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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.
I’ve been trying to use PayPal for a good while now and on my first load, I received the error message “Fatal Failure” as seen below. It looks like PayPal might be down currently. The page says nothing else besides this pretty scary error message. Refreshing the page provides me with one of three types of page loads:
- “Fatal Failure” error message
- A page that loads with no styles
- A normal page
As many have suggested on Twitter, for a service that is basically a bank to tell you that they are currently having a “fatal failure” is probably not the best message to share with customers if there is a hiccup in service. I will wait until the all clear horn is sounded before logging in just in case.
As with all down errors, leave a comment if you are experiencing the same issue when attempting to use PayPal.
Amazon has announced that they are offering free credit card processing through their AmazonPayments division through the end of September. AmazonPayments is similar to PayPal and Google Checkout. The service allows you to accept credit cards for products, services and subscriptions.
There are a few restrictions:
- you can only sell up to $2 million – after that you pay fees
- you must have an average order size of more than $5
- the account must be new – created after April 29, 2009
One additional thing to consider if you use the service as a trial for subscriptions (where you charge your customer monthly/yearly/etc.). You will need to stay with Amazon for as long as the customer wants to remain a paying customer or you will need to ask them to move to whatever other service you use. This is something I’ve thought a lot about as I look at billing options for my startup. It might be worth testing Amazon on a one-time billing option only.
The Google Checkout team has announced some major changes to the fee structure for merchants using the Google Checkout payment processing system. The new pricing appears to match the pricing by competitor PayPal.
Andy Beal has a good overview of the changes which he calls, "worse, worser and even worser". Here is the new fee tier structure based on monthly sales:
- less than $3,000 – 2.9% + $0.30
- $3,000 – $9,999.99 – 2.5% + $0.30
- $10,000 – $99,999.99 – 2.2% + $0.30
- $100,000 or more – 1.9% + $0.30
To give you an idea, as of today, here’s what you pay: 2% + $0.20 per transaction. While Google makes out that customers may see a decrease, I doubt the percentage is that high for customers with over $100,000 a month in sales.
The other news is that the fee credit provided by purchasing AdWords is also going to be removed. When I signed up for Google Checkout last month, I was pleasantly surprised to see the fee credit. It’s certainly disappointing to see the credit removed – wonder how that will impact AdWords sales which in turn will affect AdSense publishers.
Also, if your customer is located in another country, you will need to tack on another 1% fee on the purchase amount.
Update: Rich has a good overview of the changes from a UK perspective.
Web celebrity Chris Pirillo announced earlier this week that on his birthday someone was able to hack into his iTunes account and purchase $450 in iTunes gift cards using his PayPal account. Chris spoke with Apple and apparently Apple has changed the way they verify birthdates to make sure this never happens again.
Chris then approached PayPal and filed a claim to get his $450 back. PayPal sent the results of their investigation yesterday which includes, "We have completed our investigation of your claim and have determined that this is not an instance of unauthorized account activity. At this time, your claim has been denied."
Chris replies, "What the HELL are they thinking? My password was obtained illegally. My money was taken without my consent… again illegally. How exactly can they determine that this was not an instance of unauthorized anything?!"
Unfortunately Chris does not note whether Apple has been able to provide a refund for the unauthorized charges. If the gift cards haven’t been used, can’t Apple just deactivate them and refund the money immediately? If they have been used, the shipping addresses for the purchased merchandise should be great info to provide to the local police.
This type of run-around is something we see often from PayPal. We’ve written several times about PayPal and their usual lack of communication.
In this case it does seem like Apple is the merchant and should work with Chris to make him whole. But it sure would be great to see PayPal work with it’s consumers (i.e. Chris) to get satisfaction for their users as they deal with the merchant.
Last week I explained why startups should have status notifications for downtime, maintenance and any other customer communications. I assumed large companies already knew this but apparently not. The real question is: when should a company post a notice of an issue that they know about? My initial thought is immediately but clearly there are times when it makes sense not to post immediately — for example, a security hole.
A developer posted an issue with accepting payments on the PayPal message board on May 16, 2008. The issue centers around the ability to accept a payment when they country of the buyer and seller don’t match. When you select another country, a never-ending loop begins. It took PayPal 7 days to even acknowledge the issue.
PayPal has posted a message on their status page with a basic explanation. Apparently when they rolled out their last site update on May 15, 2008, the issue listed above arose. The issue still has not been resolved and no further status has been provided by PayPal.
How many millions of dollars has this bug cost all of Paypal’s customers? I would be so ashamed of myself if I was the one responsible for this bug, that I would quit immediately and go apply for a job flipping burgers, because that would be more my skill level. It’s absolutely unbelievable for a company of this size, that so many internet businesses rely on to collect money from their customers, has had a problem of this magnitude for 10 days and counting. Un. Flipping. Believable.
The real question here (besides the apparent lack of ability to fix a basic HTML form) is why did it take PayPal a week just to document the issue?
Last year I was not able to claim payments received via PayPal and the overall outage became a huge story in the PayPal developer community.
JetBlue has announced a new partnership with PayPal today that brings the micropayment service to travelers on the airline. I think of PayPal as the candy rack near the cash register – it’s perfect for impulse purchases. Is a flight an impulse purchase? No, but in any event the airline now has additional fare collection flexibility.
With JetBlue now facing competition from newcomer Virgin America for tech travelers, it’s time for JetBlue to step up their technology offerings. Sure JetBlue is testing BetaBlue (with email/IM access) on one plane, but it’s not enough. For example, why not add a channel to the live tv that lets a user browse from say the top 2 million RSS feeds? That seems easily programmed. Rather than more Internet video like Virgin is offering, I’d prefer to see more productivity offerings so that a cross-country flight can keep me moving forward.