How do I start accepting credit cards online?
That’s a very common question everyone here at FreshBooks hears from people calling and e-mailing in. I’ll try answering the best way I know how: through a little question-and-answer session.
Here are the questions we usually ask someone who calls in:
1. Where are you based?
If you’re in the USA—you have a lot of options. Canada—you have a few options. The rest of the world—sadly, very few options. If you are outside of the United States or Canada, we usually skip to recommending PayPal and leave it at that. There are more options, but FreshBooks doesn’t support them yet. We hope to soon, but in the meantime, PayPal is your best bet.
2. Do you already have a merchant account?
Or more to the point, do you even know what a merchant account is?
A merchant account is essentially a bank account that handles your funds received via credit cards. They normally take a percentage off of every transaction. This is called a “discount rate.” If you have a storefront or a retail business and you are swiping people’s cards, then you already have a merchant account.
If you want to start accepting payments online, you’ll need to give your merchant provider a call and ask for an Internet merchant account—this is different from a regular merchant account, because it gives you the ability to process credit cards without the card being physically present for the transaction.
3. If you do have a merchant account, do you already have an account with a payment gateway like Authorize.net or PayPal?
If so, chances are you already know what you’re doing and you aren’t even reading this article. If you don’t, then you can read on and I’ll give some more details on what a payment gateway is and what the options are.
A payment gateway is kind of like the middleman between your customer and you or your merchant account. They normally have a merchant login where you can manage your account, run reports, submit refunds, and even send invoices. None of them have the advanced capabilities of FreshBooks, but if you run a retail business or a storefront and all you want to do is send one invoice online and get paid, you can probably do that directly through your payment gateway. (We’re all about honesty here at FreshBooks!)
Of course, if you want to start managing all your invoices, keep track of everything and get paid faster, then you can use FreshBooks in conjunction with a payment gateway.
Payment gateways usually charge a monthly fee (PayPal is the only exception) and sometimes a setup fee. Many of them also require an online merchant account, but will usually help you get one if you don’t already have one.
Here are your options when it comes to payment gateways:
PayPal
The big daddy of them all. PayPal is incredibly useful and powerful and scary at the same time. The standard offering is free to use and provides any very small business that wants to quickly accept payments online a near-perfect solution. You can read all about PayPal from any number of sources. They have a number of offerings that work with FreshBooks:
- PayPal Standard: This is the basic PayPal account. To start collecting on your FreshBooks invoices with PayPal Standard, you just need to enter your PayPal ID in your FreshBooks settings. When you send an invoice, there will be a link to pay and it will take your customer to a confirmation page that shows the total amount and provides a link to PayPal. Your customer then clicks that button and follows the instructions on PayPal’s site to pay the invoice. After they complete their payment, they must click “Return to Merchant,” at which point they’re directed back to FreshBooks and your invoice gets updated as “paid.” You can see a demonstration of this entire process in this blog post.
- PayPal Payflow Pro: This is PayPal’s new offering, which they recently purchased from VeriSign. It is a fully functional payment gateway that you can use with FreshBooks to collect one-time payments as well as automatically charge your customer’s credit card. Payflow Pro requires you to obtain an Internet merchant account. It has proven to be a very flexible solution and gives you all the features you’ll ever need in a payment gateway. The service has not been as reliable since PayPal took it over, but it’s still top-notch.
- PayPal Website Payments Pro: I’m not sure of the history behind PayPal Website Payments Pro (let’s shorten it to PayPal WPP so I don’t get a cramp typing this article), but I think PayPal created this service before they decided to purchase Payflow Pro from VeriSign because from the customer’s perspective it is almost identical. It provides all the same functionality, except that you don’t need to go out and get a merchant account. This is advantageous if you don’t like paperwork and/or your business is fairly new. Getting a merchant account can sometimes take some time and they make it more difficult if you are just starting out. Some of the downsides for FreshBooks users is that it is only available in the USA (the UK version is just a re-badged version of Payflow Pro). It is also controlled by PayPal and they won’t let you send recurring transactions, so you can’t use it to automatically charge your customer’s credit card.
