Best Payment Gateways for Startups and Small Businesses

Financial operations are a crucial component of any business. Whether you're a startup just beginning your journey to success, or an established business, sending invoices and having them paid are a sacred routine necessary for your company to survive. That’s why when choosing a payment gateway, you should keep in mind the following factors. 

Account creation costs and transaction fees. When integrating any payment gateway in the USA, UK, or any other country, be ready for hidden costs. Thus, regardless of what your payment gateway provider advertises, they might charge the following fees:

• Account creation and configuration fees
• Monthly fee
• Minimum transaction fee
• Monthly minimum fee
• Payment processing and transaction fees (even for the declined transactions)
• Chargeback fee
• Early termination fee
• Others

With all fees taken into account, you will be able to assess the real scope of operational costs and see which of the chosen online payment services for small businesses and startups suits your budget. 

Security. Financial operations involve sharing and storing sensitive data, such as user identifying information and credit card data. Meanwhile, providing your customers with a safe online environment is vital to any business, which is looking to stay competitive. Given that, it's critical to make sure your payment gateway provider offers a decent level of data encryption and effective tools on the prevention of fraudulent activities. The best online payment solution is a secured one. 

Payment methods. To make transactions user-friendly, it's important to choose a payment gateway, which supports various payment methods, including debit/credit cards, wire transfers, e-wallets, and beyond. 

Currencies, international payments, localization. When choosing a payment solution for a startup or a small business, make sure it supports currencies in which you're going to invoice your customers, and that it's available in countries where your clients reside. Also, check it for international payment options and fees. 

User data transition. When switching to the other online payment gateway, some startups are forced to ask their customers to share their payment information.

The trick is, some providers do not allow transitioning customer payment information. The right payment gateway must not just ensure effective payment management but also help you avoid awkward situations with clients. As a result, while offering stellar customer experience, you’ll be able to focus on strengthening your business.

PayPal

PayPal is the global payment service that now manages more than 325 million accounts across 200 countries and supports 25 currencies. However, it might not suit you if you're a startup or a small business. Let us explore the key advantages and disadvantages of using PayPal as the main payment processor for your company. 

Pros: 

• Ease of use
• High level of security 
• No need for creating a merchant account
• International payment options 
• No membership and monthly fees
• Handles different types of debit and credit cards 
• Reasonable fees: 2.9% + $0.30 for debit and credit card purchases. Learn more on Paypal. 

Сons:

• Chargeback fees
• Hidden fees
• Strict use policy: even the slightest suspicion of the malicious intent from your side can lead to the locking of your account without explanations. Even after the conflict is successfully resolved, your money can remain frozen for up to six months.
• Poor customer support

When it comes to PayFlow, PayPal’s payment gateway, it's available only in the USA, Canada, Australia, and New Zealand. Pricing: $0 / month with Payflow Link (checkout hosted by PayPal) or $25 / month with Payflow Pro (unlimited checkout customization).

Stripe

Designed specifically for e-commerce, Stripe is known for its technologically complex platform, flexible APIs, and clear fixed costs. 

Pros: 

• No fees for installation, configuration, account support and cancellation
• Quick payment processing 
• Various integration options 
• High-level security 
• Customer support
• Fixed competitive fees: 2.9% + $0.30 for every successful debit or credit transaction and an additional 1% fee for transactions with international cards. Learn more about pricing here.

Сons:

• Problems with locked or canceled accounts
• Difficult to use (unlocking all its features requires technical skills)
• Limited options for receiving personal payments 

When it comes to choosing a payment gateway, Stripe is considered to be one of the best payment solutions for e-commerce despite the downsides listed above. It allows processing payments regardless of the chosen model. 

Adyen

Unlike Stripe and PayPal, this payment gateway provider is not widely known among aspiring startup or small business owners. Adyen is a big player. However, if you're in the Series A round of funding with large transaction volumes and the rising income curve, this online payment solution is definitely worth your attention. 

