What to look for when choosing a credit card payment processing service in Aotearoa New Zealand
6 October 2021
There are a lot of options for credit card processing. Booking Rooster has selected seven service options for use with its course management software and event ticketing platform. In this article Process Architect Moira Moroney shares a little about the factors to consider when choosing between them.
All credit card processing services used by Booking Rooster are compliant with Payment Card Industry Data Security Standard (PCI DSS). If you are considering credit card processing options not covered in this article, be sure to check that they are PCI DSS compliant. While we are on this hobby horse, teach your Nanny, Granny, Koro for those magic letters before they enter their credit card details into any web site or service.
If you are not yet sure whether to add the option of paying by credit then cross over to our article on the use of electronic card processing in training businesses. It covers how much revenue you could expect to collect this way.
When choosing a processing service for your training business or event management activities it helps to think of debit and credit card processing services as falling into two camps:
- Payment Platforms that you can be up and running with in a flash and have clear simple pricing – Stripe, Braintree, and PayPal.
- Payment Gateways that take more time and effort activate but may offer savings in both admin time and direct costs – Windcave (formerly DPS Payment Express), Worldline (aka Paymark Click) and ANZ eGate.
Don’t be put off by the extra time it takes to set up a payment gateway. There are some important differences between the platforms and gateways. With Booking Rooster, you can get started with a payment platform and cut over to a gateway later.
You may have noticed that one service is missing for the list above - we call Eway the Seventh Sister as we don’t see it often. It is a cross between a platform and a gateway. You may want to explore it for yourself once you are armed with the knowledge in this article.
Payment Platforms
If you are allergic to paperwork and want to get started quick, a payment platform is a good first step on your credit card processing journey. Clear, simple pricing plans can also make Payment Platforms attractive compared with some gateways.
Fast, easy application and approval process
People who are confident on a computer can be accepting debit or credit card payments with any of these “payment platforms” in about 15 minutes – provided they have:
- An ‘official role’ in the Organisation (e.g., Director, CEO, President, Treasurer),
- An NZBN number (find yours here), and
- No glaring ‘black marks’ against themselves or their organisation on the public record.
Payment gateways are very popular on the Rooster’s community event booking platform, Events Pronto. The average annual dollar value collected in the 12 months to October 2021 was 18,000 NZD per organisation. The average each organisation collected by credit card was $10,000. Since some Events Pronto users run free events or do not use credit card processing the averages are little on the light side, but you get the picture that the payment platforms are very popular with people with low annual credit card processing values.
Simple, clear, predictable pricing
All three Payment Platform options used by Booking Rooster offer simple, clear pricing that makes it easy for you to budget. At the time of writing, 6 October 2021:
- Stripe charged 2.9% + 30 cents per domestic transaction – a rate that hasn’t changed since they entered the New Zealand market in 2017.
- Braintree charged 2.9% + 45 cents per domestic transaction - 15 cents may not sound like a lot, but it can mount up, and why pay more unless you can see some clear benefits? This rate has also been unchanged in the years since Booking Rooster first connected with them.
- PayPal charged 3.4% + 45 cents per transaction. This fee only applies to credit and debit card transactions, not to funds applied from users own PayPal accounts. In many other parts of the world paying with PayPal dollars is a great way for buyer and seller to reduce fees. Not many kiwis are active PayPal members. That means few people have funds sitting in a PayPal account ready to be used. PayPal works well for people who are tech savvy, have lived overseas recently, or use eBay a lot. Others can find it frustrating. In our early years we saw many bookings abandoned at the PayPal gateway. People got the impression they had to sign up to PayPal before they could pay and simply got lost in the process.
While we are talking price it’s worth noting that these prices are for “New Zealand domestic transactions.” - transactions in NZD passed to your New Zealand bank account.
Collecting foreign currencies costs more on all platforms and gateways. If you service international markets, be sure to check the rates for the currencies you work with. If you have bank accounts in the foreign markets, consider using a different payment processing account for each currency. You’ll avoid the foreign currency fees. The domestic rates are also lower in some other countries. If you are not using Booking Rooster for your course enrolments or event ticketing, you will need to check if your web service provider can handle this approach before you go down that track.
