When you are running an online store, having the right payment options can be a key component to your store’s success but choosing the right ones can also be a challenge.
And to help you out with this decision, we have listed what we think are the best options for ecommerce businesses and for this post, we have just looked at what are effectively pay-as-you-go options as these are suitable for ecommerce businesses of all sizes and offer a few advantages over some of the ‘traditional’ online payment options, including:
- Only pay when you make a sale
- No long-term contracts
- No expensive monthly fees
Even though the advantages are very attractive, especially for small ecommerce businesses, there is one drawback and that is that you do pay a higher transaction fees and they aren’t negotiable but some of the payment gateways mentioned do offer discounts for high-volume users.
EcommerceGold is reader supported and we may earn a commission from products or services purchased through links on our site at no additional cost to you, to learn more please see our affiliate disclosure.
PayPal is the payment gateway that ecommerce business owners love to hate as they are expensive and they have a tendency to side with the customer when they raise a dispute (although you can fight and sometimes win) but many people trust and regularly use PayPal because:
- It is very easy for them to use
- They trust it
- It offers them a level of protection, which many people like when making a purchase on a site they have never used before
And having PayPal as one of your payment options can help you generate sales and also improve your site’s conversion rates, it is also one of the few payment options that is available on pretty much every ecommerce platform you can think of.
PayPal Payment Options
One of the appealing things with PayPal is that it includes a few different payment options (this can vary between countries and accounts), including:
- PayPal Checkout
- Pay Later
- Pay in 4 – 1 payment down, 3 bi-weekly payments for sales between $30 and $1,500 with 0% interest
- Pay Monthly – for sales between $199 and $10,000, break it down into 6, 12 or 24 monthly payments with $0 down, interest rates range from 0% to 29.99%
- Pay with Rewards – for eligible credit cards, customers can earn rewards on their spending which can be used to pay for purchases
PayPal have introduced a Check out with Crypto for US merchants, which lets customers make purchases using the Crypto that they have purchased through PayPal.
When you look at PayPal’s detailed fee page, it can be a little overwhelming as there are so many different fees listed but the main ones are:
- No setup costs
- PayPal Payment Fee – 3.49% + 0.49¢ fixed fee
- Invoicing Fee – 3.49% + 0.49¢ fixed fee
- Pay with Venmo – 3.49% + 0.49¢ fixed fee
- Chargeback Fee – $20
If you are selling internationally then the fixed fee will vary depending on the currency and if you are selling in person using PayPal Zettle, then there are a different set of fees.
PayPal Fraud Protection
PayPal is quite vague on its fraud protection but they offer what they call ‘Seller Protection‘ for eligible transactions and also provide information as to how you can defend yourself against Unauthorized Transactions or Item Not as Described claims but the decision is still at their discretion.
• Trusted by customers
• Easy-to-use dashboard
• Selection of payment options
• Supported by most ecommerce platforms
• Monthly Reports
• Instant access to funds
• Disputes usually go in the buyer’s favor
• Expensive fees
• Transaction fee not refunded
• Support can be hit and miss
The second option is the company that disrupted the whole credit card processing industry as it was the first company to allow small businesses to accept credit card payments, without having to sign up to a lengthy and expensive contract.
And they have gone on to be the second largest player in the game behind PayPal and while they may be in competition with each other, offering both on your site gives customers the option of the two most popular payment options (PayPal and Credit Card).
As with PayPal, Stripe is offered by most of the main ecommerce platforms and even powers some of the ‘in-house’ payment options that some offer, such as Shopify Payments and WooCommerce Payments and through most of the set-ups/integrations you can also offer Apple Pay and Google Pay to help mobile sales.
Stripe Payment Options
Stripe doesn’t offer the same flexible options as PayPal but they still offer some useful options, including:
- Credit and Debit Card payments
- Mobile and local payment methods
- Payment links – embed a payment form anywhere
- Recurring payments/billing
This makes Stripe an attractive and also flexible payment option for businesses, especially if they want more than just online payments through their checkout.
