Pin Payments is Australia’s first all-in-one online payment API
pin.net.au
pin.net.au
1. Doing anything financial in Australia is hard. For better or for worse (IMHO it's mostly better) there is strict financial regulation in Australia (mostly due to the Corporations Act revamp under the Howard government as well as the longstanding Trade Practices Act, which is one of the most consumer-friendly pieces of legislation I think in the world).
I'd be interested in knowing the story and how high compliance costs are for something like this.
2. It was done (based on comments here) at least in part in Perth. Perth is my home town and has become increasingly tech unfriendly for three reasons:
- a lot of the bigger employers got bought out and consolidated their software development over East;
- the state as a whole is very focused on digging stuff up from the ground (or under the sea to be pedantic) and selling it to the Chinese. The startup scene is tiny; and
- cost of living in Perth is terrible in wage-adjusted terms. Honestly it's cheaper for me to live in New York (I moved here about 2.5 years ago to start a job with Google). Housing is a huge part of it but food, utilities and, well, everything is expensive in Perth now.
I'd certainly like to here more about the development story and the team (the site is scant on details on this).
As for the service itself, I'll echo the comments of others and say the FX and other fees coule make this quite expensive.
Still, good to see this coming out of Australia and good luck guys. I'm also glad to hear about more tech things happening in Perth. I might have to check out the meetups and stuff next time I visit.
For every successful Australian company I can think of, there are thousands not so lucky. Atlassian and Envato are the only two companies I can think of off of the top of my head who have had major success spawning web based businesses in a country as small and somewhat lacking as Australia as Australia is. Melbourne and Sydney are definitely two locations you're most likely to start a successful business in. Good to see Pin tackling payments because in Australia you have two options: Paypal or a propriety expensive bank solution with horrible API.
You can't blame Australia too much for that. It's a tiny market, and the US is an abnormally large one. It's logical.
(There is some mixing, eg. a few devs in Austin, a few support guys here.)
And the smaller cities aren't going to be much cheaper, either. The median house price across all of Australia is around $500k (!).
I suspect the real reason the status quo was protected was something to do with a brilliant track record of globally high fees and unending profits for Australian banks.
Hopefully the Wikileaks Party can put the fear of transparency in to these people!
As an Australian, I welcome this wholeheartedly. It has been extremely frustrating watching the payment revolution in the states, whilst at home there is next to no alternative to getting a merchants facility through a bank up until now. It will also be nice dealing with an API that isn't stuck in the 90s.
edit: apologies, I didn't realize braintree required a merchant account as well.
You have to pay a bunch of money up front and then, if you're not a fish-and-chip shop or similar, you'll probably be told "no".
Plus, each bank will ask if you've ever been knocked back somewhere else. If you honestly answer that you have, guess how that affects your chances?
Pin is very needed here.
If a provider states that no merchant account is required, you are most likely being placed on an aggregated merchant account. This has many disadvantages for the merchant as you are grouped under one umbrella account. As the provider grows, this becomes unsustainable and often leads to poor customer experiences (a la Paypal account freezes).
We're working to create a sustainable solution where customer service and great software are the central focus. We'll be constantly improving the on-boarding timeline and look forward to helping the fast growing tech scene in Australia. Always happy to answer any questions about anything payments or e-commerce related, just let us know!
However, if you're an Australian company that wants to deal exclusively or largely in USD -- then you need to keep an eye on the cost.
Pin is offering $50/month ($9 promo atm) - then 3% and $0.30 on every transaction. Then for foreign exchange there is "a retail foreign exchange rate of 4% on top of the wholesale interbank rate at the time of the transaction" https://pin.net.au/pricing
Plus if you've got USD outgoings - e.g. paying for EC2 - you'll cop the foreign exchange on the way out too.
All of these things chip away & can add up to quite a considerable overhead.
"Better off elsewhere" - where? Braintree seems like the only similar option, and as discussed elsewhere in this comment thread: you need a merchant account if you want to engage with them.
(I'm happy to take suggestions, but there's just a dearth of them!)
At the low end (transaction volume/amounts), you just get murdered on costs. If you've got a niche or high margin business this might be fine.
At the higher end. Well. It seems that a US entity is the way to go. If you structure the vehicle according to some strict rules, you don't incur any US tax. The fixed costs are much, much higher, but the breakpoint is probably lower than people think. This is especially true if you have any kind of cost-base in the US.