There is one more important ‘rider’ to discussion of pricing that applies to both platforms and gateways. The prices relate to ‘Visa and Mastercard’. Accepting other cards like Diners Card and American Express is extra. These are rarely used in New Zealand today but need to be factored into your budget if you expect international purchasers or have a lot of those cardholders in your mix.
The Payment Platform popularity contest
Currently all Booking Rooster clients and most Events Pronto clients that are use a payment platform, use Stripe. Their rates are lowest, their platform is easy to use, and you can easily contact a real person when you need help. It has the added advantage on the Booking Rooster platform that you can take repeat payments with it. That is, it enables you to offer people the option of paying for their course or event in regular installments deducted automatically from their debit or credit card. This option is popular in the conference sector.
Payment Gateways
If the payment platforms are so quick to set up, why do most Booking Rooster clients choose a payment gateway over a payment platform? Payment gateways offer at least two clear benefits:
- They offer ‘full and fast settlement’. In other words, you receive all funds the same day they are collected and pay a separate fee for their services later. By contrast, the payment platforms pay out 4-7 days after the transaction and extract their fees first.
- They can be less expensive – depending on the value and volume of your transactions.
The advantage of full and fast settlement
The cashflow advantage of receiving money on the day people book is obvious. What may be less obvious is the advantage you get from being paid ‘in full’ rather than after fees have been deducted. Imagine it’s your job to reconcile your bank statement. When you reconcile with a payment gateway the dollar values match exactly, job done. When you reconcile with a payment platform the amount in the bank account is less than the amount invoiced as the fees are taken out first. This takes lot more accounting effort.
Booking Rooster software has features that reduce the pain of reconciling payment platforms, but not everyone has Booking Rooster yet. The flip side of the full and final settlement advantage is they are ‘choosier’ about who they work with. They will need to ask you for a lot of detail. If your general trading history is brief or your venture is small you may not qualify for these services initially. Don’t be angry. Build your track record up on a payment platform then try again.
The pricing advantages
If you receive more than $10,000 NZ via credit card each year some gateway options offer price advantages. Take care when comparing prices. To use a gateway, you need both a gateway and a merchant account. The merchant account is usually with your bank. You pay fees to the bank and to the gateway. There may also set-up fees and minimum monthly fees to consider.
Windcave now offer the option of a consolidated service package including both a gateway and a merchant service. On 6 October 2021 they accepted Visa and Mastercard for “30 cents plus 2.8% per domestic transaction.” This clear, concise pricing makes it easy to see the price advantage. Their minimum fee is $30 a month so you only need to process $1000 NZ a month to be better off on this service than on a platform – plus a bit to cover the one-off $99 set up fee.
Paymark and ANZ e-gate require a merchant account. Merchant account charges change across banks. They can also vary with transaction value and volume. These gateway prices cannot be summarized simply. You will need to contact a gateway and your bank to find out your own total cost of service with these platforms. When comparing gateways also remember to consider foreign currency transactions, Diners and American Express costs, if relevant to you.
The gateway popularity contest
Windcave is used by more Booking Rooster clients than any of the other gateways. There is no clear reason for Windcave winning in the popularity stakes. If you use Worldline (Paymark Click) or ANZ e-Gate already there is no reason for change. The consolidated service package from Windcave is relatively new and is likely to enhance its popularly. Their optional ‘account to account’ service is also gaining popularity. This allows people to pay directly from their bank account to yours. You may have used a similar service if you have paid your car registration online.
In Summary
Whatever you choose, choose a credit card processing option that is compliant with Payment Card Industry Data Security Standard (PCI DSS). To get up and running quickly choose a payment platform like Stripe or Braintree. Think hard about your own market before choosing PayPal. A payment gateway is likely to offer the best long-term advantage for anyone processing at least $10,000NZ annually via credit card. Payment gateways like Windcave, Worldline and ANZ eGate take more time and effort to activate but make accounting easier and often offer financial advantage.
About the author:
Moira Moroney
This article was researched and produced by Booking Rooster co-founder and process architect, Moira Moroney. Moira has a strong background in business process improvement, marketing and customer engagment. Her career spans over 35 years in a mix of corporate, SME and entreprenuerial environments. Connect with Moira on LinkedIn, email or by call her on +64-7-575-6903.