When it comes to fees, Stripe is more cost-effective than PayPal, their pricing page is also much clearer but for merchants, the important fees are:
- No setup costs
- Standard Fees – 2.9% + 30¢ fixed fee +1% for International cards +1% if currency conversion is required
- Billing Fees (recurring payments) – 0.5% on the starter plan, 0.8% on the scale plan
- Invoice Fees – 0.4% on the starter plan, 0.5% on the plus plan
- Chargeback Fee – $15 or you can opt to pay a 0.4% chargeback protection fee on each transaction and Stripe deals with any chargebacks for you
Stripe also offers a custom package for businesses with higher transaction volume, which can result in you paying lower fees per transaction.
Stripe Fraud Protection
Stripe offers a good selection of fraud protection features as standard and there are optional upgrades if you want enhanced fraud protection, including:
- 3DSecure – included with all transactions
- Radar Machine Learning – included with all transactions
- Radar for Fraud Teams (advanced fraud protection) – 2¢ per transaction for accounts with standard pricing
- Chargeback Protection – 0.4% per transaction
We didn’t list all of the options for the Radar, as there are quite a few but you can check out all of the tools included on Stripe’s Radar page.
• Easy for customers to use
• Different payment options included such as Apple and Google pay
• Competitive Pricing
• Recurring Billing
• Good anti-fraud tools
• Offered by lots of Ecommerce Platforms
• Set-up can be more difficult than PayPal (depending on platform)
• Transaction Fees not refunded
• Support can be inconsistent
• Takes longer to get access to funds
Square is another credit card processor and is an alternative option to Stripe but unlike the first two options on this list, Square didn’t start out as an online payment gateway, instead, it started as a way for small businesses and individuals to start taking face-to-face payment payments without having to spend a lot of money on card terminals and sign up to long and expensive contracts.
And following their success in the face-to-face market, they ventured into the world of online payment processing and have gone on to become a major player in the market.
Square can be a great option for businesses that sell face-to-face and online and want to manage all of their sales through one dashboard (with some third-party software, you can also sync your inventory depending on the ecommerce platform you are using) as this is where their strength lies.
One of the features that Square offers that no other gateway on this list does, is that they have their own ecommerce platform, called Square Online Store, which allows you to build a simple online store for your business.
Square Payment Options
When it comes to online payments, Square is a little bit limited when compared to the two previous options but it does offer:
- Credit and Debit card payment processing
- Recurring payments via the Online Checkout
- Apple Pay and Google Pay via the Online Checkout
- Buy now pay later (through Afterpay)
Square Transaction Fees
Square are very upfront and transparent about its fees, which keeps things simple for merchants:
- No setup costs
- Square Payment Processing Fee: 2.9% + 30¢ fixed fee
- Buy now pay later through Afterpay – 6% + 30¢ fixed fee
- No Chargeback fee
And that is it, they don’t charge any additional fees for recurring payments. If you are processing more then $250,000 a year in sales, then you can contact them and they will create a custom package for your business.
Square Fraud Protection
Square offers a good set of tools when it comes to helping your fight fraud in your business, which includes fraud monitoring for free and Square will also fight disputes and chargebacks on your behalf and they don’t charge for this.
But if you want to take fraud protection to the next level, then you can use Square’s fraud risk manager which costs 6¢ per online transaction and includes:
- Transaction management & machine learning to help you spot potentially fraudulent transactions
- Set your own fraud filters to protect and prevent recurring fraud
And for some businesses, this 6¢ fee can save them a lot of money in the long-term.
• Good for in-person and online payments
• Integrates with most major ecommerce platforms
• Transparent Pricing
• Good anti-fraud tools
• No fee for disputes
• Limited features when compared to Stripe (for online payments)
• Buy now pay later is expensive
• Difference between Online Payments and Online Checkout is a bit confusing
4: Amazon Pay
One payment gateway that is starting to gain popularity, especially as an alternative to PayPal is Amazon Pay and that is simply down to the popularity of the Amazon retail site as most people have an Amazon account, which they have added their credit or debit card information to.
And by offering Amazon Pay on your website, you allow people to pay for their purchases using their Amazon account, which could potentially lead to more sales.
