Payment system/support brain storming

[Antenore Gatta]

Hi all,

The intention of this thread is to clarify some points about the
payment support we would like to put in place.

I'll not speak about micro donation in this thread.

As this is a critical subject, I would like to receive as much
comments as possible.

I took most of all the information from Wikipedia, at the end of the
thread there will be a full list of the resources.

---

First a brief explanation of the terms I'll use, this is to make clear
to everybody of what we are speaking.

User:   Any GNU Herds registered (authorized) user who is allowed to
post job offer.
Professional:   Any GNU Herds registered (authorized) user who has
filled the qualification form.
Internet Merchant Account:   A Merchant Account is an account with a
financial institution or bank, which enables you to accept credit card
payments from your clients.
eWallets (PayPal, ):   Is an e-commerce business allowing payments and
money transfers to be made through the Internet.
Electronic funds transfer (EFT):
    * Cardholder-initiated transactions, where a cardholder makes use
of a payment card
    * Direct deposit payroll payments for a business to its employees,
possibly via a payroll services company
    * Direct debit payments from customer to business, where the
transaction is initiated by the business with customer permission
    * Electronic bill payment in online banking, which may be
delivered by EFT or paper check
    * Transactions involving stored value of electronic money,
possibly in a private currency
    * Wire transfer via an international banking network (generally
carries a higher fee)
    * Electronic Benefit Transfer

This is already a Jungle...

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What we need is an easy (at least the most easy) way to allow payments
and/or donation from a User to a Professional.
>From a user point of view will be just an additional form, or
additional fields in the existing ones, where it'll be possible to
choose the available payments systems, the amount of money to transfer
and eventually data needed by the payment gateway.

This could be achieved in different ways, let's see which are the
available payment systems from a non technical point of view.

As an image should be better then 100 words... Take a look at the
enclosed image (or dia file), and let me know if you have issues to
view it.

Almost all of the specified methods could feet our needs, but I'd
rather focus more our attention on credit cards, Gateway payment
system and e-Money.

- Credit cards.

We have to act as PSP (Payment Service Provider).

Accepting credit card payments through our web site actually requires
multiple components. Between a paying customer, our bank account, and
the Professional reciveing moneythree layers exist:

Web Site - Regardless of which merchant provider and gateway service
you choose, your web site will need to integrate with your service
providers. Most providers include detailed web integration
instructions.

Payment Gateway - This is the code that will transmit a customer's
order to and from an internet merchant account provider. The payment
gateway provides us the ability to accept customer billing information
and the necessary validation steps that must be followed before the
credit card is actually billed.

Internet Merchant Account - A Merchant Account is an account with a
financial institution or bank, which enables you to accept credit card
payments from your clients. Unfortunately, most local banks do not
provide internet merchant account capability.

How Much Does It Cost?

   --- ...there are more merchant account providers than there are
people looking for internet merchant accounts

Typical fees:

    * Up Front Application Fees
      Some they require to cover initial expenses.
    * On Going Fixed Fee
      Usually Montly fixed fee (statement fee). About $25 (some 10$)
    * Discount Rate
      Between 2% and 4%. If the discount rate offered is 3%, and you
receive a sale over your web site for $20, you will owe 60 cents to
your internet merchant provider.
    * Fixed Transaction Fee
      Usually between $0.20 and $0.30
    * Termination Fees
      A termination fee can apply if you cancel your merchant account
within a specified period of time (1 to 3 years)
    * Miscellaneous Fees
      Example for a refund, between 10$ to 20$

Example:

Montly Transaction - 100
Transaction prize - 10$
Average refund reuqests - 5
Discount Rate - %2.5
Statement Fee - $10
Fixed Transaction Fee - $0.30
Chargeback Fee - $15

Monthly Sales Revenue = 100 x $10 = $1000

Total Charges = Statement Fee + Number of Transactions x (Average Sale
x Discount Rate + Fixed Transaction Fee) + (Number of Chargebacks x
Chargeback Fee)

Total Charges = 10 + 100 x (10 x .025 + 0.3) + (5 x 15) = $140

MERCHANT COST = 14%

So it is clear that this solution is too much tricky and expensive,
even if we would have some thousands transaction per Month the cost
will be always around 14% (never less then 13% till some millions
transactions). Even more is really hard to develop, the security risks
are too many and too dangerous to even consider this option.

- Payment Gateway System.

I just provide an example,http://www.authorize.net/, this is the most
used and he accept several different kinds of payment systems. The
advantage is that we have almost nothing to develop, we just need to
use some APIs to connect to the payment gateway, that will take care
about all the rest of the transaction.
The cost? It's not clear, what we need is not a standard product...

- eMoney.

This is the most attractive solution, we don't need to develop
anything then a logging interface for legal purpose.

It should be clear I'm speaking about PayPal, but there is another
provider that has a great advantage compared to PayPal, it doesn't
have fees, Neteller PLC is a publicly traded company on the London
Stock Exchange Alternative Investment Market.
Customers can transfer money from their Neteller account to merchants.
The service is often used to transfer funds to and from online
gambling sites, so customers can also receive funds, such as winnings,
back from merchants to their Neteller accounts. The cost of
transferring funds from Neteller accounts to and from merchants is
free to consumers because, as with credit cards, merchants cover the
costs.

http://www.neteller-group.com/

PayPal fees: http://www.paypal.com/cgi-bin/webscr?cmd=_display-fees-outside

So before to proceed deeply I would like to have your opinions, it's
not a simple subject at all!!!

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- References, unless differently specified the documents language is English.

http://en.wikipedia.org/wiki/E-commerce_payment_systems
http://economia.repubblica.it/articolo_cribis/I_sistemi_di_pagamento_online:_caratteristiche_e_sviluppo_del_settore/156021
(it)
http://en.wikipedia.org/wiki/PayPal
http://en.wikipedia.org/wiki/Neteller
http://www.findmyhosting.com/web-resources/Articles/internet-merchant.htm
http://en.wikipedia.org/wiki/Guide_to_E-payments

Payment_Systems.png
Description: PNG image

Payment_Systems.dia
Description: application/dia-diagram