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Comment by jusben1369 | Hacker News Reader

PayPal, PayMill, Braintree etc are all 3rd party payment processors. So I don't quite understand your distinction. I believe FastSpring may mean you avoid having to get a merchant account directly so perhaps that's the difference you see? The biggest objection I've heard is the 9% flat rate they take vs 3% and 30 cents per transaction that you'd roughly see from a payment processor.

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The cost for a payment processor 3% and 30 cents per transaction PLUS the costs (time-related, development-related, support-related) to manage to obtain a merchant account, deal with VAT, fraud detection, a nice customer experience, and many other things. For startups you end up way ahead by NOT rolling your own solution to this and other problems.

9% of your turnover vs ~ 3.1% of your turnover.

You're a mad man to pay that much. It's a right pita, but it's not worth 6% of your company.

Let's get the comparison right.

FastSpring charge me 5.9% + 50c A merchant account will cost me 3% + 30c.

My software sells for $69. So it is 6.62% vs 3.43%. Actually it isn't.

The comparison is (6.62%) vs (3.43% PLUS dealing with all those VAT issues, fraud detection, fighting and/or wearing chargebacks, coding and maintaining the payment system, allowing direct bank transfers in countries where consumers prefer them, and many more things).

When you look at the service and functionality you get in exchange for paying more, you realize that in reality FastSpring actually means paying less, earning more (profit). Take a look at the FastSpring or SaaSy features pages, and as you go through the functionality and services listed, think through how much time it would take you to develop the same functionality on your own (years), how much more revenue you'd earn from day one by using this already existing global online selling functionality, how many distracting obstacles you get to avoid (try setting up on your own to accept foreign currencies and have your order page language-localized, not to mention to be able to manage global taxes and be in compliance on all global sales), the expenses you avoid taking on (you dont pay chargeback fees, you don't need the support or dev staff members you would otherwise need, you dont need to pay for file hosting), the risks you avoid (we are the merchant of record, not you, we deal with fraud and PCI compliance, you outsource to us potential company-killing risks like how credit card numbers are stored (btw we store none), the list goes on and on...

There are plenty of businesses where 9% is more than the gross margin. And plenty of businesses where the gross margin is higher than 9% but small enough for you to be totally unable to compete if you spend 9% on transaction fees.

It certainly can be worth it for high margin services and products, but it's by no means something that's always viable.

True. Though we mainly deal in downloadable software/games and SaaS where margins are usually pretty high.

  PayPal, PayMill, Braintree etc are all 3rd party payment
  processors. So I don't quite understand your distinction.
  I believe FastSpring may mean you avoid having to get a
  merchant account directly so perhaps that's the
  difference you see?

The main difference is that FastSpring acts as a reseller. One of the consequences being that Europe based startup doesn't need to handle VAT - technically it's selling to the US.

  The biggest objection I've heard is the 9% flat rate they 
  take vs 3% and 30 cents per transaction that you'd roughly 
  see from a payment processor.

Well, it's not cheap but we have EU regulators to thanks for it - not having to deal with VAT can be worth the price in some cases. And when a company grows, it can optimize in the payments area.

Indeed, FastSpring is the reseller, the merchant of record, so everything gets outsourced.

These e-commerce companies will negotiate as long as you have a reasonable revenue.

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