Poll: Paypal or Credit Card for payment processing on webapp
So I have been looking into launching a few web apps with cheap simple payments, either one time $10 signups, or $5-10/month recurring. I am trying to decide, from a user/UX standpoint, if paypal payments or a CC form is less signup friction. Does anyone have any experience? As a customer what are your views?
16 comments
Ideally, you should do both. You will alienate a percentage of people who prefer one over the other if you only do one no matter which one you choose.
Paypal for both one time and recurring as I don't have to worry whether my cc number will end up in some underground hacker ring and it is easier for me to log onto paypal to cancel a sub as opposed to hunting for a unsub page on your site
As a customer, I have been actively avoiding PayPal as much as possible for years, and your apps are unlikely to be spectacular enough to change my mind now.
Another anecdote: I overheard a conversation on Friday at a client's business where a lab tech was told to find another source for a part because the seller only accepted PayPal, and the CEO refused to set up a PayPal account for the company.
I thought that was kind of interesting; usually, once I start hearing things like that from my clients, it signals a sea change. I won't hold my breath, though.
I thought that was kind of interesting; usually, once I start hearing things like that from my clients, it signals a sea change. I won't hold my breath, though.
I don't know if you should go by the customer's view. Personally, I would recommend a reputable Credit Card payment processor.
In terms of legal rights, you (as a business owner) have many avenues of resolution should an issue arise with a CC processor.
Paypal, on the other hand, has been known to arbitrarily freeze accounts without warning and provide no immediate way to resolve the situation.
There have been many stories on HN about that exact situation.
If you can afford and are able to qualify for a reputable CC payment processor and merchant account, do it.
As a customer, I prefer a CC form. I don't trust Paypal, and if my bank accounts are linked to Paypal and my account is breached, I'm fucked. If I don't link them and use a credit card, I go through a lot of hoops to complete a transaction within the Paypal interface.
In terms of legal rights, you (as a business owner) have many avenues of resolution should an issue arise with a CC processor.
Paypal, on the other hand, has been known to arbitrarily freeze accounts without warning and provide no immediate way to resolve the situation.
There have been many stories on HN about that exact situation.
If you can afford and are able to qualify for a reputable CC payment processor and merchant account, do it.
As a customer, I prefer a CC form. I don't trust Paypal, and if my bank accounts are linked to Paypal and my account is breached, I'm fucked. If I don't link them and use a credit card, I go through a lot of hoops to complete a transaction within the Paypal interface.
We use both.
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I use both. Paypal has about 15% take rate. The user is shown the credit card form, and can opt to switch to Paypal.
I guess I'm in the minority. For me, having a paypal link can be the deciding factor for if I buy something or not.
For paypal, it's a username and password that I can recall from memory.
For a CC, it's getting my wallet out, taking out my card, typing in the number (which I don't have memorized), the expiry date, the CCV and my full name.
It's an extra pain.
In my opinion, amazon/prime 1-click checkout is the best, followed by paypal, followed by CC#, followed by typing in a checking account and routing number.
For paypal, it's a username and password that I can recall from memory.
For a CC, it's getting my wallet out, taking out my card, typing in the number (which I don't have memorized), the expiry date, the CCV and my full name.
It's an extra pain.
In my opinion, amazon/prime 1-click checkout is the best, followed by paypal, followed by CC#, followed by typing in a checking account and routing number.
This assumes that the consumer has PayPal setup with funds, or the appropriate backup funding method.
A bigger pain is registering for PayPal and adding a backup funding method (takes days).
I'd also like to reap the benefits of Credit Card rewards.
In theory, PayPal makes life easier, but I think the common case actually can be a bigger pain.
A bigger pain is registering for PayPal and adding a backup funding method (takes days).
I'd also like to reap the benefits of Credit Card rewards.
In theory, PayPal makes life easier, but I think the common case actually can be a bigger pain.
I think paypal can give you the best of both worlds. Login and use funds like I always do, or you can just enter a card and info like a typical credit card form.
Definitely, I think it's always best to offer consumers both options.
The problem with PayPal Express is that it obfuscates the credit card option by making it a small link below a PayPal sign up form that says "or another payment option" or something equally confusing.
The problem with PayPal Express is that it obfuscates the credit card option by making it a small link below a PayPal sign up form that says "or another payment option" or something equally confusing.
As a consumer, being able to file charge backs for unresponsive merchants is also a nice feature that isn't available with PayPal payments.
Really? I use PayPal as my processor and I get hit with reversals a few times a month. From what I gather, PayPal will always return funds to the buyer unless the seller shipped a physical item and can provide proof of shipment.
As a processor, PayPal will process chargebacks against a merchant (like you explained). I meant that if you pay for something with PayPal, as a consumer you can't file a chargeback, as far as I know. Does that make sense, or am I mistaken?
PayPal calls them "disputes". I have gotten an actual chargeback from a credit card used with PayPal which actually incurs a fee that doesn't happen if you have a PayPal dispute. A dispute just gets resolved with a refund of the transaction.