That pretty much covers their offerings; you can read more about PayPal here. They also have something called Express Payment that is available if you have WPP, but express payment is just PayPal Standard on steroids. It will provide more consistency, but it still requires your customer to have a PayPal account.
Authorize.Net
Authorize.Net has built a very good reputation as the leader in online payment gateways for small business. They have a great solution with a no-nonsense gateway that just works. They provide a more direct solution than PayPal Standard, allowing your customer to seamlessly pay you with a credit card without having to leave your FreshBooks account. This offers a completely branded payment experience for your customers. Authorize.Net’s prices are reasonable and from what we have experienced, their service is great. When you refer people to sign up to a payment gateway, no news is good news; we’ve received largely positive feedback from new customers getting going with Authorize.Net and existing customers continuing to use the service.
Get a discount on Authorize.Net services by signing up through us.
The rest
FreshBooks has integrated with a host of other payment gateways. A select group of them are capable of handling automatically charging your customer’s credit card on a recurring basis. They include: Landmark (a smaller provider with excellent rates and easy online signup), Payment Processing Inc. (a U.S.-based service that actually purchased what was formerly a Canadian gateway, Paradata), iTransact (a larger gateway that also has a good reputation from our standpoint because we haven’t received any complaints), Linkpoint (ditto to iTransact), PSiGate (a Canadian gateway—yaay Canada!—they are a great solution if you are a Canadian business).
The outliers
A special payment gateway that doesn’t actually process credit cards is Electracash. They can enable you to collect your payment with something called an eCheck on the U.S.-based ACH (Automated Clearing House) network. This is a cool service, but be warned it doesn’t work for Canadian businesses, and they usually insist on holding back a certain amount of money for a designated time period until you become a more trusted merchant. Authorize.net and PayPal Payflow Pro also process ACH payments, but they will still charge a percentage instead of the low per-transaction fees Electracash charges.
The final one worth mention is 2Checkout.com. To be honest I don’t know much about 2Checkout.com, except they seem to be very simple to get set up and will work with very small businesses much like PayPal. They also offer their services to countries outside of the US and Canada.
In conclusion
I am a big believer in giving your customers an easy option to pay you because any barriers to payment you can remove will increase your cash flow and that is arguably the best thing you can do for your small business. If you want to get going immediately, PayPal is a great place to start. If you are ready for the next step, then take your pick of payment gateways that work seamlessly with FreshBooks.
If you are thirsting for more knowledge, check out the FAQ inside our help manual. Good luck, and happy collecting!
Copyright © 2000-2007
3:01 am
Thanks Levi for the payments info.
What non-PayPal options are there for Australian based payments? Are there any other Australian based users that are accepting online payments without PayPay?
Keep up the great work!
12:07 pm
Hi guys,
just thought I would throw a suggestion in there - have you considered Worldpay? They are also really good, and work with many currencies.
Thanx, Jens
5:28 pm
Hi Jens, yes we have actually looked into Worldpay and unfortunately I can’t for the life of me remember why we didn’t pursue them further. It is possible that the technology they use didn’t allow us to do recurring billing, so it wasn’t a good fit. Perhaps we should take another peek.
Smiggins, I have heard rumors that VeriSign had an Australian based service, but now that they have been purchased by PayPal, I’m not sure of the status.
2:04 am
It would be incredibly useful if you updated the ‘Compare Payment Partners’ page here:
http://www.secondsite.biz/Partners/Compare-Payment-Partners/
It’s pretty relevant, but the data is from 2004 - I’d imagine it’s changed a bit since then.
4:10 am
Hi guys - any movement on the inclusion of Realex in FreshBooks? That would give us European users a much better chance.
