12 April 2008

Paypal as a Payment Gateway

The other day, a friend asked me, "What is the best way to accept credit card payment online?"

Everybody knows that you could organise a payment gateway with the local banks. It only sets you back a few thousand ringgit as a setup fee, and a few more hundreds in monthly fees.

In her business, she only receives a few credit payment a month, so a bank payment gateway is out of the question. I decided to do research and check what is the best and most effective way to accept credit payment, with the lower possible fees.

After a quick research, there isn't any online payment gateway that doesn't have any monthly fees. The lowest charged that I could find was from Paypal, of 2.9% + US0.30. Any other options either had a monthly fee, or a 5% charge!

I knew from the start that Paypal could accept credit card, but it does have some of it's own issues. About 2 years back, Paypal wouldn't accept payment if you didn't have a Paypal account. What it means is that, you MUST sign up, in order to pay with your credit card.

Recently, I read that they allow customers to pay, even if they didn't sign up or have a Paypal account. If that was true, then it would be the perfect payment gateway. The fees are low, and they are one of they biggest online payment system available.

So, I decided to create a "Pay Now" button to test whether it is true. Whether you could pay for it without a Paypal account. I recalled from the past, Paypal literally forced you to join, if you wanted to use your credit card to pay for something.

With the button created, I tested to see whether it was possible to pay without having an account. It was true, my hunch was right, I was unable to pay for it without my Paypal account. I then checked and read all the help files at Paypal, and it constantly showed up, that it was possible to pay without an account!

Hmmm, strange, Paypal openly advertise that you don't need to be a member to use your credit card. I then, decided to Google it and to read some external articles on this topic

I then found out that, it was true, Paypal do allow you to pay with your CC even if you are not a Paypal member. It however only allows this from a list of selected countries. That means, if you are in those countries, the options to pay without being a Paypal member will appear.

Their argument is that, for some "Money Laundering Act", for certain countries you must have their details on file if they were to pay with their credit card. By having an account, they would have your details, thus if there is any hanky-panky, they'll have details!

So that answers the question, Paypal would be one of the better payment options available. It has the lowest rate in the market, with no monthly fees.

The 2 bad points Paypal has as a payment gateway is that
  • Cannot accept Ringgit as a currency (Able to accept USD, Pounds, AUD, SGD etc)
  • Must be a Paypal member (in certain countries, including Malaysia)
If you are able to live with the 2 negative points of using Paypal in Malaysia, then you'll have a good method of accepting credit card payment online.

If you are having issues, withdrawing payment from Paypal, please read my two earlier articles

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