I read an interesting blog post by Justin Vincent recently titled How I converted from PayPal to Stripe in just two days. For start ups and small businesses it has always been a headache to set up on the web and securely accept credit cards in a PCI compliant manner – although I think it’s better than back in 2010 when Sachin wrote this now famous post. PayPal was arguably the first to solve the problem of having to get a separate internet merchant account and gateway by bundling it all into one. Alas, time and success seems to have resulted in mixed feelings around the PayPal API and/or customer support experience. There are a fair number of horror stories about how PayPal has negatively impacted a business in one way or another. Some criticism is probably unfair (fraud is a nightmare to manage) while some of it certainly seems legitimate. It also doesn’t help that in many instances your customer has to leave your site to go to an external PayPal page for transactions.

Braintree appears to be the first to seize upon discontent with what some people felt like were archaic API’s and/or poor service by existing gateways. From what I’ve read and heard they came at it with a Zappos approach. This is your billing, this is critically important, so why would you not want the best possible experience when interacting with your provider in this space? Having recenty raised $34 million it appears they understood the opportunity well. However, Braintree has a minimum monthly fee of $75 which is prohibitive to smaller business. Stripe steps in with no minimum, a great API and documentation and it’s off to the races! Here’s one example of the initial response to Stripe’s arrival

Stripe takes a higher % of your transaction though – perhaps to offset that lack of a monthly fee and the convenient service they provide. So discussions about Stripe tend to fall into one of two categories pretty quickly:

• This is a hobby/lifestyle business for me so I’m not really concerned about 0.5% to 1% difference in transaction fees
• A smarter API and documentation along with a single source (merchant account and gateway bundled together) is very nice but too expensive a luxury at those fees

Let’s put the hobbyists and lifestyle businesses to the side for one moment. If you have one of those (less than $3000 a month in sales?) the good news is you have more choices than ever to hit the ground running.

For the rest of you though, you’re faced with the following conundrum:

• Which API do I code against?
• Which gateway/merchant account do I select?
• Do I sign with one of the bigger ones and pay higher monthly fees to get access to a lower discount rate or do I go with a smaller gateway and pay higher fees for now and know I’ll have to change later when I grow?

Here’s how one industry veteran of online commerce put it to me. “Gateway/Merchant accounts are like a vacation. You can have a fantastic vacation when you’re 18, 38 and 58 – but it’s unlikely to be at the same location. Make sure you can change vacation locations to suit your ever changing needs”

That’s a big part of the value prop behind Spreedly Core. To keep with the analogy above: How do you avoid continually vacationing at Disneyland because you really enjoyed it when you were 12? There’s 3 or 4 reasons why that might happen:

• Outsourcing and storing your credit cards at your gateway to tackle PCI compliance made sense at the time. However, now they, not you, have all your credit card information.
• You coded directly against the gateway API. Perhaps even more problematically – you went further and utilized API’s for more advanced functionality like recurring billing
• You wanted to have more than one merchant account gateway for financial or strategic (failover recovery) reasons
• It never occurred to you that as you grew you would be eligible for a much better set of fees or a more comprehensive range of services

In terms of the first bullet point – it’s important to point out that newer offerings like Braintree and Stripe are willing to return your customer data. Other’s are arguably not so kind and either way it’s a pain to manage.

Going back to Justin’s article above in our example we’ve had customers move from PayPal to Stripe in an hour or two.

Today it costs 2 cents to store a card and 10 cents a transaction as we come out of beta. Yes, that’s on top of whatever fees you pay a gateway and merchant account. It should be noted that most gateways have some fees for storing cards on your behalf so you would not have to sign up for those. Authorize.net calls it a “CIM” and charges a flat $20 per month while Braintree is $20 per month for a “vault” + 1 cent per card.

Core requires you to bring your own front end – whether that’s a commerce cart, subscription page or the ability to do a unique invoice each time that you want billed (cloud utility or pay as you go type services where no two invoices are the same). We think of Core as a cloud based billing utility designed to scale both for your and our business.

We look forward to bringing Spreedly Core officially out of beta at the end of this month and merging it into our main site at spreedly.com. Let us know here, or directly via email, what you think. We are also really interested in the feedback from all quarters.

P.S: Given that Core came out of our Spreedly subscription offering the benefits listed above are also enjoyed by our subscription customers.