This past week our top support questions was, “What is a merchant account and payment gateway and how do they work with Chargify?”  This is a great question and it is important for Chargify customers to understand what they are and how they work together with Chargify.

What is a merchant account?

A merchant account is a type of bank account that enables businesses to accept payment by debit or credit cards.  A merchant account is necessary because it’s what allows you to accept recurring credit card payments from your customers. Before you can even begin using Chargify, you will need to set up a merchant account. (You can however test Chargify without having a live merchant account/payment gateway with the developer plan.)

What is a payment gateway?

In order to get paid, you will need a payment gateway.  A payment gateway facilitates the secure transfer of information between your website and your merchant account.  Your payment gateway will transmit your customers’ billing information to your merchant bank so that payments can be deposited into your internet merchant account each month.

A lot of questions come to mind when running an e-commerce business. You know you need a payment gateway but you may be wondering what a payment gateway can do for you and how you choose one. Basically, payment gateways enable you to accept credit card payments and transfer billing info to your bank so that payments can be deposited into your internet merchant account each month. Yes, that’s the basic version.

Here at Chargify, we have paired with four of the top-rated gateways to ensure ease and security for our customers. These gateways are Authorize.net, Beanstream, PaymentExpress, and TrustCommerce. Whichever one you choose depends on your company’s specific needs. To help you figure out the differences, here’s a brief description of each (note: each payment gateway supports buyers in any country):

Authorize.net

As a leading provider of gateway payment services since 1996, Authorize.net allows merchants to settle and manage credit card transactions for a number of e-commerce applicants.

Authorize.net is an ideal choice for US based companies since customers since the merchant account must be located in the US. Authorize.net is PCI compliant, and customer support and fraud prevention are included. There is a setup fee of $99 and a monthly charge of $39.95.

Merchant Accounts & Payment Gateways

We reach a lot of small businesses and software developers who’ve never needed to know anything about merchant accounts and payment gateways, so I wrote up a personal blog entry a few weeks ago that explains most of what you need to know - from what the pieces do to where to get them.

If you’d like to learn more about merchant accounts and payment gateways, in general, please check out Merchant Accounts & Payment Gateways… Keeping the Grass Green!.

Why We Removed PayPal WPP

Back in April, were excited to add support for PayPal Website Payments Pro (“WPP”) for Chargify merchants in the US, UK, and Canada. WPP provides an additional and in some ways easier path for startups and small businesses to get a payment gateway and merchant account in one package.

Since we entered private beta, one of the most requested features has been PayPal merchant services support. PayPal’s Website Payments products ease the pain of finding a gateway and merchant account, making it simple to start charging customer cards.

This week, we introduced support for PayPal Website Payments Pro in the United States. Next week, we will add support for PayPal accounts in Canada and the United Kingdom. We also plan to support PayPal Payflow Pro in the near future.

This is a guest-post from Sean Harper, co-founder of TransFS.  He is a zealot about making sure business owners get a fair shake from their financial services providers.

1. Know what your requirements are and find a processor that has lots of experience with those requirements.
The worst credit card processing outcomes occur when the business owner doesn’t screen the processors that don’t have experience fulfilling that requirement. Fortunately, there are lots of processors that are experienced dealing with SaaS and web services companies and providing the gateway (auth.net or otherwise) that they need.

As a startup, we face many of the classic trade-offs between getting things done quickly and getting them done the best way possible. The right answer is usually somewhere in the middle. Since we’re dealing with our customers’ money and business transactions, we err on the side of doing things slowly and methodically, especially on core issues.

GATEWAY COVERAGE

Hundreds of people want us to add other payment gateways. This is absolutely true for people outside the USA, because they can’t use our currently-supported gateway, Authorize.net, which means they can’t use Chargify. And that’s a shame!

We’ve been gathering info since November on what gateways people want. In parallel, we’ve been investigating ways to add gateways - quick ways vs best ways.

If you’re a developer, you might ask why we don’t write code for each of the different gateways’ APIs. Especially with things like ActiveMerchant (in Rails), we should be able to add gateways very quickly. Yes, but…

Welcome to the Bullring, the blog dedicated entirely to empowering entrepreneurs and developers to start and run successful businesses based on recurring revenue models. 

Let’s lay it out there. Recurring billing is a pain in the ass. Credit cards get declined for a million different reasons, you have to deal with upgrades/downgrades, proration, refunds, credits, customer communication, fraudulent transactions, and the list goes on. It’s no small task to implement a system that handles all of the potential pitfalls of billing on a recurring basis.