Amazon was also one of the first companies to develop their own in-house payment system, which they use on their own retail site and this is the same technology that powers Amazon Pay and if it works for the biggest online retailer in the world, then it has got to be pretty good.
For most websites, Amazon Pay will probably be best used as an additional payment option to PayPal and a Credit Card processor.
Amazon Pay Payment Options
Amazon Pay offers a surprising amount of payment options, which could be appealing to many ecommerce businesses, including:
- Immediate payments for normal transactions
- Deferred payments for things like pre-orders or order online, pickup in store
- Split payments for things like built-to-order, where the customer pays a deposit followed by the full balance upon completion
- Recurring payments
- One-off payment and subscription
Amazon Pay Fees
Amazon Pay is very simple when it comes to there fees:
- No setup costs
- Transaction fee – 2.9% + 30¢ fixed fee
- Cross border fee – 3.9% + 30¢ fixed fee
- Chargeback fee – $20
One good thing with Amazon Pay is that if you need to refund the transaction, they return the percentage portion of the transaction fee, which is something that some of the other options this list have stopped doing.
Amazon Pay Fraud Protection
There isn’t much information regarding the fraud protection of Amazon Pay but they do say ‘Amazon Pay is backed by the fraud protection technology used on Amazon.com’, which means that they probably have some decent fraud protection built in.
• Name recognition
• Competitive fees
• Fees returned after refund
• Good range of payment options
• Lots of platform integrations
• Some reported issues with Account freezing/closures
• Support can be inconsistent
• May not be used as much as other gateways
Klarna is one of the more unique options you could consider for your online store as in a similar way to Stripe, they really shook up the payments industry as they were one of the first companies to allow merchants to offer flexible payment options to their customers.
Prior to this, any kind of retail finance was only available to companies with large turnovers (often in excess of $1 million a year) and they also weren’t the most user-friendly and that is where Klarna changed the game!
As you will see below, Klarna offers a number of different payment options and over recent years they have been adopted by many large online retailers as offering flexible payment options has helped companies improve conversion rates, especially for products that are slightly higher in price.
Klarna Payment Options
Klarna offers a few different options when it comes to online payments, including:
- Instant payment, they can choose to pay the full amount by card
- 30 days to pay, this lets people order and try products before making a payment
- 4 interest-free payments, customers can choose to pay over 4 installments but you as the merchant get paid instantly
- Financing, customers can choose to pay over a period of up to 24 months, interest rates can range from 0% to 28.99%
Offering customers this kind of flexibility can help to increase conversion rates.
One aspect that Klarna doesn’t openly advertise is the fees they charge for processing payments and the only way you can actually find out what you would pay is to contact Klarna directly.
Klarna Fraud Protection
From a merchant perspective, Klarna doesn’t provide any real information when it comes to fraud protection as most of the information on the site refers to Buyer protection.
• Easy for buyers to use
• Multiple payment options
• Merchant gets payment upfront
• Lots of platform integrations
• Lack of info for merchants
• Some refund-related complaints/issues
• Fee information not easily available
Other Payment Gateways
There are many other payment gateways out there that could of been mentioned on this list but weren’t for various reasons, these include:
- 2Checkout – they were recently acquired by Verifone and whether they stay as a separate entity or get incorporated into Verifone’s offering is yet to be seen
- Authorize.net – they charge a monthly fee of $25 and the transaction fees are no better than providers with no monthly fee
- Adyen – confusing pay structure and they have a minimum invoice amount, so not suitable for new/small businesses
All of the payment gateways on this list are great options for online but you want to offer more than one payment option for your online store for the following reasons:
- People have their own payment preferences, for example, some people only use PayPal, whereas others prefer to pay with their credit card
- It helps to increase conversion rates
- It stops your business from being solely reliant on a single payment provider (as accounts can be closed with no notice!)
So offering multiple payment options can not only provide a better experience for your customers but it can also help protect your business.
But be careful not to offer too many options as this can be overwhelming for customers, the minimum should be PayPal and a Credit Card processor which also supports mobile payments, you can then test things like Amazon Pay or flexible payment providers to see if they help increase sales for your business.