Pros: 

• High-security level
• Ease of use
• Global payment processing with local acquiring 
• Dynamic reports and the ability to track payments in real-time 
• Supports almost all payment methods (over 250)
• Stellar customer support
• Reasonable credit and debit card processing fee (1.1%)
• No hidden fees
• The possibility to accept payments locally in new markets (that are officially not supported by Adyen) without additional surcharges from issuing banks.

Cons:

• They may reject your application to join the system because of low transaction volumes
• Complicated pricing structure 
• The monthly minimum of 1000 transactions
• The fee of $120 for not reaching the monthly minimum

TransferWise

The TransferWise gateway allows clients — individuals or small businesses — to send and receive international wire transfers easier, 8х cheaper, and faster than in traditional banks. With the TransferWise account, you will be able to accept payments from all over the world with a $0 fee and carry out currency exchanges based on real rates. 

Pros:

• No sign-up fee
• Excellent customer support 
• Transparent pricing
• Fast payment processing
• Ease of use
• Supports various payment methods
• No transaction minimum 
• Low payment fees (fixed transaction fee of 0,5% and a 0,35-3% fee for currency conversion if necessary).

Cons:

• Wire transfers only 
• SSN is required for making transfers 
• The limited scope of countries and currencies

DWOLLA

Dwolla can be a decent solution if you're running a business in the USA — the given payment gateway works exclusively with the ACN network. However, Dwolla is an effective tool if you want to save costs on transaction fees.

Pros:

• Ease of use
• Full freedom of setting up one-time, mass, and recurring payments 
• Excellent customer support 
• Free business account
• White-label service that strengthens your brand 
• No monthly fee and low payment fees: 0.5% of the transaction amount, with a minimum fee of $0.01, up to a maximum fee of $5.00.

Cons:

• Available only in the USA
• Does not offer credit or debit card processing

Square

Square does not fit every type of business. However, it's an ideal solution for small enterprises due to its ease of use, a wide variety of free functionalities, and affordable prices. It also offers the functionality of a POS-system as the leader among mobile payment platforms (mPOS).

Pros:

• No monthly fee
• Accepts payments on any device
• Free tools for e-commerce 
• Low payment fees (fixed rate of 2.6% + $0.10 for contactless payments, 3.5% + $ 0.15 for keyed-in payments, and 2.9% + $0.30 for internet payments.

Cons:

• Even the slightest suspicion of fraud may lead to an account freeze (it can be helpful if the hacker attack does take place; otherwise, you just lose access to your funds — so vital for your business — for no reason) 
• Poor customer support
• Does not suit high-risk industries

Braintree

Braintree is a catch-all payment processing solution. The system supports over 130 currencies across 45+ countries and allows processing debit and credit card payments, as well as payments via Paypal, Venmo, Google Pay, Apple Pay, Visa Checkout, Masterpass, Amex Express Checkout, and ACH Direct Debit.

Pros:

• Unique merchant accounts for clients 
• Supports different payment types and currencies 
• Ease of use
• Vast variety of tools for developers 
• Dedicated merchant account
• High level of security 
• Accessible customer service
• Transparent pricing 
• Average market prices: 2.9% + $0.30 for every transaction.

Cons:

• High merchant account fees: you’ll need to pay $49 monthly for your payment gateway, as well as $10 per transaction and another $10 for any additional merchant you link up
• For e-commerce only 

How to create your own payment gateway

At first, glance, creating your own payment gateway for a startup might seem much more expensive than paying for a third-party solution. But actually, it will pay off in the long run, considerably increasing your revenue. 

While enabling you to save on transaction fees, building a payment gateway from scratch means going beyond the standard set of features of an external solution. Thus, you can improve your product as you see fit, making it fully tailored to your individual business needs. You can also use your custom solution as an additional source of income, offering it to other companies. 

If you're looking to build a custom payment solution, Owlab is at your service with our expertise and the latest technologies. Why Owlab? During the development process, we take into account the following:

• Security requirements (PCI security and fraud prevention standards)
• Integration with various payment processors 
• Scalability 
• Clear mechanism for chargeback processing, dispute resolution, arbitration
• All functionalities necessary for your business

Owlab is a business-oriented software development company. As advocates for the partnership approach, we offer our clients solutions tailored to their needs.