10:18 am
Great piece, Levi - very helpful.
Just a note - “accepting online payments” and accepting credit cards are not entirely synonymous, of course.
The cheapest way I’ve found so far is interac email money transfer:
http://www.certapay.com/en/
10:21 am
[...] Cooperman of Freshbooks has written a very useful post on allowing payment by credit card. [...]
11:58 am
Hi Leif, yes this secondsite.biz page is a great page and definitely outdated. I’ll pass your request on to the powers that be.
Hey Rob, yes email money transfer is very cool (and only in Canada). One of the biggest limitations I’ve found is the cap at $1,000 per transaction. I don’t know why the banks don’t just up that to $5,000…what can you do with $1,000 these days anyway? Perhaps that would put all the payroll direct deposit and wire transfer services out of business. If only I was on TD’s board of directors
2:34 am
You mention PayPal Pay Flow Pro has not been as reliable since they took it over, how so?
What types of problems have you run into? I recently upgraded our account to PayPal Pay Flow Pro, but very new to using it.
1:51 pm
Hi Christopher,
PayPal PayFlowPro is a great product. Its just been down a few times since PayPal took it over and their support hasn’t been great. You can read about it in these posts:
http://www.freshbooks.com/blog/2007/10/12/paypal-worst-support-ever/
http://www.freshbooks.com/blog/2007/10/02/paypal-payflow-pro-down-agin/
http://www.freshbooks.com/blog/2006/06/27/paypal-has-dropped-the-ball/
6:13 am
Just thought I would chime in on Pay Pal & accepting credit cards.
So far It has worked out well in our testing and I’ve had a couple of clients take advantage of it.
One client paid their $450 invoice using their AMEX card and the service charge amounted to ~$13.50, or ~3%. In Oregon we do not have a sales tax so we’ve repurposed the custom tax field for use as a “courtesy fee” for credit card use.
So far we’ve not had any complaints about the 3% fee for using their plastic. The only problem we have is knowing in advance if they plan to use a card.
One request from us would be for FreshBooks to offer an automated way to include a credit card courtesy fee. If setup properly, the client could then simply agree to the fee at the time of payment, then a new total would be calculated to reflect the additional fee. Just an idea!
Keep up the great work folks!
Cheers!
—Jeff
9:41 pm
jeff,
You should reconsider your “credit card courtesy fee”. It is against VISA and MASTERCARD regulations. If someone complains to VISA and MASTERCARD you could loose your merchant account!!!!!!!
10:07 pm
I’m a PayPal Premier Business client and for the most part I’m a very happy camper. In the past I’ve had 2CO accounts as well and all I can say about them is that they are mostly setup for “real goods” and not services. Whereas in my case I sell no good and only services.
Now, as a Freshbook user I’d like to be able to set up auto-billing, to clients credit card, recurring payments. From what I read to do this my choices are either open an account with one of the accepted payment gateways and get a merchant account (which I do not want) or use PayPal’s Website Pro gateway. Ok so off I go and check the later out only to be shocked that their not interested in my business unless I do $3K with them monthly.
At this point I’m scratching me head wondering why I can’t do recurring billing using that feature in my established PaylPal Business account? And I’m hoping someone will explain that to me because I’m presently scatching my head trying to make sense of this.
Thanks for reading.
PS: To Jeff and your “credit card courtesy fee”. I agree with Dave that it’s against both the VISA and MASTERCARD merchant account policies but I also know that it’s widely practised in for example the computer business. I’ve no idea how these companies get away with it. When I buy computer equipment for my business use wholesale and use a credit card I’m charged 3% more to cover the merchant account expense. None of these business’ hide that they use this practice - they spell it out in Newspaper and TV ads.
3:39 pm
I know the way they get around it, mostly, is to advertise “cash discounted” prices. Those prices are discounted 3% from “regular price,” and if you pay by credit card, you pay that regular price.
