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Payment Processors: Comparing Third Parties

Part 3 of a series about electronic payment providers and what merchants should look for

In Payment Processors: Unraveling the Mystery, we covered some basic payment processing terminology and discussed the top factors merchants should consider when shopping for a payment provider. Payment Processors: Gateways and Beyond discussed a few popular merchant gateways and a few emerging mobile payment apps.

Now let’s dive into five third-party e-wallet options to get an idea how these measure up against one another.

Online merchants can use a traditional credit card processor to receive credit card payments from their customers. Another way to receive credit card or other monetary values is by offering your customers the ability to pay with their e-wallet.

There are plenty of these types of payment processors available for online merchants to choose from. Here is a sampling of a few of the well-known third-party payers so you can get acquainted with what to look for.

Amazon Payments

Launched in 2006, Amazon Payments offers two different payment services for outside businesses. Amazon Simple Pay allows your customer to pay for their purchase using the credit card information they have on file in their Amazon account. The second service, Checkout by Amazon, also lets your customer pay with their Amazon account, but it provides services for merchants to apply promotional discounts, sales tax calculation and shipping rates, among other perks.

Fees: Merchants pay 2.9 percent, plus 30 cents to Amazon Payments for all transactions greater than $10. For transactions of less than $10, the merchant pays 5 percent, plus 5 cents. There are also volume discounts available if you receive monthly payments at the $3,000 to $10,000 level, the $10,000 to $100,000 level, or the $100,000-plus level. There are no minimum requirements, no startup costs and no monthly or annual fees.

Pros: If your customers have an Amazon account, they’ll appreciate being able to use that instead of having to enter their credit card information. Plus, there’s a level of security for them, knowing that their personal payment information isn’t being handed to every merchant they do business with.

Cons: To complete their purchase on your website, customers will be taken to the Amazon page where they can sign into their Amazon account. The problem with that is you risk a level of professionalism and your customers might feel disoriented. Also, you will have to wait for Amazon to deposit your money into your bank account, as it only makes deposits every two weeks.

Google Checkout

Like Amazon Payments, Google Checkout is a third-party payer that makes it easy for your customers to buy online using a wallet account.

Fees: Merchants pay 2.9 percent, plus 30 cents to Google Checkout for all transactions of less than $3,000. Transactions between $3,000 and $9,999.99 cost 2.5 percent, plus 30 cents; sales between $10,000 and $99,999.99 cost 2.2 percent, plus 30 cents; and transactions of $100,000 or more cost 1.9 percent, plus 30 cents. There are no setup, monthly or gateway fees.

Pros: Google Checkout provides the shopping cart and gives you access to consumers who hold an account with Google Checkout. It allows your customers to make online purchases through their Google Checkout account instead of submitting personal payment information through you. One other perk: If you have a Google AdSense account, you can link it to your Google Checkout account.

Cons: Google Checkout reportedly only accepts debit or credit cards, so those who want to pay by other means would be unable to do so. It also reportedly does not have any phone or email support and, as with any less-costly payment processor, there are likely to be limited features.


PayPal is a third-party payer owned by eBay, but you don’t need an eBay account to use its services. If you already offer credit card processing on your website, but you’d also like to give your customers the ability to pay with PayPal, you can use the Express Checkout service. If you’re in the market for a full payment processing service, these options can also be found through PayPal:

  • PayFlow is a gateway service that you can use with your own payment processor or merchant account.
  • PayPal Payments Standard gives you the ability to accept credit cards on your website. That means your customer doesn’t have to have a PayPal account to buy from you. But you will need a PayPal account because the funds will be deposited there for you.
  • PayPal Payments Pro functions in the same way, but instead of being taken to a PayPal page for payment, your customer will remain on your website while paying by credit card. It’s more like a gateway and merchant account setup, and it requires a monthly fee.

PayPal further offers Virtual Terminal and Online Invoicing services.

Fees: PayFlow requires a one-time setup fee and monthly service fees, plus a fee for every transaction over your allotted amount. Express Checkout and Website Payments Standard don’t have setup or monthly fees but will charge you per transaction: 2.9 percent, plus 30 cents for monthly sales under $3,000; 2.5 percent, plus 30 cents for sales between $3,000 and $10,000; and 2.2 percent, plus 30 cents for transactions that are more than $10,000. Website Payments Pro charges the same rate per transaction, plus a $30 monthly fee.

Pros: PayPal offers a shopping cart and a variety of options to fit nearly any business’ needs. Whichever service you choose, it’s easy to set up, and you can even reach customers across the globe. Plus—as with the other mentioned third-party wallets—millions of people trust PayPal enough to pay with their account rather than inputting a credit card number.

Cons: PayPal is not without problems, and a recurrent complaint stems from the way PayPal handles disputes and chargebacks. As a third-party payer, PayPal can set its own rules and freeze or cancel your account if it deems it as high-risk, which is a source of many grievances.


Formerly known as Moneybookers, Skrill is like the European version of PayPal. It’s an online payment and digital wallet system that works across the globe. Its Digital Wallet service might be likened to PayPal’s Express Checkout, so consumers can pay through their e-wallet instead of through a direct credit card number. Or, like Website Payments Standard, you can receive other payment options through Quick Checkout by those who may not want to use an e-wallet.

Fees: For U.S. merchants, monthly sales of up to $3,000 will cost 2.9 percent, plus 30 cents per transaction. Sales between $3,000 and $10,000 cost 2.4 percent, plus 29 cents; transactions between $10,000 and $100,000 cost 2 percent, plus 29 cents; and monthly sales beyond $100,000 will cost the merchant 1.7 percent, plus 29 cents per transaction. While there are no setup fees, you will find other fees for things like withdrawal or currency exchange.

Pros: Skrill is considered one of Europe’s largest online payment options, offering more than 100 payment choices in 200 countries and territories, and hosting several million user accounts. If you use one of Skrill’s shopping cart partners, your transaction fees will be reduced.

Cons: To obtain a merchant Skrill account, you are required to include on your business website your privacy policy, returns policy, full contact details and terms and conditions. You may also be required to verify your business standing once you’ve received a certain amount in payments. Also, if you sell to a customer outside your currency system, Skrill will charge you to have your money converted. is a service provided by Visa that will launch this year. It’s a third-party wallet that gives your customers the opportunity to keep on file an assortment of major credit and debit card information for hassle-free payments.

Fees: The fees for this service have not yet been made available.

Pros: Visa is a trusted name that consumers feel secure with. As a merchant, you will be able to add your own branding to the service so that your customers don’t feel they are being removed from the site when they pay. Online tools will let you keep track of sales activity.

Cons: The service will only be available to U.S. residents. Customer support will be available only during regular business hours, Monday through Friday, Eastern time.

And more

There is an inexhaustible list of payment processor services to choose from. If you like to thoroughly research your options, you can continue your search with the following payment services:

Now you are equipped with a better understanding about how payment processing works and what kind of fees you’ll be looking at paying as an online merchant. You can choose to accept credit card payments, and you can add third-party options, as well. You might also like to subscribe to a mobile service that will let you accept credit cards while, perhaps, hosting a booth at an event.

Understanding the terms and costs associated with payment processing can be quite tricky, but this series should give you a basic foundation upon which you can become a more knowledgeable, independent seller.

About the author

Sarah Brown
Sarah Brown is a freelance writer who writes about e-commerce and small businesses. She recently graduated from Chico State with a journalism degree and is also a budding online entrepreneur, having launched two Web businesses and her own line of handmade products. Opinions expressed here may not be shared by The Online Seller and/or its principals.

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