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Moving to Stripe: Fixing the Biggest Mistake I’ve Made to Date
A month ago, we switched our payments on CloudContacts from Paypal and Google Checkout to the new payments service from Stripe. I’ve been meaning to post about why we switched and since Greg Taylor posted today about his switch to Stripe, I figured this was a good time to start my string of posts about my online commerce payments research I’ve completed over the past few months. There is a good discussion of Greg’s post on Hacker News. Greg mainly discusses moving from Paypal to either WePay and Stripe and ultimately selecting the latter.
When I launched CloudContacts two years ago, I made the decision to use Paypal and Google Checkout as the payment services we would offer because after speaking with friends and colleagues, it seemed like people trust these services and as a new service, customers might be more likely to pay with one of these services. Initially we used a shopping cart with E-Junkie.
Shortly thereafter we created a custom checkout which had the following flow:
- CC Order Form > off site > PP/GC > back to site >CC Thank You
It seemed like everything was going well — every once in a while we would get an inquiry from a potential customer that they wanted to pay with a credit card and we explained that you could use a credit card on both Paypal and Google Checkout.
And then I started to do some analysis and realized the biggest mistake I’ve made with CloudContacts to-date. What I found was that a number of customers filled in our order form, went off to Paypal or Google Checkout, but never completed the order. Many of our business customers aren’t web savvy and the fact that they had to input their info twice if they needed to create a pp/gc account was just a headache. I know we all think that everyone has a Paypal and Google account but this really isn’t the truth and even if someone has a Google account, it doesn’t mean they have set it up with Payments (now Wallet) access and information.
I emailed a few of them and asked if they would explain why they didn’t complete the purchase and the overwhelming response was that it was just too much work and that they didn’t have Paypal nor Google accounts.
Call it a coincidence but since we switched to our new payments platform a month ago, sales have gone up. We also removed a few of the fields on the order form to make it as absolutely simple as possible. The new checkout process has the following super-easy, “normal checkout” flow:
- CC Order Form > confirm order > thank you
I started to research online payment companies (more posts about my research coming soon) for switching so we could create a simple, easy checkout process that was completely integrated into CloudContacts. The end result for us was that it came down to:
- Paypal Payments Pro
- Braintree
- Stripe
Comparing online payment providers is like shopping for a mattress – every store has a different name for the same bed so you can never truly compare one to another. With online payment providers, each one charges different fees and so comparing is nearly impossible. Stripe charges, “2.9% + 30 cents per successful charge” – the only downside is that they hold the funds for 7 days – this isn’t an issue once you get past the hump but if you make a huge sale today, you will be waiting a week to see the cash.
I was ready to begin the merchant process with Braintree when I heard about Stripe – literally within a few days I would have moved forward with Braintree. I was very impressed with Braintree – they answered all of my questions (I am a former accountant after all) and had very strong documentation. Ultimately I selected Stripe for CloudContacts because we didn’t need to go through the merchant creation and approval process.
Stripe offers pre-made scripts to get started on most of today’s development languages (PHP, Python, Ruby, etc.) and they have a Campfire chat for questions — I’ve learned a lot by just lurking.
I have no harsh words for Paypal as I haven’t had any issues with them in all my years using the service. We still offer the ability to pay with Paypal through an eJunkie shopping cart although in the month since we switched, not one sale has come through this option. I did completely remove Google Checkout as an option going forward.
The big takeaway here for other web startups is to make sure you create a seamless, easy-to-use checkout process from day one. Get the customer to the order form, get their credit card info as quickly as possible and get them to the big green Order button. Then move on to the next sale.
How did you replace the functionality E-Junkie provide, e.g. licence keys, access to downloads?
We don’t use those things – we use ejunkie solely for payment processing.
You may want to also consider SaaSy.com:
- All-inclusive – hardly any development work needed, esp. compared to the alternatives
- Global tax/VAT management
- Works with vendors in most any country
- 10 currencies
- 20 languages
Lots of other benefits to SaaSy as well.
One problem that I have with it is that it forces us to redirect the user to another page, even if said page can be customized with our website design. This doesn’t really work with single page applications.
What happened to iframes? Or posting directly (through https) a form? Those seem to be PCI compliant methods.
7 day fund hold? Surely this is unnecessary. Is this just a way to earn a little interest? This is a deal breaker for me and my small operation.
I do agree here – it was the one thing that had me thinking…
Having just implemented Stripe, here’s the reason for the 7 day hold as I understand it:
With a “normal” credit card services processor you, the merchant, are on the hook for any chargebacks, fraud, etc. The card services processor is liable to the banks and you are liable to them. They take the time to investigate and underwrite your risk and are absolutely allowed to not do business with you if they don’t want to, and you pay whether you make any transactions or not. The up-side is when a charge goes through the money goes from the payor’s issuing bank directly to your bank account in 2-3 days.
Stripe IS the merchant. They are liable for all the fraud and chargebacks you might incur, and the money goes from the payor’s issuing bank to stripe’s account, which usually takes 2-3 days to settle. Once Stripe physically has the money they can then forward it to your account, which takes another day or two. Add a day or two of lag to catch early fraud and there’s your 7 days.
Also? It’s free to create an account and you only pay a service fee when you actually get money.
Yes Jonathan I believe you are correct. There is probably a bit of float in there (that’s what I would do if I was stripe) as well.
I think your issue is more to do with how you implemented the order flow. As an example, check out http://conveyor.la. It doesn’t get any simpler than this, and if you test the checkout process, you can experience it for yourself. After the site order form, they get redirected to Paypal, but there is an option for paying with or without an account, and once paid, there is no secondary confirmation afterwards. 3 field order form, payment page at paypal, done. And this is their simplest web form API. The order form also sends an email before customers pay also, so they can invoice them or do follow-up. Usually someone who goes as far as submit an order is pretty interested in what they ordered… Anyway, just so you know the order process and flow is actually more about deployment than service provider. Maybe you need a better programmer, not a different payment provider. One thing I will say is you shouldn’t drop Paypal, since a lot of people have accounts, and for them it makes everything easy.
payment by credit card over the phone on your service??? for a tshirt?
They have a physical store, and have welcomed old fashion phone orders even before launching their web site.
In the past, what was the ratio of PayPal to Google Checkout payments for you?
Good question – I’d say overall 70% PP/30% GC. Now if you take the people I know are “techies”, then it flips the other way – more techy people using GC, more normals using PP.