The thing is, this—and service charges in general—the whole idea of it seems really deceptive. If I want to pay by credit card, I want to pay by credit card; you should accept my credit card and work it into your cost of doing business, or not accept my credit card. The in-between has always seemed very odd, and it smacks of amateurishness a little.
That’s just my opinion, of course. But I do tend to avoid those places.
8:46 pm
Re the “credit card courtesy fee”: in Australia, merchants are legally allowed to pass on the credit card merchant fee to the consumer.
See http://www.fairtrading.nsw.gov.au/shopping/usingcredit/creditcardfees.html
Some of our major utilities do just this, charging an extra 1-2% if an account is paid by credit card. Of course, when this was introduced the merchants did not reduce their non-credit card prices, they just slapped the extra cost on top!
8:49 pm
Re JOEL’s comment: I don’t see how paymate.com integrates with FreshBooks. As a separate payment channel, sure, but wouldn’t you have to manually enter payments? Not much advantage there.
6:22 pm
Right… thanks Smiggins, I’ve marked his comment as spam, which I guess it was! Sorry for missing it, I’ve now subscribed to all blog comments so as not to miss that stuff again.
6:24 pm
Ah, and interesting about the Australian law. That’s actually sort of a shame, as a credit card user… but I’ll do as I’ve always done and continue to vote with my wallet, I suppose.
7:20 pm
After several clients had trouble paying us with pay pal (they received the infamous obscure error messages that don’t tell you anything), I ran across the site paypalsucks.com, and I found their readers choice pay pal alternative, http://www.merchantinc.com/. We were already in the process of setting up an authorize.net account, but they required tons of paper work. We signed up at marchantinc.com, as part of that setup they give you a linkpoint.com gateway account, a merchant account, and everything else you need, all in one electronic application processes. The LinkPoint gateway integrates seamlessly w/ FreshBooks, and in our first month of having it, and no more mention of Pay Pal on our Fresh Books pages, we’ve seen a big jump in credit card payments. It’s worth the time and trouble to move.
11:56 am
[...] Freshbooks’ Blog has a very thorough and informative article about accepting payments online. If your a freelancer and have ever had the desire to accept plastic over the Internet then this is an article you should be reading. I use Freshbooks for my business and have been very very pleased with the service. It’s easy to use and affordable. As a freelancer, I like to keep my overhead as low as possible and Freshbooks helps me to do that. They have a free account that lets you get your feet wet. They even snail mail your invoices if you so choose. With project management, time tracking (so you can bill by the minute like an attorney) and the ability to set different rates per project/employee/task it’s super customizable. [...]
8:29 pm
another good resource for payment processing in Canada would be:
http://www.canadian-merchant-account-services.com
6:28 pm
There are many options out there other than PayPal that can integrate with several software systems and certainly lower cost options. Take a look at this pricing comparison http://www.paysimple.com/competitors.html from PaySimple. It is one of the best references I’ve seen to compare the differing merchant account providers.
7:05 am
Can I add to the query from Sarah about REALEX.
6:41 pm
I’m in the Uk and have and use both worldpay/future pay and payal pro.
Worldpay offers recurring billing through a service called futurepay. It has been around since the late 90’s and is one of the biggest payment gateways in Europe and one of the only recurring payment options in Europe. It’s a pain to get an account though and they hold your money for a month until you’ve had your account for awhile and fight with them. They also charge for transferring funds to your bank and for refunds.
Paypal Pro in the UK has just added the recurring billing. You can change payment amounts, dates, billing cycles and credit cards. It’s not got the best interface but it does work fairly decently if not intuitively. I have not been able to quite understand the difference between pro and flo though and where one works and one doesn’t.
Does payal pro in the UK work with freshbboks?
Excuse my ignorance on this question, I”m new to Freshbooks and don’t understand how the payment process works. How do the customer’s payment details get into the system - ie, how does the customer input their credit card details or paypal account?
