So you’ve started your business, and you’re ready to collect some real money in the bank.
Not that easy though.
You’ve probably looked through quite a few articles sharing the ‘best’ payment gateways, but you’re still confused.
- What are you actually paying for?
- Why do you need a payment gateway?
- And what exactly are you going to use it for?
Here’s a simple diagram to explain.
|When should you use it?
|WooCommerce Payments, which processes your payments through Stripe
|3.4% + $0.50 per transaction
|If you’re running a traditional physical products business (including food)
|$9 per month with varying fees per order
|If you’re selling more of a service, like online coaching, online courses
|ThriveCart with Stripe acting as the payment processor
|Lifetime fee of $499, with 3.4% + $0.50 per transaction as Stripe processes the transactions
|If you’re selling more than $1000 per year in your service business, and want to look more professional
Let’s make things clear
If you look at the diagram above, there are actually three things you need to get money into your bank account in Singapore.
- A payment cart
- A payment processor
- Your bank account
The last part is the easy part.
The first two are what’s difficult to choose.
Your payment gateway is your payment cart
For ease of understanding, we are going to call the payment gateway the payment cart.
Because this is where your customers are going to first interface with something where they will key in their credit card details, that will allow you to be paid.
The payment cart is what allows you to collect payment details. And if you’re wondering why you can’t just let your buyer share his credit card details with you, the reason is simple.
PCI is short for the Payment Card Industry Data Security Standard, which protects consumers from having people charge their credit card unnecessarily.
The payment cart is what collects the credit card details, processes them on a separate server, before sending the details through to the payment processor.
It is the payment processor that will take funds
Now it’s the payment processor’s turn to do the dirty work.
They will send instructions to the customer’s bank to transfer that amount of money to your bank account.
You now get your money.
And of course, the question is,
Which of these payment gateways should you use, given that there are so many?
You don’t always need an online payment gateway
If you’re selling through one of the main shopping sites like Amazon, Lazada, and Shopee, you can quickly fill up your account details, and then have them transfer the monies straight into your accounts.
Shopee has a simple page that explains how you withdraw your payments.
When do you need an online payment gateway?
But the times when you do need a payment gateway is when you own your ecommerce website.
The most common option here is a WordPress site that’s plugged into WooCommerce.
Before the options, let’s ask one important question
How much are you going to sell?
The answer is not millions, because as much as I would love to feed your dreams, if you’re doing this for the first time, you might not be selling thousands, or even hundreds in your first month.
You might only end up selling tens of dollars. Not tons of products, but just a few dollars here and there.
That is the sad reality.
If you’re doing this for the first time, it might be much, much better to use the easiest and fastest option.
Rather than worrying about the potential margins you might lose, it might be better to improve your ability to sell a product from scratch.
That’s not an easy skill.
I remember the first time I launched a product, slapped the payment link on the internet, and quickly expected myself to be the next Internet millionaire.
It took 6 months before I ever got my first sale online, and even then, the second sale didn’t happen until 3 months later.
That’s my reality, but it might also be yours.
If you focus too much on what payment gateway to use, rather than improving the product.
WooCommerce Payments (3.4%+$0.50 per transaction), if you have a WordPress website
My default recommendation is to use the WooCommerce option, because of how simple it is to set up.
Within 5 minutes, you’re done.
WooCommerce has an automatic Stripe or Paypal integration that allows the monies to be transferred directly into your bank account.
In this case, WooCommerce is acting as your payment cart, where they collect the payment details of your customer.
And Stripe or Paypal is acting as your payment processor.
And these are the fees that Stripe charges.
Stripe are the ones who eventually ensure that you get paid.
For example, with the Stripe integration with ThriveCart, one of the payment gateway providers, you can see that there’s an elegant option with PayNow.
It pops up automatically if the browser detects that you’re from Singapore, allowing the payments to be processed more cheaply.
Sendowl ($9 per month), if you have a service business, and want something simple
But there are other business models where you might be providing a service, such as an online course, coaching, or tuition, and the ‘product’ isn’t something you can just check out on the site.
In those cases, explicit payment carts like Sendowl, can work.
Sendowl is probably the cheapest and most affordable option, though you have to pay a monthly fee of $9 for the starter option.
ThriveCart ($499 lifetime), if you have a WordPress website
If you’re selling upwards of $1000 a year in online products, it might make sense to graduate from the Sendowl, to ThriveCart.
With ThriveCart costing $499 for a lifetime subscription, it’s not the cheapest.
But it’s the most elegant option.
Sell first, optimise later
We always say that the priority is to ensure that you’ve solved for product market fit, before you try to add fancy payment gateways.
Having a fancy checkout page is not going to work if people don’t want, or need your product.
Build a better product that solves people’s needs.
Then solve for everything else.