Once you have shortlisted the candidates for being your recurring billing provider you can start to unravel the spider’s web, called the pricing list. If you are a start-up the first thing that you may want to look into is the minimum monthly fee. For example, Adyen, Recurly, Braintree and Chargify all have the minimum monthly fees, which means you have to cover the cost even though you may not have any customers yet!
Minimum monthly fees:
Next to minimum fees, check whether your service provider is already taking care of payment gateway and merchant account, which can significantly increase your cost and time to market. In my research sample, Recurly and Chargify were both not providing merchant account and Chargify was also not providing payment gateway. Therefore I had to estimate the cost of payment gateway (authorize.net) and merchant account (sagepay.com) and add it to my calculation.
2,5% commission + $15,70 monthly for PCI compliance certificate
$20 monthly fee + $0,10 per transaction fee
Next to those cost you have to look at the commission and per transaction fee charged by each provider. Watch out for additional charges for recurring billing transactions, international cards as well as qualified vs. non-qualified transactions (I assumed in my research 65% of qualified transaction). Braintree was the worst for me in that case because their pricing strategy is really complicated and they have many additional fees like the one for international cards (The only thing that saves Braintree is their on-line price calculator, otherwise it would be a real nightmare). Chargify on the other hand in its “New Idea” plan, charges $1,99 for every additional transaction over 20 which is highly overpriced.
Summing up, service providers have such differentiated offerings that without excel their services would be incomparable (perhaps that is the goal?). Therefore, I computed all the variables that were mentioned in the article and you can see the results underneath. I also attach the excel file for those who have different transaction amounts and frequency and would like to change the settings (just change the yellow field in excel sheet named cost of service).
Unfortunately, when making a final decision you cannot fully rely on any model. You also have to consider such subjective factors as how subscription oriented is the service provider and how reliable is his service. What is the quality of recurring billing API? Is the service provider willing to help small companies or is he too busy with serving the bluechip companies? Last but not least, look into chargebacks, data-portability, fraud prevention and the frequency of money transfers from the merchant account to your settlement account.
Yes, it is a difficult choice…Therefore, I prepared some propositions for you:
A) Have a very high margin and you totally do not want to take care of recurring billing- go for Sassy
B) Need the absolute lowest cost at the beginning: Sassy or Stripe
C) Have technological competences on board and would like to have cost-effective and customizable solution: Stripe
D) Are a Non-US company: Saasy or Adyen (Stripe plans to include that service soon)
If you have something to add/correct I would love to hear you opinion. Leave your comment below please.