We sell subscription services online and most payments are taken online. Can I use a shopping cart to sell the services. One which then creates an invoice in freshbooks and collects payment thru paypal and creates a sales receipt . And continue to do so and update freshbooks?
Tks
8:53 am
It’s currently unsupported, because we have no way to test it ourselves in a hands-on fashion; but I know if you enter your PayPal Website Payments Pro UK information in your FreshBooks settings under PayPal Manager, with “PayPalUK” as the partner, it should work! I’d recommend at least experimenting with it, assuming you already have the PayPal account.
5:42 pm
Hi guys. Any timetable for Google Checkout support?
7:54 pm
HI all, I just wanted to throw my 2-bob in for supporting the Australian Paymate service (for Oz users) as an alternative to PayPal. Better rates, good support (you can speak to someone there) and robust.
12:21 am
Thanks Levi for the payments info. Very helpful!
Regards,
–orlando
http://www.internetpronto.com
12:55 am
I just have to chime in and say I second that about Paymate for Australian users. I love using Freshbooks, but my clients have a lot of trouble figuring out how to use the Paypal payment page - the credit card link is tiny!
Paymate on the other hand is awesome in the respect that they make it easy for people to use credit cards, and their support is 1000% on Paypal in my opinion.
11:15 am
I’m currently using Payoneer to receive payments. Very convenient for me and my client. Hope we could integrate this here in Freshbooks.
1:31 pm
I would like to use online credit card processing yet I already have a Moneris account. Is there anyway to use or transfer that account so that I can use it in your system?
Robert
1:35 pm
HI Robert,
At this time we don’t support Moneris. If you want to get setup with a gateway we support in Canada, you could try contacting PSiGate (http://www.psigate.com). I am guessing you could keep the merchant account you have, but they will let you know if that is the case.
- Levi
3:52 am
Levi,
Any updates on WorldPay?
12:05 am
Australias biggest payment gateway is eWay. We use them for our online stores. If you want to add a real payment gateway provider for Australian users go for eWay. Apparently the API is easy to use for you developer types…
3:12 am
Another payment gateway for australia is SecurePay (www.securepay.com.au). It allows periodic payment. trigger payment, one off payment …. plus they have XML API to achieve all of this and they are PCI compliant….I think it would be really great if FreshBooks implemented the payment gateway as it will give a more cheaper and better options for us to get auto payments
8:37 pm
Just adding my voice for the requests for Google Checkout and Amazon Payments.
12:51 am
I would like integration with Google Checkout also.
Thanks!
3:20 pm
Just signed up, we’re using Google Checkout (after leaving Authorize.net because we got sick of the monthly recurring fees in addition to the percentage and the per-transaction charge). Google charges 2% + $0.20 per transaction.
I made the assumption that Google Checkout was covered. Unfortunately I don’t know if Freshbooks will remain an option if Google Checkout is off the table.
Any news there? I see a few posts but nothing back from Freshbooks.
Cheers -
3:54 pm
Hey John, Mike and Carl,
Thanks for the comments. Wow, sounds like it is definitely time for us to add Google Checkout. I will check where it lies in our product roadmap and get back to you soon.
thanks for the feedback,
Levi
12:16 pm
Hey, Guys! I’m new to this game, and am looking for a bit of advice regarding payment. I work for myself as a consultant, and have a single client. They refuse to do direct deposit for consultants, so I’m looking at online credit card payment. Is it worth it? Once a customer makes a payment online, how are those funds then transferred to your bank account?
10:51 am
Chris, I might recommend you check out our guide to accepting online payments. We usually find it’s more than worth the 3% or so in surcharges because getting 97% of your money FAST is still way better than getting 100% of it slow, or worse, never at all!
11:44 pm
I’d sign up for Freshbooks in a New York minute if you guys supported Google Checkout! Until then… It’s BillingOrchard.com
6:33 pm
I have been a Freshbooks user for over a year and love it. However, I just signed up for a merchant and gateway service, thinking it was supported by FB, but I guess I didn’t do my homework very well.
