Put your Money where your Mouse Is: 6 Payment Gateways Reviewed

The Gateways

So, now you know what to look for in a gateway. Many providers will vie for your attention: who will you consider?

I've researched some of the more popular gateways; I'll break down their features, costs, strengths and weaknesses. Here are the contenders:

• Authorize.net
• Verisign Payflow Pro
• Verisign Payflow Link
• LinkPoint API
• LinkPoint Connect
• Plug 'n Pay

Some of these gateways offer different features -- charge different prices -- depending on which method of integration you choose to use. I've listed each of these offerings separately, classifying each as its own, unique product for the sake of easier comparison.

Authorize.net

Authorize.net, founded in 1996, has become synonymous with the word 'gateway'.

Features

Fraud Prevention

The Authorize.net Fraud Detection Suite (FDS) is designed to identify fraudulent transactions before your product ships (and you're hit with a chargeback). The suite's features include:

• an amount filter that sets upper and lower value limits for "acceptable" sales
• a velocity filter that limits the number of transactions that can be received per hour from a given customer
• an address mismatch filter that detects instances in which billing and shipping addresses differ
• an IP filter that isolates suspicious activity from one IP address
• a suspicious transaction filter based on Authorize.net's own criteria
• IP blocking functionality, which allows you to block the IP addresses of known frauds

Recurring Billing

This is straightforward: supply your customer's credit card details, billing amount, payment interval, the length of the subscription, and a recurring billing account is created. No further interaction is required.

eCheck Processing

The Authorize.net eCheck system is robust and full-featured, with many capabilities. Any merchant who's considering processing eChecks will find Authorize.net's solution an excellent choice.

Choice of APIs

This is one of the strongest features of Authorize.net: merchants are able to choose between two different integration methods for the same price. You can switch methods at any time, and all features are available regardless of which method you choose.

The available integrations methods are:

• The Simple Integration Method (SIM): Not surprisingly, this is easiest method to set up, with virtually no programming, and no SSL certificate, required. Your secure order page is hosted directly on Authorize.net's secure server, but it can be customized to match the look and feel of your Website.
• The Advanced Integration Method (AIM): This method allows programmers to make the checkout process completely seamless and transparent. Customers never leave your Website, as transactions are conducted server-to-server, behind the scenes. This method gives you complete control over the front-end, and your customers' experience of your site.

Cost

Authorize.net doesn't list service pricing on its Website because it doesn't sell directly to merchants. Interested merchants need to contact one of the authorized resellers listed in the directory.

Pricing varies by reseller, but here are some rough guidelines:

• Set-up fee: Set up costs range from $25 to $300 (the average being $100). This fee usually does not include recurring billing or other value-added services. Some resellers allow you to reduce the setup fee if you agree to pay a higher monthly fee.
• Monthly fee: Monthly fees can range from $10 to $30 per month, averaging $15. This fee covers processing statements and the provision of merchant support.
• Transaction Fee: In addition to the transaction fee charged by your merchant account provider, Authorize.net will charge an additional transaction fee of its own. This fee will vary from 5 cents to 15 cents, with 10 cents being average. Some resellers have the ability to offer free transactions, as Authorize.net rewards active resellers by allowing their merchants to process their first 250 transactions each month for free. If you expect to make fewer than 250 transactions per month, you can essentially avoid transaction fees if you use a reseller that offers this discount.
• Recurring Billing: Authorize.net's recurring billing feature is not a standard feature: it incurs additional cost in the form of a set-up fee and a monthly recurring fee. Setup fees run from $40 to $100, with $50 being average. The monthly fee will range from $20 to $40, with $30 being average.
• Fraud Detection Suite: Authorize.net's Fraud Detection Suite also incurs additional setup and recurring fees. The setup fee ranges from $25 to $50, with $40 being average. The monthly costs vary depending on volume. If your business conducts no more than 100 transactions each month, your cost will be between $8 and $20, with $13 being average. If your business conducts between 101 and 1000 transactions, the FDS will cost between $15 and $50, with $30 being average. If your business conducts over 1,000 transactions each month, you'll be looking at a range of $50 to $150 per month, with $100 being average.
• eCheck: eCheck services through Authorize.net are handled differently then their other services. Pricing is not set by resellers. However pricing will still vary from merchant to merchant as Authorize.net sets it rates on a case-by-case basis with fees being determined by the risk associated with the account. However, most merchants typically pay a $49 application fee and if approved a $100 setup fee. Each check process will cost 1.75% of the check's face value plus 30¢ per transaction. There is no monthly fee but $10 monthly minimum does apply.

Strengths

Although Authorize.net resellers can charge virtually any price they wish, pricing for this provider's gateways and services remain relatively low. This is due to two factors:

1. Low buy rates: Authorize.net has excellent buy rates from which resellers can mark up their services both competitively and profitably.


