Payment Gateway for micro-transactions

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vyfster

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# 210525 31-Mar-2017 14:36

Afternoon

I'm looking for recommendations for Credit Card Payment Gateways (or alternatives) for micro-transactions. It would appear that the current providers (in NZ) are not well suited to use for micro-transactions, as the cost per transaction is prohibitive and ends up at around 40% for a $1 transaction.

Breakdown - (this could change on a higher volume of transactions)

Payment Gateway: 30 cents per transaction.

Bank: 2.5% - 6% of the value of the transaction.

I'm not really sure if there are other fees with the PG but I would assume a monthly charge?

So, it would appear that best case, I would end up with ~64 cents in the dollar (but am expecting other hidden costs, so this would make it less).

Anyone have any recommendations for low value, high volume (hopefully) credit card payments?

Thanks.

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BDFL - Memuneh
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# 1751322 31-Mar-2017 19:37

Hmmm. @nate?

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nate

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# 1751324 31-Mar-2017 19:42

Tricky. I think you'll just have to pay the higher fees until you have proven volume, and then can negotiate with the payment gateways/banks.

vyfster

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# 1751334 31-Mar-2017 20:06

I did find that one can use PayPal for micropayments - https://www.paypal.com/us/webapps/mpp/merchant-fees#micropayment-fees?locale.x=en_US. The cost is 6.5% of the value of the transaction and a fixed fee of 0.08NZD. However, my concern with this is the user experience. It seems that the payee needs a positive balance on their PayPal account. If insufficient funds in their account then they would need to top-up their account with a minimum amount. Will need to experiment with this to see how it would work IRL.

I suppose one could get clever and only use PayPal for amounts below a certain threshold and a "normal" Payment Gateway for all other transactions.

So still looking for other options if there are any, but for now looks like PayPal it is.

As a side whinge - I think it crazy that any business would feel that they are entitled to any portion / percentage of the value of the transaction. The cost to process a transaction is fixed and remains the same for the various middle men, regardless of the dollar value of the transaction. Thieving crooks!

richms

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# 1751362 31-Mar-2017 21:30

One person supports this post

they are taking on the risk of the transaction in some ways as well, so therefore a percentage is valid.

Richard rich.ms

vyfster

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# 1751367 31-Mar-2017 21:41

richms:

they are taking on the risk of the transaction in some ways as well, so therefore a percentage is valid.

I disagree. Payment Gateways carry zero risk and the merchant carries most of the risk. If the transaction is reversed for whatever reason, the merchant doesn't necessarily get their goods back. Same with fraud - which might be covered by the banks or the major credit card companies, not sure - but the merchant doesn't get anything back - AFAIK.

PaulBags

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# 1751427 1-Apr-2017 07:58

I'm suprised banks take a percentage, but Paypal taking a percentage is to your advantage if your only alternative is 30c+ per transaction. Even just the fixed cost component 30c is a higher rate than 6.5% until after $4.61. So, Paypal are hardly theiving crooks.

eftpos

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# 1752530 1-Apr-2017 10:43

With Paypal and some of the other "Payment Gateways" they essentially acquire transactions on behalf of a Sponsor Bank, reffered to as 3rd Party Processing or Aggregation. Without getting into the nitty gritty it isn't something widely available from NZ Providers (however I believe eWay has a product where no Merchant Facility is required from the Bank and they manage and package up the Fees).

We have actually been working on trying to do the same thing however the NZ Banks are extremely risk-averse. The failure of some smaller Aggregators in the past (eg. SwipeHQ) have only helped to cement the Banks position on Aggregation. Essentially the Aggregator assumes Risk (notwithstanding that the "Sponsor Bank" is the one that is ultimately on the hook to the Schemes in case of fraud and failure of the Aggregator) and is required to manage AML, Credit Checks and all the requirements the Bank would do for a merchant that approached them directly.

Far more popular in Europe and the USA based on the sheer size of the Acquring Base. NZ on the other hand is still a small (but growing) market for these type of payment-methods but the required levels of capital and surety you need to put up to the Sponsor Bank (as well as Visa, Mastercard etc.) makes it a very expensive and risky venture to get off the ground.