Any plans to support Elavon in the near future?
8:51 am
Hi Matt,
Thanks for the support.
We don’t have any short term plans to support Elavon. May I ask why you chose that gateway over others like Authorize.net, Linkpoint or Payflow Pro?
- Levi
3:47 pm
This article is hugely in need of an update. Much of the PayPal information is no longer correct.
10:15 am
Hi Joshua,
Which PayPal information is out of date? As far as I know most of it is still valid.
- Levi
12:14 am
Freshbooks Newbie here!
Living and working from the USVI I would like to know what my credit card and ACH processing options would be. Any help would be appreciated.
Thanks!
Alicia
10:47 pm
I would also like to use Google Checkout.
Thanks.
11:00 pm
Hi I use alertpay as payment option.
How can I integrate that with my freshbooks?
9:05 am
Hi Aldimir,
Currently we are not integrated with Alertpay. If you already have a merchant account, you could likely use that merchant account and get an account with a different gateway that we are integrated with such as Authorize.net, Linkpoint, iTransact or Payflow Pro.
- Levi
11:03 am
Is there any use of “Worldpay” possible since we are merchant with “Worldpay” and wish to integrate Worldpay to your Fresh Book Software/System. Thank you.
4:02 pm
@Joshua: i think they might be referring to the Website Payments Pro info. PayPal now allow WPP to do recurring billing, whether or not it’s gonna work for Freshbooks is up to you though.
1:22 pm
Hi Levi,
All this is great info about the different merchant accounts…but what would you recommend for your smaller businesses, who can’t or don’ t want to carry a true online merchant account, and haven’t had great success with the Free PayPal at least with respect to online gift certificates?
3:26 pm
Hi Gregg,
Sadly there aren’t many online options for the smaller businesses that don’t want a merchant account. I normally would recommend PayPal, but if you don’t want to use PayPal, you could try 2Checkout. They are quite popular around the world for small merchants.
Hope that helps a bit,
Levi
3:29 am
how about cybersource? i think they own authorize.net or the other way around.
thanks
julian
8:43 am
Hi Julian,
Cybersource has always been an option for us, but we don’t get many requests. Are you using it?
- Levi
1:19 pm
Count us in for the request for Google Checkout. It’s much more economical for small business owners and my clients are getting tired of only having Paypal as an option.
Is there a timetable for this yet or any feed back from Freshbooks on Google Checkout?
Anyone? Anyone? Bueller?
3:14 pm
Hi Joelle
We have definitely heard our users voting for Google Checkout, and I’ve added your vote to the tally. There is no timetable on this as we don’t comment on unreleased features.
But we hear you, and we think it’s a great idea. Hasn’t happened yet, but it’s definitely on our list.
8:26 pm
I know FB puts a lot of effort into continually improving product. Judging from all of the posts here and else, I would suggest that the top 3 feature requests are:
1. Google Checkout
2. Google Checkout
and
3. Google Checkout
Please?
5:17 am
There are many other payment providers so people aren’t mis-led to think PP is the only one.
12:33 pm
Just throwing in another request for Google Checkout. Maybe it will make the top 4 requests now. I’m probably going to hold out on Freshbooks until I see it integrated.
2:07 pm
I have just gone round the houses with 2checkout refusing to allow me to use freshbooks with my 2checkout account (apparently they only support products purchased from your site… apparently freshboks is jost not an option).
This leaves paypal (which I and my customers dont like).
Please please please sort out Google Checkout… I will sign up when that is in place, for sure!!!
6:03 pm
Just a note to say Levi (Freshbooks) ironed this out with 2CO for me… great job Levi, I really appreciate it!
12:33 am
Another vote for Cybersource.
1:02 am
Please add support for Google Checkout.