There are a few other hacks too. If you're a SaaS business you might consider deeper discounts for annual payment. This is good for cash flow & bumps up your individual transactions. This can change the equation a little - and it's probably better for the $ to be in your customers' pocket rather than a bunch of intermediary financial institutions.
As you say. I'm open to hearing constructive suggestions too! It's frustrating how complex this still is.
Edit: One of the biggest bugbears is AMEX. Even if you get yourself a NAB USD account - AMEX only ever process in the home currency (i.e. AUD). It's easy to be ignorant of this in Australia as AMEX is considered reasonably rare. However, it's pretty much a requirement to operate in the US... So you get this expensive facility, then half your transactions come in AMEX and get processed to AUD anyway (damn). Very open to hear better solutions!
Yeah, absolutely. There are Australians out there with US entities so they can use Stripe; that ultimately seems the way to go if you are doing volume/have thin margins.
I'm (about to) run a niche, high-margin service so Pin isn't too bad, esp. at the intro pricing. The good thing is that their API's are so similar that porting across isn't a lot of work if you need to do so down the track, and/or if Stripe launches a local offering.
I really like what Pin is doing, but clearly they only have so much push with the bank(s). Perhaps in time (when they get more volume) they can pass on some savings to end-users.
Forex is beyond me, and that's where it does get complex :)
It's $50/month. $0.30/transaction. Then 3% and then another 4% for the FX. Then maybe you pay your EC2 bill, or your Adwords account, or your oDesk freelancer and that's another 4-5% on the way back.
If you're doing a large volume of small transactions you'll be racking up ~15% just in fees. If you manage to change that to fewer larger transactions, you might get that to 8-9%. However, even though the % is slightly healthier it's now serious money ($1,000s). Once you get into that camp having a US entity (or whatever) starts to pay off.
Meanwhile, your US-based competitors are doing a flat $0.30 and 2.9% with Stripe (That's just off the bat! Your bigger competitors are using Braintree and probably getting sub 2% overall).
Sounds like I'm hating on Pin. I'm not. Genuinely embrace that they're on the scene. Payments in Australia have been a world of hurt for a long time. This is a great first beachhead and getting this capability out there is fundamental.
These guys are based out of Perth, Australia and offer some pretty compelling prices, especially the email they sent them morning where their monthly pricing went down to $9 a month (instead of $50).
They use ruby on rails, and offer a JSON API.bEE
For those who don't know, Perth is the most remote city in the world (according to Bill Bryson), and has a population shy of 2 million mostly in a sprawl that hugs the coast.
I spent over a month there and a couple of weeks exploring the area around Margaret River, lovely place... but reading this, what strikes me is how hard it must be to find support, raise money, and build a startup with reach in a city of such remoteness and with only a limited pool of angels and tech resource to call upon.
So... knowing the city and WA as briefly as I do, I think this startup would probably have a good story behind it about the adverse environment (for startups) in which they emerged and what it took to get to where they are, and where they're going from here.
It looks like they have a great team and in my limited experience their customer service is really good. Hopefully some of them chime in here though their director seems a little HN shy from one of his latest tweets.
There's a story to tell! Building something like this in Perth is hard, but that's part of what makes it such an opportunity.
We're by no means the only tech startup here too - given the population and isolation, Perth is well represented in Australian startup crowd.
So I take this opportunity to ask someone, sensibly: Is there a thriving tech scene in Perth? Software businesses, catering to a local market, that sort of thing? Like most major cities, there is probably an 'IT sector', consisting of hardware and systems support companies, probably -and of course the Uni's of WA are all very well connected in the F/OSS/Academic systems software departments. But, whats the local software economy like? Much custom, Business to business, software?
I imagine that with the Perth Mint and the Mining banks involved in all this, its going to be a solid way to do business in that part of the world, as well as Internationally. I'm, anyhow, off to get my family to set up their Pin Payments accounts asap .. :)
There is quite a lot of businesses who want customised web solutions (not just in mining, but would account for a large portion), so as a result there are quite a few web companies here in Perth who do anything from small business websites all the way up to customised systems. The industry does go quiet sometimes, however it's usually pretty busy especially as more people over east bring business over to Perth thanks to the thriving web market here :).
[1] - port80.asn.au
Do you do credit card only? What about recurring charges?
We are remote yes, but we have so many events going on here that it makes up for it.
They have support from the banks and also the Australian Government so would love to hear how that all went, if/when I meet them I'll ask them to blog about it then post on HN.
