I'm working on a web app that will handle monthly payments from users, but I'm still learning the ins and outs of web app development and how payment systems work. I hear a lot about payment processors and payment gateways, but I'm confused about what they actually do. Could someone explain how these systems work? Also, I want to know more about Stripe and why it's so popular. Are there cheaper alternatives with lower transaction fees? Lastly, I'd appreciate any recommendations for resources—like articles or videos—that can help me better understand payment systems. By the way, I'm not based in the US, and I have access to different payment options, such as credit/debit cards and local services like Tabby and STC Pay.
2 Answers
Before selecting a payment processor, think about these important questions:
1. Will you have international customers? This can lead to extra currency exchange fees.
2. Where do you want the funds to go—directly to a bank account, PayPal, or a digital wallet?
3. How quickly do you want to receive your money: days or weeks?
Here’s a quick breakdown of how payment gateways work: when a customer pays by card, the transaction is authorized instantly through networks like Visa or Mastercard and the money typically settles in 1-2 days through a Payment Service Provider (PSP) like Stripe. If you're interested in solutions that pay out directly to wallets using USDC, I've created one specifically for businesses outside the US!
Payment processors like Stripe, PayPal, and Braintree are essential because they handle your customers' payment card data safely. This is crucial—if you try to manage that data yourself, you put your business at risk from cyber threats. Typically, they charge around $0.30 plus a percentage per transaction, similar to what stores pay for card transactions. Plus, they help protect against fraud, which is invaluable. If you want to use Stripe for subscriptions, just be prepared; their API can be a bit tricky to navigate. Check out their billing docs for guidance!
So, are payment processors responsible for handling Visa and Mastercard transactions? What about payment gateways, like Google Pay or Apple Pay? I don’t see them listed as options on payment processors, so what's the difference?
Do payment service providers handle those currency exchange and cross-border fees, like Stripe or PayPal?