In this FAQ we will be discussing the costs, pros and cons of collecting credit card payments via PayPal and/or your Bank Payment Gateway.

Note: The Fees in this article change regularly. They may have been accurate at the time of writing this article, but they should be confirmed before proceeding.

Paypal Express and Website Payment Standard Accounts:

There several PayPal account types depending on your size and functionality. Most startups use the Website Payments or Express accounts - and these have charges starting at 2.6% + 30c (or 3.6% + a fixed fee for international customers). These fees are reduced depending on the monthly sales you do. If you do over $150,000 a month, the Fees drop to 1.1% + 30c.

With these accounts, there are no monthly fees and no cancellation.

If you transfer less than $150 out of your paypal account into your bank account, you get slapped an additional fee.

Pros:

  • You don't get charged if you don't sell anything
  • Cheap for small shops

Cons:

  • Paypal holds your money until you transfer it to your bank account. If there is a problem - PayPal holds the money. If a buyer disputes a transaction - your account gets locked!
  • PayPal is governed by US laws - not Australian laws.
  • In 2010 PayPal requested additional information from several existing Australian merchants (copies of passports). Paypal locked their accounts without warning until this information was submitted. Some of these merchants could not (or were not willing) to submit the information and as a result these merchants lost access to their paypal merchant account and the funds within.
  • PayPal's customer support is appalling.
  • Your Bank statement only shows the bulk PayPal transfer and not every customer transaction.

For More info:

Cost Case 1, $200,000:

$200,000 of transactions per year, averaging at 2,000 x $100 products.

Total Annual Fee: $5,200 + $600 = $5,800

Cost Case 2, $50,000:

$50,000 of transactions per year, averaging at 1,000 x $50 products.

Total Annual Fee: $1,300 + $300= $1,600

 

Merchant Hosted Payment Gateways:

These vary from bank to bank. Fees also vary from bank to bank. The information below should be checked for your own case with the bank directly.

At the time of writing this page, the banks offered the following Merchant-Hosted API interfaces...

Bank: NAB Westpac ANZ CommBank Bendigo PayPal
Express
Plan: Transact API Payway API

eGate
(MIGS)

Commweb
(MIGS)
MIGS -
Method: XML API Client API + SOAP API POST API POST  API POST -
Merchant Facilty Setup: inc below $110 inc below ? inc below -
API Setup Fee: $199 $220 $99 ? $195 -
Monthly Charge: $35 $22 $39.95 ? $39 none
Min Monthly Service Fee: $22 $22 $29 ?  - none
Transaction Fee: $0.35 $0.165 none ?  none $0.30
Credit Card Fee - Standard Cards: 2.2% 1.1% 1.8% ?  1.45% 2.4%

Credit Card Fee - Premium Cards*:

3.2% 1.1% 1.8% ?  1.45% 2.4%
Annual Fee $28 none $29.95 ?  none none
Early Account Closure Fee $150 $550 within 3 years
$105 thereafter
$250 ? $250
within 1 Year
none
Accepted Cards

Visa
MasterCard
(AMEX with
difficulty)

Visa
MasterCard
AMEX

Visa
MasterCard
AMEX (3.25%)
  Visa
MasterCard
AMEX
Visa
MasterCard

 Please consult your bank for updates and confirmed quotes. The information above is indicative only for accounts with $50,000/annum transaction volumes, $100 transactions amounts at the time of our enquires.

*Premium cards are International, Corporate, Commercial, CUP and Platinum cards.

A few banks use the MIG'S and rebadge it.

MIGS is a Mastercard product - its short for Mastercard Internet Gateway Service.

Cost Case 1 (NAB), $200,000:

$200,000 of transactions per year, averaging at 2,000 x $100 products.

First Time Setup fee: $199.

Total Annual Fee: $200,000*2.2% + $700 + $35*12 + $28
   = $5,548 + third Party Gateway Costs

Cost Case 2, $50,000 (NAB):

$50,000 of transactions per year, averaging at 1000 x $50 products.

First Time Setup fee: $199.

Total Annual Fee: $50,000*2.2%+ $350 + $35*12 + $28
    = $1,898 + third party Gateway Costs

 

Cost Case 1 (Bendigo), $200,000:

$200,000 of transactions per year, averaging at 2,000 x $100 products.

First Time Setup fee: $195.

Total Annual Fee: $200,000*1.45% + $39*12
   = $3,368 + third Party Gateway Costs

Cost Case 2 (Bendigo), $50,000 :

$50,000 of transactions per year, averaging at 1000 x $50 products.

First Time Setup fee: $195.

Total Annual Fee: $50,000*1.45% + $39*12
   = $1,193 + third party Gateway Costs

 SSL certificates are required, which also helps for customer confidence.

Third Part Gateway costs are generally $50/month. ($600/year).

Pros:

  • The bank looks after the security
  • Governed by Australian Laws
  • Payments go straight into your bank account automatically.
  • Better phone support

Cons:

  • More expensive for small shops
  • Not all Banks have an API interface.

What is MIGS?

Known as the MasterCard Internet Gateway service (MiGS), it is Australian developed software that powers MasterCard’s ecommerce payments across the Asia-Pacific region.

MIGS was originally developed in Brisbane by software engineers working for what was then known as Dialect Payment Technologies. Dialect is part of the US company, Transaction Network Services (TNS).

More than 70 (seventy) banks across the Asia-Pacific region are said to use the MiGS gateway to process online card transactions from more than 17,000 merchants.

Recommendation

For a revenue of less than $50k, and if you are OK with your money being handled by an oversea's company, PayPal is often the most viable.

For sales greater than $50k, a Bank Payment Gateway generally is more viable. With that you will get security of being legislated by Australian Law.

What your Customers prefer to use is a different matter. You may opt to provide both gateways for customer convenience.