And being originally from Perth it is fantastic to see it show that it is so much more than just a FIFO mining town.
In addition to the tyranny of distance, what's working against startups here is the high cost of living.
Perth is wealthy, but is the money mostly poured back into mining related ventures?
Largely due to mining, Australia's average wage is around $70k but our median wage is around $45k. Pretty crazy.
It's a similar atmosphere to Texas oil culture (I hear, anyway). Lots of secessionists saying Western Australia is keeping the country afloat. This is somewhat true (but not entirely), and they tend to forget 20 years ago WA was a shitheap with nothing going for it.
The payments sector has been awaiting a shakeup in Australia for some time now, and Pin will definitely be a recognizable force moving forward.
Congrats on the launch and thanks for the lowered monthly fee!
So the actual pricing is more like $9/mo + .30 + 7% for any non AUD business.
We use Stripe, a Bank of America USD account and OANDA to move our USD -> AUD with an FX commission ~ 0.1%.
There's one point in favour of Pin, though: easy setup. For side-projects, $9/month and have an ABN is comparatively little, where going through creating a merchant account alone---let alone the other requirements---is a big deterrant and thus, I think, quite harmful to this micro/experimental online business sector. My plan is basically use Pin while it's the cheapest and simplest, then when my business has demonstrated viability, go for the cheaper, more complex option. (Naturally this is dependent upon having a fairly-high-margin business.)
That said, foreign currency accounts are usually expensive. Westpac quoted me a $60/mth account keeping fee.
I ended up going with a US entity + bank account, which is the best option of a bunch of crappy options.
Pin looks good for small volumes
The $50/$0.30/3% you pay will cover expenses and make a bit of money, but the margins are pretty tight on that part of the transaction - it's all the FX leveraging/charging they do with your non-AUD income that actually makes the company viable.
And then for any further side-projects... I'll already have the low-maintenance account. Great!
Uh, and they also don't support 2FA on their login form; that's not going to end well.
I am very that excited this came through and am doubly grateful for the $9 offer they're doing.
I'll have to get a sole trader ABN to be eligible to use it but I suspect it will be worth it.
Welcome to Australian banking.
Somehow through one of the worst banking crisis in the history of the world the major Australian banks still remained some of the most profitable companies in the world.
The banks in Australia are a huge tax on the economy but politically nobody will raise the issue - since despite getting shafted the Australian public is too shallow to see past the fear mongering of job losses in the banking sector and having to protect it.
But our market is too small to attract truly serious competition. A serious foreign entrant would need to buy a Big 4 and that would be expensive and messy.
And that's Australian Banking. Alternatives are even more pricy..........
They abstract the bank part of the equation as well so you are just dealing with a single entity for any issues that arise. Plus their pricing is a little bit better:
https://www.braintreepayments.com/pricing
That said ANY competition is always nice. The real question though is how they handle chargebacks.
Which, to me, are not-insubstantial barriers. Pin might not be as competitive on price (barring the $9/m intro offer), but just being able to supply a regular account to handle their deposits is convenient.
On a somewhat related note, I'm currently forking Drone.io's go.stripe library[1] for Pin Payments, given the extreme similarity of the Stripe & Pin API's. If anyone is keen on helping, get in touch or send me a pull request: https://github.com/elithrar/go.pin
IMHO Pin lowers the barrier to entry for accepting CC, which is most welcome, and long overdue in this country.
Will definitely be giving Pin a go then.
I personally use Braintree but with a US account for a US company (even though I live in Australia). This is more of an exceptional case however I think.
For Australian businesses charging in US dollars is not exceptional, probably very common.
If a provider states that no merchant account is required, you are most likely being placed on an aggregated merchant account. This has many disadvantages for the merchant as you are grouped under one umbrella account. As the provider grows, this becomes unsustainable and often leads to poor customer experiences (a la Paypal account freezes).
We're working to create a sustainable solution where customer service and great software are the central focus. We'll be constantly improving the on-boarding timeline and look forward to helping the fast growing tech scene in Australia.
From another Perth guy, more congrats to the Pin team (I actually discovered them when I had the same idea, googled it and found that it existed already - in my own town!)
I found out that they were here by looking the company details on ASIC.
No gateway or merchant account required.The 50k cutoff used to be the threshold for GsT registration, which is now 75k
Told them to jam it, in the process of moving to Pin as we speak.
They're based in NZ, have lower transaction fees, no monthly fee, and already support 12 different currencies.
Progress, not the exact same post.