (with minimum fees over $100/month) and then pay to use eWay or similar gateways (again, for a few hundred bucks a year), or we could use PayPal.

As services such as Stripe launched in the US, us Aussies felt a bit left out. Our tightly regulated banking industry didn't seem welcoming to new players, or so it seemed.

Throughout 2013, a number of new players have become available in Australia.

Since launching WhisperGifts we've begrudgingly accepted PayPal payments. Although PayPal is pretty ubiquitous, the user experience leaves a lot to be desired - sending your ready-to-buy customers to an external website for payment looks amateurish, regardless of how much custom design that external party lets you do.

The three key players as of today are Braintree, Pin Payments, and Stripe. Having tried each of them for WhisperGifts, I'm ready to write up my thoughts and recommendations.

Common Features

As far as I'm concerned, all three services cost pretty much the same. All have no monthly fee, a 30c per transaction base fee, and a small percentage per transaction (ranging from 2.4% for Braintree to 3% for Pin). I do pretty low transaction turnover, so at this stage I'd rather pay a slightly higher per-transaction fee than a monthly fee.

All provide Javascript-based payment processing libraries, allowing you to put a form on your own website that POSTs encrypted credit card details to your server for processing. None of them require a customer redirect for payment.

Lastly, all three have similar functions for storing credit cards for future or recurring use. Braintree and Stripe have explicit recurring billing functionality built in (ie they handle the recurring billing themselves), and Pin Payments has a relationship with Spreedly to manage this, albeit at extra cost. If you do your recurring billing yourself against a pre-saved customer token, all three are sufficient.

Braintree

Braintree Payments are an American company, who launched in Australia in late 2012. The service is solid, having had a few years to mature in the US market, although their initial Australian offering had a minimum monthly fee of $50. These days, there's no monthly fees.

Their web console is also quite useful, although after getting started with them I had a major gripe: The underlying banking relationships are just too messy. It sometimes feels like Braintree are an old-style bells-and-whistles gateway, who have cut fees to appeal to startups and small businesses.

When you sign up for Braintree in Australia, you're actually opening a merchant facility with the National Australia Bank. This isn't made clear during the initial process, however it's abundantly obvious when you come across any issues: My first settlement from Braintree took over a month to arrive, due to the NAB refusing to pay proceeds to my personal bank account (I run as a sole trader; my legal entity name doesn't match my trading name. This is normal.)

This led to a long process of opening a new business bank account in my trading name, simply to get paid by Braintree. But it wasn't pretty - after I started interacting directly with the NAB, I began to be charged all sorts of fees that Braintree must normally abstract / negotiate away. Every interaction with the NAB seemed to cause a regression, and the NAB business bankers really don't understand the relationship with Braintree.

Not all of this is directly Braintree's fault, of course - but it still soured my experience. Regardless, this banking relationship has it's benefits: Braintree do settlements within a couple of days.

Braintree is now owned by PayPal, however the public messaging is that they'll remain as-is for now. Support times were somewhat slow, as it appeared to be done out of the United States (despite an Australian office). This meant multi-day to-and-fro email conversations to get issues resolved.

Pin Payments

The first Australian payment provider (that I know of!) to launch was Pin Payments, who hit the scene with a public beta in early 2013. I joined up pretty quickly, as their beta participants received a no-monthly-fee account. After their public launch, the fee jumped to $30 however there is again, as of October 2013, no monthly fee.

Transaction fees are pretty normal, at $0.30 + 3%. Some foreign payments attract conversion fees, which you should be aware of.

Pin's API is fantastic, as is their web console. I released an open-source Pin Payments library for Django which is easy to use.

The relationships with banks are abstracted away to become almost invisible, however the signup process asks questions typical of a merchant facility. This suggests to me that they're doing a lot of work under the covers to hide that bank relationship, which is fine by me.

There's two things, however, that I don't like about Pin at the moment.

Firstly, your payment form must collect the full address of your customers, rather than just their credit card details. As I'm selling an online service, I don't need these details for any other purpose and would rather not collect them. I can appreciate the fraud management use of this data, however if I can get away with keeping it off my signup form then I'd prefer to do so.

The second irritation is that Pin will email your customer a payment receipt. This means that you must share your customer contact details with Pin, and the customer begins to see the plumbing of your payment system as the Pin email includes their logo and contact details. When I contacted Pin about this, they mentioned that there might be an option to disable it in the future if you agree to email a receipt yourself - although this is still in the pipeline.

Settlements take seven days, which might be an issue if you rely on the cashflow - however they don't hold any balance other than this. Support was fantastic, with quick responses. This is the joy of having a vendor in your own timezone!

Update January 2014: Chris from Pin Payments was nice enough to reach out to me after this blog post to address my points above. With his permission, here's the meaty bit of of his email:

Pin Payments are able to switch off the e-mail receipt sent to customers, and set the billing address fields to be optional. At the moment you just need to e-mail the team at support@pin.net.au

Something else that's worth noting when comparing is the multi-currency support we provide. Currently you can bill in 6 currencies. This is seriously powerful for Australian companies looking to go global, or even being able to tap adjacent markets like NZ.

Changing the e-mail receipt and billing address were a big deal for me, so I'm likely to switch back to this Australian-based provider. Now, back to the original post! End update

Stripe

Stripe were the first company since PayPal that I remember seeing turn the payments industry upside down. For a long time, foreigners looked at websites using Stripe with awe, thinking "If only we could do that!".

In August 2013, Stripe launched in Australia. They're still in Beta, but it's easy to apply.

In my opinion, Stripe is the benchmark in simple payment processing and it's clear that Pin have somewhat modelled themselves on Stripe. I can't blame them.

The signup process is incredibly simple, and there's no multi-day account setup or validation (you do, however, have to provide copies of your drivers licence or passport to meet Australian banking laws). There are many, many third party libraries for Stripe - they are very well supported. The only fields you are required to have on your site are the credit card number, expiry, and verification code - no address or e-mail address.

Like Pin, payments are settled after 7 days.

I haven't yet needed to contact Stripe support, however I wouldn't be surprised if I saw similar wait times to Braintree.

Final Thoughts and Recommendations

Since none of these services have signup or monthly fees, I'd highly suggest signing up for yourself to try them out. The barrier to integration is pretty low (especially compared to PayPal) and all have mature APIs and third party libraries.

For my use, I'm currently sticking with Stripe. It ticks all the boxes for me, is easy to use, and doesn't have any quirks that impact me. If Pin end up simplifying requirements for payment forms to only collect payment card info, and stop sending my customers an email, I'd prefer to use them due to their being Australian owned and operated - something I have major respect for.

The online payments industry in Australia is currently undergoing quite a bit of a transition. In less than a year we've seen two major foreign players launch locally, and have seen a home-grown company get off the ground with quite a bit of success. The next year or two are going to be really exciting, as it finally seems that we can launch a small startup in Australia without the long and expensive process of applying to accept credit cards. I'll drink to that.


Thanks for reading.

I'd love to hear your feedback and comments. E-mail me, ross@rossp.org, or get in touch on Twitter where I'm @RossPoulton. Chat soon!