I've been meaning to post an Ask HN about this topic myself for awhile. The online buying experience has unnecessary friction, particularly at the "giving you my money" stage. Paypal has strong brand power and familiarity, and is the only payment processor that takes low volume (that I know of; Braintre et al require more volume and the mythical Stripe isn't available to all yet).
If Stripe is as successfully low-friction as it's been hailed to be, I'll be mighty pleased and use them as processor of choice.
If Stripe is as successfully low-friction as it's been hailed to be, I'll be mighty pleased and use them as processor of choice.
1) Charge radically more, regardless of which you go with. Many businesses have reported no change in conversion rates with monthly payments in the $5 ~ $12 range. If this is the case, pricing under $12 is just giving away money. This tracks with my own experience, which is that the main cost of trivial payments is convincing me to dig out my card to pay anything. (There are people who perceive $5 as different than $9. They make terrible customers. Do not seek their business if you value your sanity.)
$10 one-time payments are challenging to build a business around because you'll have essentially nothing that you can spend on customer acquisition. If you're not on a platform with built-in distribution up the wazoo, well, that's less than happy.
2) You don't have to expose the fact that you're using Paypal to users. See Paypal Website Payments Pro -- they're just an API endpoint then. (Quick plug: Spreedly means you won't have to program recurring billing logic. This was a major win for me.)
I've offered Paypal / GC to customers for years on BCC, and (somewhat surprisingly to me) it is almost exactly 50/50 in which one they pick.
As to doing a poll on HN for views on this sort of thing: keep in mind that HN users are not your customers.
$10 one-time payments are challenging to build a business around because you'll have essentially nothing that you can spend on customer acquisition. If you're not on a platform with built-in distribution up the wazoo, well, that's less than happy.
2) You don't have to expose the fact that you're using Paypal to users. See Paypal Website Payments Pro -- they're just an API endpoint then. (Quick plug: Spreedly means you won't have to program recurring billing logic. This was a major win for me.)
I've offered Paypal / GC to customers for years on BCC, and (somewhat surprisingly to me) it is almost exactly 50/50 in which one they pick.
As to doing a poll on HN for views on this sort of thing: keep in mind that HN users are not your customers.
> Quick plug: Spreedly means you won't have to program recurring billing logic. This was a major win for me.
We handle recurring billing ourselves where I work, and the recurring billing logic doesn't seem to be much of a problem. Surely one of your obvious skill and experience could whip out recurring billing logic in practically no time. How does letting someone else handle it turn into a major win?
I can see that if it lets you avoid storing credit cards that could cut out a lot of annoying stuff, but you (and others I've seen recommend Spreedly) specifically say "recurring billing logic" which I'm assuming means just keeping track of when people are due and billing them.
We handle recurring billing ourselves where I work, and the recurring billing logic doesn't seem to be much of a problem. Surely one of your obvious skill and experience could whip out recurring billing logic in practically no time. How does letting someone else handle it turn into a major win?
I can see that if it lets you avoid storing credit cards that could cut out a lot of annoying stuff, but you (and others I've seen recommend Spreedly) specifically say "recurring billing logic" which I'm assuming means just keeping track of when people are due and billing them.
No customer pays me for my awesome abilities at handling e.g. edge cases in proration or remembering to include a 3 day grace period to cover expired cards which cannot be charged. Writing these things would leave me less time to write features or systems which connect AR with people willing to pay for it.
I think it depends on the price range. I sell my BatteryBar applications for anywhere from $1 to $10 (time-limited or unlimited). In that price range, I get far lower fees using PayPal's micropayments (5c + 5%) pricing than the default ($0.30 + 3%). That higher pricing is also common for credit cards.
So I would say that if you are accepting average payments below $10, get micropayments processing from PayPal or Amazon.
If you're charging more than that (as you stated), why no offer both? Have a credit card entry form and off to the side have a PayPal button. I know I prefer PayPal since it's easy and I know how much I have available to spend.
So I would say that if you are accepting average payments below $10, get micropayments processing from PayPal or Amazon.
If you're charging more than that (as you stated), why no offer both? Have a credit card entry form and off to the side have a PayPal button. I know I prefer PayPal since it's easy and I know how much I have available to spend.
Recurring, recurring, recurring. Recurring revenue makes a business.
Recurly or similar makes it easy, albeit a bit spendy.
Recurly or similar makes it easy, albeit a bit spendy.
Shouldn't there be a "both" option? Thats what I do...
You should take into account where your users are located. I've found that PayPal is good for selling to US customers, only a small number of complaints about no alternative. Whereas for non-US customers particularly European ones PayPal is not a favoured option. In a previous company targeting Irish/UK customers we removed the PayPal option and switched to credit/laser cards only. PayPal seem a lot easier to deal with for US centric transactions and are a lot more tolerant of US users. Once outside the US (and probably inside for some as well) PayPal seem to switch to their arrogant we don't give a sh*t about you or your business setting.
fees might be something to consider too:
http://feefighters.com/paypal-calculator