Of the several payment options available, the two most popular and easiest to get up and running are PayPal and Stripe. A third option, Braintree, is also very good. The latter was purchased by PayPal a few years ago, but operates independently.
Unless your event is processing large volumes of credit card transactions, consider using one of the above three option. Take the time to compare these with a bank merchant account. Even though a bank will quote a lower discount rate (the percentage of the transaction the processor takes), a number of hidden fees may cost the event more overall.
PayPal Business Accounts
We’ve personally interacted with all three services and find Stripe to be among the easiest accounts to set up (takes about 5 minutes) and work with moving forward. The only drawback, and it may not be critical, is their customer support is only handled via email. Responsiveness can vary from 8 hours to several days. Braintree Payments is the best with readily accessible customer service and they now appear to allow accounts to be set up more quickly than in the past. Being owned by PayPal allows Braintree Payments and PayPal users to exist within the same account.
The discount rate (what the event pays per transaction) is the same for each of the three payment processors. As of this writing, it’s 2.9% plus $0.30 for each transaction. Typical bank merchant accounts will quote a discount rate of approximately 2.2% for online transactions and 1.8% for card present transaction. However, that rate is for a basic credit card. If the credit card used is a rewards card the rates are higher. In the past, banks would charge the highest fee for business rewards cards – around 3.6%. Additionally, an event will need to set up a separate account for American Express, which has a discount rate of around 3.5%. If you don’t process enough of their cards they may hit the event with a $5 monthly minimum charge. Double check the fine print for more details.
Here’s what makes Stripe, PayPal and Braintree different from a standard bank merchant account:
- No monthly minimums are required. Merchant account services through banks may charge a $25 minimum. Even if you don’t process enough transactions in a month, they will charge the event the minimum.
- No monthly fees. Bank merchant accounts typically charge a monthly statement fee along with possibly other fees. For more information, check the fine print.
- No gateway fee. If an event is processing transactions online versus point of sale (retail location), you will need to connect your merchant account to your online store using a gateway. Authorize.net is a widely used payment gateway. The event will pay a monthly fee along with additional processing fees for the gateway above those you already pay for your merchant account. Check Authorize.net’s monthly fee. It was $20 and the per transaction fee was $0.10.
- Fees are refunded when a refund is issued. Verify with Stripe and Braintree that fees are reversed when refunds are occur. PayPal has been refunding the discount rate but not the $0.30 transaction fee. Bank merchant accounts haven’t historically refunded any fees and many times will charge an additional fee for issuing the refund.
- A flat $15 chargeback is assessed when a buyer disputes a credit card charge. If the dispute finds in favor of the event, Stripe will refund the $15 chargeback fee. Double check Braintree and PayPal fine print. Merchant accounts through banks do not refund any chargeback fees which are typically around $30.
How fast is your money available to the event?
Banks usually deposit transaction amounts to your bank account within 2 business days, but American Express will take 3-5 business days. Braintree will deposit within 2 business days. Stripe will take 7 business days for the first deposit and then deposit in 2 business days thereafter. With PayPal, the event will need to login to your account and make the transfer manually, unless this piece has been automated.
There are many free integrations available; because Stripe and PayPal’s popularity, they have the most plugins. Braintree Payments does integrate with WooCommerce.
For more information on this topic:
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To learn more about event and festival management, check out “Secrets to Successful Events: How to Organize, Promote and Manage Exceptional Events and Festivals.” For those with event planning experience, consider, “Secrets to Successful Events Resource Guide: 42+ Easy-to-Use Tools and Resources.” Both are written by internationally known author and speaker Lynn Fuhler and are available on Amazon and at major booksellers.