Recurring payment provider options for a UK start-up

As many of you will know, we're currently in the process of launching a new online service -Crisis Cover which is a digital safe for your business' digital assets. A week before the launch we ran into a  slight hiccup in regards our payment gateway. The problem is simple:

The trouble with this: to trade for a year, we need some way of taking payments for the service; so we had to start looking into alternative payment gateways.

Our requirements

• Low processing fees as the lowest plan is only £4.99
• UK based payment gateway
• Offer (or didn't require) a merchant account number
• Billable in GBP
• Handles the recurring element of the payments (so we didn't need to write a custom handler)
• Trusted brand
• Allows on-site payments (though this wasn't too much of a priority)

The payment gateways we looked into were:

• PayPal (www.paypal.com)
• Google Checkout (http://checkout.google.com/sell/)
• PayPoint (www.paypoint.net)
• SagePay (www.sagepay.com)
• Zuora (www.zuora.com)
• Recurly (www.recurly.com)
• AlertPay (www.alertpay.com)
• CheddarGetter (www.cheddargetter.com)
• Spreedly (www.spreedly.com)
• Chargify (www.chargify.com)
• Authorize.Net (www.authorize.net)
• Xylyx (www.xylyx.com)

Skip Our findings and jump to our conclusion.

Our findings

PayPal

For

• Quick setup
• Known and trusted brand
• Wide market penetration
• Simple integration
• Fully managed service
• No merchant account number required

Against

• High monthly charge for a business account with montly recurring payments
• Perceived as a B2C service rather than a B2B service
• Constantly tries to upsell it's payment system to the customer (although the Website Payment Pro onsite option should work around that)
• A large number of mix-and-match services it's hard to identify which one you need

Verdict

Although PayPal's offering is very appealing, it is still perceived very much as B2C service which is the main reason we decided against it. In addition to this, their monthly charge for the service we need and processing fees make it a potentially unviable solution to launch with.

For recurring payments, you will need Website Payments Pro with their monthly subscription upgrade which is currently an additional £20pcm (it's buried deep but you can learn more on this page -click the "Reporting & Back Office" tab).

Google Checkout

For

• No setup charge or monthly fee
• Quick setup
• Known and trusted brand
• Simple integration
• No merchant account number required

Against

• Offsite payment (thought they suggest you can do onsite too)
• Recurring payments are in beta
• General "feel" of the checkout experience is clunky
• Not clear how to checkout if you don't have a Google Account

Verdict

Google's offering is certainly very appealing however the lack of non-beta subscription services meant that we didn't explore it further.

SagePay

For

• No setup charge
• Simple billing model
• Known and trusted brand
• Simple integration
• No merchant account number required

Against

• No recurring payment facility
• Potentially slow setup

Verdict

SagePay's offering is a good solution that we have integrated with many times. Their API makes taking payments onsite quick and simple however there is currently no recurring payment system built in so we initially discounted them^*.

^* See conclusion

Zuora

For

• Complete solution (apparently)

Against

• Overly flashy website that doesn't tell you how much it costs
• Appears to be predominantly US based

Verdict

Although it may seem petty, if you can't find out even the most basic information on the company website it makes me think that they're massively overpriced or not ready to take clients. So sadly, Zuora were ignored due to the lack of useful information.

Recurly

For

• Handles recurring payments
• Quick setup
• Simple integration
• Fully managed service
• Invisible to the customer

Against

• Not a payment gateway
• Another additional monthly cost

Verdict

We've come across Recurly before and we initially discounted it as we didn't understand what it was/did. On revisiting their service in more detail however we realised what it does -and it's actually pretty good/helpful.

Recurly is not a payment gateway. Now I've got that out of the way, I should explain what it is. Recurly is a system that integrates with third party payment gateways e.g. SagePay and enables you to use these third party payment gateways to take recurring payments without requiring Continuous Authority with the acquiring bank.

This is massively important because Continuous Authority is usually what a start-up gets rejected on. Continuous Authority is basically a contract between the acquiring bank (the one "taking" the money) and the customer's bank which allows the acquiring bank to charge the customer (in theory) whenever -and however much- they like. This is obviously seen as a trust issue -especially when the company is a new entity with no trading history.

So Recurly opens up a whole new potential avenue of payment providers (within their group of partners of course!) which is when we took another look at SagePay.

AlertPay

For

• No setup charge or monthly fee
• Handles recurring payments
• Active development community

Against

• Appears to be a similar concept to PayPal (encourages the user to have an AlertPay account)
• Lots of very small small print (check their prices page and "Some industries may be subject to a fee of 3.90 % + £0.59 GBP or equivalent for receiving funds from e-wallet and 6.40 % + £0.39 GBP for receiving funds by credit card")

Verdict

The offering from AlertPay looks good however because it encourages users to sign up for one of their accounts and they've not got enough market penetration yet to be a known/trusted brand which is a key factor in our decision.

CheddarGetter

For

• Handles recurring payments
• Quick setup
• Simple integration
• Fully managed service
• Invisible to the customer

Against

• Requires a Merchant Account
• Very costly
• Not a payment gateway

Verdict

CheddarGetter is very similar to Recurly, just more costly. It's also not clear if your Merchant Account requires Continuous Authority.

Spreedly

For

• Handles recurring payments
• Quick setup
• Simple integration
• Fully managed service
• Invisible to the customer

Against

• Not a payment gateway

Verdict

Spreedly is very similar to Recurly as well. We would need to compare them side by side sperately but although the website was clean and clear, the price reasonable (for 200 customers it would be $10pcm cheaper than Recurly). The lack of "pretty" information without signing up put us off. We read through the gumph however we were still left feeling it wasn't quite up to the same standard as Recurly.

Chargify

For

• Handles recurring payments
• Quick setup
• Simple integration
• Fully managed service
• Invisible to the customer

Against

• Monthly charge
• Requires a merchant account

Verdict

We came across Chargify very early on and again is very similar to Recurly, they've recently changed their pricing structure which has made it completely unfeasible to even consider them.

Authorize.Net

For

• Handles recurring payments
• Quick setup
• Simple integration
• Fully managed service

Against

• Primarily US based
• $99.00 setup fee
• Monthly fee of $30

Verdict

Authorize.Net offer the entire solution for what is a relatively low monthly fee however as they're mainly a US based company, this raises complications for us as a UK based company.

Xylyx

For

• Quick setup
• Simple integration
• Low processing charges
• No setup fee
• Based in the UK

Against

• Doesn't yet handle recurring payments
• Backed by www.moneybookers.com so encourages the user to sign up for an acount

Verdict

We immediately signed up to Xylyx having spoken to Robert Atkin who overviewed their offering to us in some detail. It's a very good service all in all however the one thing that let it down for us was the fact that they don't yet have recurring billing built in (though it's due to launch this month).

If we were looking for a standard payment gateway (or when they've rolled out their repeat payments) we'd look at Xylyx again. Despite a somewhat bland website, Robert was very helpful.

The Conclusion

After carefully reviewing the options available to us, if you're looking to setup a service in the UK with recurring payments and minimal fuss I recommend the following order of options:

• Recurly with SagePay
• Spreedly with SagePay
• Recurly with Authorise.Net
• Spreedly with Authorise.Net
• Recurly with PayPal Website Pro
• PayPal Website Pro with recurring billing