2. Competition: So many companies resell Authorize.net's services that pricing needs to remain low: reseller competition is fierce!

The features Authorize.net offers (recurring billing, fraud detection, and eCheck) meet the needs of virtually every merchant. Such a comprehensive offering eliminates the need to implement third party solutions, and makes managing the services easy.

Authorize.net does not consider one form of integration superior to another, so it offers customers both. New Webmasters will find this feature particularly attractive, as they may not yet have the programming skills to implement the Authorize.net gateway through its available API, but want to have the option to do so in the future, once they acquire those skills.

Authorize.net's popularity is of benefit to many of its users. If you look at the features offered by most of the currently available shopping carts, almost every one offers built-in support for Authorize.net right out of the box. In fact, many shopping cart and ecommerce solutions list support for Authorize.net among the software's features. In these cases, unless you're writing a custom shopping cart for your site, you don't have to worry about integrating your Authorize.net gateway: it's already been done for you. If you've chosen to write your own custom shopping cart, you'll find that developers have released the source code that accesses Authorize.net's AIM API, making application development much quicker and easier.

Weaknesses

As popular as Authorize.net's services are, they are not perfect. Being the largest payment gateway provider does have its downsides.

The first notable issue is that pricing can vary tremendously from one reseller to another. If your goal is to get the lowest rates possible, you'll need to shop around quite a bit. Unfortunately, you may also be inundated with merchant account offers, as the vast majority of resellers are very interested in landing lucrative merchant accounts. Some will even refuse to establish a gateway for you unless you use their merchant services.

As the largest payment gateway provider, Authorize.net is often targeted by hackers. In September 2004, Authorize.net was the target of a Distributed Denial of Service attack (DDoS) that lasted for almost a full week, preventing some merchants from processing sales, and others from being able to sign up for new services. It wasn't the first attack Authorize.net has experienced, and it's not likely to be the last. Granted, any business could have been targeted (in fact, 2checkout.com was attacked at the same time), but it's fair to say that being number one in the payment gateway industry also means being number one on the hackers' hit list.

Verisign Payflow Pro

The Verisign name is well-known, and carries a reputation for security and trust. It has carried its reputation for security from its SSL certificate issuing to its gateway services.

Features

Recurring Billing

The Payflow Pro recurring billing feature is pretty standard, but does offer a very useful feature: an API (application programming interface) from which a recurring billing profile can be created. So, for example, you can have your Website automatically create a recurring billing profile for you during a customer's online registration. For Web hosting or other subscription-type services where new users sign up through your site, this can be quite a time-saver.

The Payflow Pro gateway also is capable of sending out automated custom emails. You can send your customers email receipts for their records or send them a notice that their card was declined and that they need to make new payment arrangements for failed transactions. Reporting is also available for billing transactions and individual customer profiles.

Fraud Prevention

Verisign breaks its fraud prevention services into two different packages; each has add-on features that enhance the level of protection.

The Basic Package includes seven basic filters that help reduce a merchant's exposure to fraud. The filters included are:

• High dollar value filter
• High item number filter
• Shipping/billing mismatch filter
• AVS failure filter
• CSC failure filter
• High risk zip code filter
• Freight forwarder filter

You can also restrict sales to certain IP addresses. In essence, you create a whitelist of valid IP addresses from which purchases are permitted.

The Advanced Package includes all of the Basic Package's filters, plus another fifteen filters that increase protection:

• Product watch list filter
• High risk BIN filter
• Account number velocity filter
• US Postal Service address validation filter
• IP address risk list match
• Email service provider risk list match
• Geo location failure
• Bad list filter (credit card and e-mail address)
• High risk country filter
• International shipping/billing address filter
• International IP address filter
• International AVS filter
• Good email list filter
• Good credit card list filter
• Total purchase price floor filter

Verisign offers an interesting feature in Account Monitoring. Essentially Verisign employees monitor your sales looking for suspicious transactions. If they notice one, they investigate it to determine whether the sale is truly legitimate or fraudulent. If the sale appears to be fraudulent, they prevent that sale from being settled, and contact you to discuss the transaction further. To use this feature, you must already be registered with the Basic or Advanced Fraud Prevention Packages.

Lastly, Verisign offers a Buyer Authentication program for merchants who wish to utilize Visa's Verified by Visa and/or MasterCard's SecureCode technologies. To use this feature, you must already be registered with the Basic or Advanced Fraud Prevention Packages.