To the OP I would say take a look at https://eway.io/nz/plans-pricing which I believe are their pricing plans which may not require a separate Bank Merchant Facility.

vyfster

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# 1752587 1-Apr-2017 12:11

PaulBags: I'm suprised banks take a percentage, but Paypal taking a percentage is to your advantage if your only alternative is 30c+ per transaction. Even just the fixed cost component 30c is a higher rate than 6.5% until after $4.61. So, Paypal are hardly theiving crooks.

My whinge wasn't directed at any specific business. Most payment gateways, from I have seen take a percentage of the value of the transaction and then the bank take theirs too. So why should a transaction with a value of $1000 cost more to process than a $10 transaction? That is daylight robbery IMHO!

vyfster

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# 1752588 1-Apr-2017 12:12

eftpos:

To the OP I would say take a look at https://eway.io/nz/plans-pricing which I believe are their pricing plans which may not require a separate Bank Merchant Facility.

Thanks @eftpos. I'll have a look at eway. Certainly looks promising!

mattrix

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# 1757494 6-Apr-2017 13:10

We use Swipe HQ.

2.75% only (no fixed fee)

No monthly cost

$99+ setup fee.

There main problem is reliability.
We have an automatic switch to Paypal if their API goes down so we don't miss payments.

Since the new owners, they do seem to a be a lot better.
Avoid the readers etc, just get the "Online" only version.

vyfster

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# 1757564 6-Apr-2017 14:08

Thanks @mattrix. I'll have a look at them, however, poor reliability would be a deal breaker for me. How often are their services offline / unavailable?

mattrix

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# 1757571 6-Apr-2017 14:20

Looking through our payments, we only had 2x for all 2017 so far that have gone via Paypal.

(And they were both within 10 mins of each other)

Let's assume the downtime was an hour long.

That's 1 / 2300 hours so far this year = 0.04%

There could have been other down times but no payment tried to be made.

We are quite small but usually have at least have 1x payment per main hours (6am to midnight).

It's always a good idea to have redundancy with any provider anyway.
Could have Swipe and then Eway as a fallback.

As long as there are no monthly fees - your usage won't matter.

MichaelNZ

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# 1768936 22-Apr-2017 15:06

mattrix:

Since the new owners, they do seem to a be a lot better.
Avoid the readers etc, just get the "Online" only version.

You're kidding, right?

My business was a Swipe client at the time they went bust and after a couple of months under the new ownership, we deserted them and went with the Bank of New Zealand.

Oh dear. That was over a year ago and still -

"Currently New application are on hold, we will contact you as soon as we are able to process your application."

https://signups.swipehq.com/checkout/signup.php?plan=online

I have no idea why Cybercom bought SwipeHQ. It was a dud then and I have seen nothing since to change my mind.

Integrity Tech Solutions @ Norsewood, New Zealand

mattrix

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# 1769702 24-Apr-2017 12:45

Didn't notice they are not taking on new applications.

We have found them a lot better since the buy-out.
Better / faster communication about suspect transaactions etc.
Better up-time.

We do only use the online portal though - not the nightmare readers.

Does BNZ have any fixed cost per transaction? eg. 30cents
Or is it just % based? Or both?

If there is any fixed price per transaction, then it won't be suitable for micro transactions.

MichaelNZ

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# 1769705 24-Apr-2017 12:53

mattrix:

Does BNZ have any fixed cost per transaction? eg. 30cents
Or is it just % based? Or both?

If there is any fixed price per transaction, then it won't be suitable for micro transactions.

BNZ offers 2 types of merchant facility - NZ$ and multi currency. My business has the multi currency version. They only charge the percentage fee (usually with a minimum charge of $20 per month), however, you still need a payment gateway. I use Eway - who I don't recommend - who charge a flat rate of $0.30 per transaction for payment gateway services. All their advertised plans come with minimum monthly charges but they can offer a per-transaction only plan if you call them up and speak to the right person. But again, I don't recommend Eway.

BNZ also has their own payment gateway offering which I think is around $50 per month. I am not sure if it has any per transaction fees.

In any instance you are going to need a lot of sales to make this pay.

Other points to consider - you need to have a perfect credit check (business and personal) to get a bank merchant facility and will also require a good banking record. I believe BNZ require their merchants to bank with them.

Setup cost was $150

Now my business is directly with a bank this is where it will stay. The money is deposited same day (for txns done before 10.30pm) every day and less risk then the Swipes etc of the world.

Integrity Tech Solutions @ Norsewood, New Zealand

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