Ecommerce Payment Gateways

In this FAQ we will be discussing the costs, pros and cons of collecting credit card payments via PayPal and/or your Bank Payment Gateway.

Note: The Fees in this article change regularly. They may have been accurate at the time of writing this article, but they should be confirmed before proceeding.

 

Paypal Express and Website Payment Standard Accounts:

There several PayPal account types depending on your size and functionality. Most startups use the Website Payments or Express accounts - and these have charges starting at 2.6% + 30c (or 3.6% + a fixed fee for international customers).

These fees are reduced depending on the monthly sales you do. If you sell over $150,000 a month, the Fees drop to 1.1% + 30c.

With these accounts, there are no monthly fees and no cancellation. You only pay a fee upon a sale, so that is fanastic for small startup shops.

The PayPal account accrues the income from your sales. From within the PayPal account you then transfer the funds to your bank account.

If you transfer less that $150 from your PayPal account into your bank account, you will get charged a small additional fee.

Cheap "PayPal Here" credit card readers are available to purchase for AU$99. These readers are used together with your mobile phone or tablet. The transaction fee is cheaper overall if using these readers - at only 1.95%. For more info... https://www.paypal.com/au/webapps/mpp/credit-card-reader

Pros:

  • Only get charged if you have a sale.
  • Cheap for small shops.
  • Easy to refund via the PayPal account.
  • You don’t need a merchant bank account - saving monthly bank charges.
  • Cheap PayPal credit card readers are available to purchase for AU$99. For more info... https://www.paypal.com/au/webapps/mpp/credit-card-reader
  • Good security and fraud protection.
  • Does not charge for failed credit card transactions.

Cons:

  • Paypal holds your money until you transfer it to your bank account. If there is a problem (ie:buyer dispute) - PayPal could put a hold on the account and prohibit transferring funds.  
  • PayPal is a US company. It does have Australian offices to call. Contact is best via the PayPal account.
  • Your Bank statement does not show every customer transaction. Individual customer transactions are shown in great detail from within the PayPal account.
  • Good phone support, but no Face to Face contact with PayPal.

For More info:

Cost Case 1, $200,000:

$200,000 of transactions per year, averaging at 2,000 x $100 products.

Total Annual Fee: $5,200 + $600 = $5,800

Cost Case 2, $50,000:

$50,000 of transactions per year, averaging at 1,000 x $50 products.

Total Annual Fee: $1,300 + $300= $1,600

 

PayPal Website Payments Pro

This is an upgrade to the free PayPal Express. It costs $25/month. Benefits...

  • Your customer won't be nagged to join PayPal - which sometimes confuses them.
  • You have access to better API's to create a better customer shopping experience.
  • You still don’t need a merchant bank account - saving monthly bank charges.

More info here... 

 

Merchant Hosted Payment Gateways:

Solutions and fees vary from bank to bank. The information below is only indicative and should be checked for your own case with the bank directly.

At the time of writing this page, the banks offered the following Merchant-Hosted API interfaces...

Bank: NAB Westpac ANZ CommBank Bendigo PayPal
Express

PayPal
Payments Pro
Plan: Transact API Payway API

eGate
(MPGS)

 Commweb
(MPGS)		 MPGS - -
Method: XML API Client API + SOAP API POST API POST  API POST  API POST  API POST
Merchant Facilty Setup: inc below $110 inc below ? inc below Free Free
API Setup Fee: $199 $220 $99 ? $195 Free Free
Monthly Charge: $35 $22 $39.95 $10 $39 none $25
Min Monthly Service Fee: $22 $22 $29 ?  - none none
Transaction Fee: $0.35 $0.165 none $0.29  none $0.30  $0.30
Credit Card Fee - Standard Cards: 2.2% 1.1% 1.8% 1.4%  1.45% 2.6% 1.75%

Credit Card Fee - Premium Cards*:

 3.2% 1.1% 1.8% 1.4%  1.45% 2.6% 1.75%
Annual Fee $28 none $29.95 ?  none none monthly
Early Account Closure Fee $150 $550 within 3 years
$105 thereafter		 $250 ? $250
within 1 Year		 none none
Accepted Cards

Visa
MasterCard
(AMEX with
difficulty)

Visa
MasterCard
AMEX

 Visa
MasterCard
AMEX (3.25%)		 Visa
MasterCard
AMEX 		 Visa
MasterCard
AMEX		 Visa
MasterCard		 Visa
MasterCard
Charges for Failed Transactions No ? ? YES No No No

Please consult your bank for updates and confirmed quotes.

The information above is indicative only for accounts with $50,000/annum transaction volumes, $100 transactions amounts at the time of our enquires.

*Premium cards are International, Corporate, Commercial, CUP and Platinum cards.

Several banks use the MPGS and rebadge it.

MPGS is a Mastercard product - its short for Mastercard Payment Gateway Service.

Some banks also charge you a monthly rate for a "Terminal" - which is a physical device that can read credit cards. You don't need this for transactions done through these gateways.

 

Cost Case 1 (NAB), $200,000:

$200,000 of transactions per year, averaging at 2,000 x $100 products.

First Time Setup fee: $199.

Total Annual Fee: $200,000*2.2% + $700 + $35*12 + $28
   = $5,548 + third Party Gateway Costs (+~$600)

Cost Case 2, $50,000 (NAB):

$50,000 of transactions per year, averaging at 1000 x $50 products.

First Time Setup fee: $199.

Total Annual Fee: $50,000*2.2%+ $350 + $35*12 + $28
    = $1,898 + third party Gateway Costs (+~$600)

 

Cost Case 1 (Bendigo), $200,000:

$200,000 of transactions per year, averaging at 2,000 x $100 products.

First Time Setup fee: $195.

Total Annual Fee: $200,000*1.45% + $39*12
   = $3,368 + third party gateway costs (+~$600)

Cost Case 2 (Bendigo), $50,000 :

$50,000 of transactions per year, averaging at 1000 x $50 products.

First Time Setup fee: $195.

Total Annual Fee: $50,000*1.45% + $39*12
   = $1,193 + third party gateway costs (+~$600)

 

A third party gateway is needed. The costs are generally $50/month. ($600/year).

Pros:

  • Governed by Australian Laws
  • Payments go straight into your bank account automatically.
  • A Bank Manager is available to assist with issues.

Cons:

  • More expensive option for small startup shops
  • Less shopper confidence (who are looking for PayPal security).
  • Sometimes banks will charge a fee for failed credit card transactions. If a hacker uses your facility to  scanning for credit card numbers, you can be charged a large fee (depending on your bank). In the case of CommBank, they once charged a client $20k for failed credit card fees.
  • Less transaction and customer detail when compared to PayPal.

 

What is the MasterCard Payment Gateway Service (MPGS)?

Formerly known as the MasterCard Internet Gateway service (MiGS), MPGS is an Australian developed software that powers MasterCard’s ecommerce payments across the Asia-Pacific region.

MIGS was originally developed in Brisbane by software engineers working for what was then known as Dialect Payment Technologies. Dialect is part of the US company, Transaction Network Services (TNS).

More than 70 (seventy) banks across the Asia-Pacific region are said to use the MiGS gateway to process online card transactions from more than 17,000 merchants.

For more details, visit...

 

Recommendation

For a revenue of less than $50k, PayPal is often the most viable.

For sales greater than $50k, a Bank Payment Gateway generally is more viable. With that you will have access to a Bank manager, face to face, to help with any issues. 

What your Customers prefer to use is a different matter. You may opt to provide both gateways for customer convenience.