Cost

• Setup Fee: Verisign charges a one-time fee of $249 before account setup.
• Monthly Fee: Verisign charges a hefty $59.95 monthly for the service.
• Transaction Fee: Each transaction run through Payflow Pro costs 10¢ in addition to your merchant account fees. However, the first 1,000 transactions each month are free. Since the vast majority of merchants don't do that kind of volume, this pricing structure virtually eliminates transaction fees for most merchants.
• Recurring Billing: If you decide to use Payflow Pro's recurring billing feature, you'll incur a $39.95 setup fee, and a recurring $29.95 monthly fee.
• Fraud Protection: As described above, Verisign offers quite a few tools for fraud detection and prevention, but charges separately for them. The basic package costs $29.95 to set up, and an additional $19.95 per month plus 5¢ per transaction (these charges are not included in the free transactions). The advanced package costs $89.95 to set up, plus $49.95 per month and 10¢ per transaction (these charges are not included in the free transactions). Account monitoring costs $29.95 to set up and $19.95 per month. If you wish to use Verified by Visa or MasterCard SecureCode, you'll incur a $150 setup fee, as well as a $9.95 monthly fee plus 10cents per transaction. In summary, if you wish to use all fraud prevention tools provided by Verisign, you will incur $260.90 in setup fees, $79.85 in monthly fees, and at least an additional 20 cents per transaction.

Strengths

Verisign's fraud prevention tools are second to none in terms of flexibility and power. With so many ways to review transactions for potential fraud in one system, it's hard to imagine many fraudulent transactions slipping through. Merchants who have been troubled by chargebacks and fraud in the past would find these tools a great relief.

As an ecommerce merchant, if your Website is down -- even for a minute or two -- your nearest competitor is only a click away. While other gateways have experienced issues with datacenter moves and hacker attacks, the Verisign gateway has been consistently reliable, with only one outage in recent memory.

Thanks to the SSL certificate business from which this gateway started, the Verisign name has been known for years as the secure and reliable brand on the Internet. At the very least, merchants feel comfortable using Verisign's services, and customers feel reassured by the Verisign logo. Although it's debatable whether Verisign is more secure then other gateways, many Webmasters and customers trust this brand.

Weaknesses

As I mentioned, the Verisign name is well known and carries with it a reputation of security and trust. And they make you pay for it. Payflow Pro is easily the most expensive gateway available. With a $249 setup fee, you could pay more to become a Payflow Pro customer (before you even receive your login information or make a sale) than you would for an entire year with other gateways, setup fee included! Verisign's $59.95 monthly fee for basic features would buy you every available feature on many other gateways.

Although Verisign's fraud detection tools are robust, they're also expensive. I found it disappointing that this provider broke its features down into four different categories and charged for each of them separately. Each one costs a significant amount, and combining them would double the cost of an already expensive gateway.

Verisign Payflow Link

The little brother of Payflow Pro, this gateway still carries Verisign's reputation for security and reliability.

Features

Recurring Billing

Unlike its more robust Payflow Pro brother, Payflow Link does not offer an API through which you can set up new recurring billing profiles. All recurring billing profiles must be set up manually through a control panel.

Payflow Link includes the same email and reporting capabilities as Payflow Pro. See Payflow Pro for more information.

Fraud Protection

The fraud protection tools available for Payflow Link are the same as for Payflow Pro. See above for more information.

Cost

• Setup Fee: Verisign charges a one time fee of $179 before account setup.
• Monthly Fee: Verisign charges a reasonable $19.95 per month for service provision.
• Transaction Fee: Just like Payflow Pro, each transaction run through Payflow Link costs an additional 10¢ on top of your merchant account fees. However, the first 500 transactions each month are free. Few merchants will process more than 500 transactions per month, so this structure virtually eliminates the transaction fee.
• Recurring Billing: If you decide to use Payflow Pro's recurring billing feature, you'll incur a $14.95 setup fee, and a recurring $9.95 monthly fee.
• Fraud Protection: The fraud protection tools available for Payflow Link are the same as for Payflow Pro. See above for more information.

Strengths

See the strengths of Payflow Pro above.

Weaknesses

Like its big brother, Payflow Link is expensive. Considering its limited integration capabilities (detailed below), you can end up paying a lot of money for relatively little service. In this case, I believe that you're almost certainly paying for the Verisign name.

Unlike Payflow Pro, Payflow Link does not allow you to make the checkout process transparent for your customers. You must send all customers to Verisign's Website, where your secure order form resides. Although this will save you money on an SSL certificate -- as you don't have to host the secure order page -- the Web address shown in your customer's Web browser will not be your own. This can be seen as a negative factor by customers deciding whether or not to complete a purchase, and can result in abandoned shopping carts.

A "hidden" weakness that most merchants don't notice is that Payflow Link does not support Level two or three business cards. When a merchant accepts certain special credit cards, additional information about that card needs to be sent to the processor. If you fail to send these details, higher fees are usually charged for that sale. If your business were to use Payflow Link and accepted business credit cards through its Website, you'd pay the highest possible fees for those sales, as Payflow Link doesn't support those types of cards. Verisign does specify the lack of support for level two and three business cards on its Website, but, due to most merchants' lack of merchant account knowledge on the topic, this fact usually goes by unnoticed.