Most platforms that process online payments on behalf of their users, use a company such as PayPal, Authorize.net, Braintree (now a part of PayPal), Square or Stripe.
Out of the companies mentioned above, we chose Stripe for processing payments on behalf of our tournament hosts. As part of the tournament setup, a host will create a Stripe account or connect an existing one, if they already have one. The process takes no more than a few minutes.
We have been asked by several tournament organizers – why don’t you use [insert payment processor name here]. I will explain our reasons here and expand on it.
Most payment processors require you to open a merchant account with your bank in order to process payment cards. As a payment aggregator, Stripe uses their own merchant account on your behalf, removing the need for you to open and maintain one (which involves some additional paper work, a waiting period and additional fees). PayPal is another service that offers this feature, which is one of the reasons that it has become so popular.
PCI stands for Payment Card Industry, and in this case specifically refers to the Security Standards Council, the body that organizes security standards for digital card processing.
Everyone who processes payment cards needs to be PCI compliant to meet legal requirements for doing so. If you ever processed credit cards directly with a merchant account, you are probably familiar with the procedure – you need to fill out a security questionnaire, and have a periodic security audit.
Stripe has a clever solution that transfers that requirement onto them – by making sure credit card information goes directly from the web browser to their servers. What we get back is a token, a unique string of characters that allows us to bill the card without storing the card information.
By doing this, Stripe saves us the hassle and cost of maintaining PCI compliance. At the same time, security increases, as we do not actually possess any credit card information. Note that if we want to charge credit cards directly using PayPal (without sending payers to PayPal’s website and using a PayPal account to pay) – we need to handle PCI compliance and the associated security measures ourselves.
Stripe is by far the friendliest and easy-to-use solution of the alternatives mentioned above.
First, as a developer – there is no comparison. Their API and documentation are the best. Stripe was originally aimed for developers, before they added more consumer products such as shopping carts and payment forms.
Knowing that whatever possibly needed - from a payment processor - is clearly documented, is a huge benefit. It means there is much less chance of something going wrong due to undocumented behavior (PayPal, I’m looking at you), and that the implementation will be much simpler and easy to maintain. Complexity is the source of most issues in software engineering, and Stripe has done a great job of minimizing it.
On the customer side, they have a simple and quick account creation process, and user-friendly account management tools. Gone are the days of using billing software that looks like it was built in the 90s over a spreadsheet application. Stripe dashboards and online tools allows you to easily find relevant payment information and make it work with your accounting software.
Stripe’s pricing is clearly marked on their website, and are very competitive. For reference, take a look at Authorize.net’s pricing. It appears identical on the surface, until you realize they also charge a $49 “setup fee” and $25 per month. A small asterisk at the bottom also indicates that there is additional 1.5 percent cost for international cards (relevant if you have tournament participants who are tourists). Chargebacks are also higher at $25 vs. $15 at Stripe.
The actual details are not that important – what is most important is that almost any other service you look at has tiers and hidden fees in small letters and hard to reach pages, which Stripe does not. The good folk over at Memberful did a nice comparison of PayPal and Stripe fees, which is an interesting read. It seems that around $5000 of monthly payments, PayPal starts beating Stripe by a hair, if you do not count their monthly fees and international card fees. (You should be looking at the PayPal Pro comparison, as PayPal Standard is a different service that is not directly comparable to Stripe).
On the other side, using PayPal Pro for credit card processing requires you to take care of PCI compliance yourself. PayPal is also infamous for freezing accounts for many months at a time, while holding on to the funds, with very little due process. (Just Google “PayPal account freeze” to see what I mean). In 2013, they promised they were rolling out a solution to those account freezes, but not much has changed which makes it hard to recommend PayPal for any business critical billing.
When you create a Stripe account through our settings page, you can use it for much more than just hosting tournaments on Tournamatic.com. There is literally hundreds of products and services that can use a Stripe account – from accounting, to invoicing, to eCommerce and mobile payments. Your Stripe account can centralize all your financial activities related to you or your business, which makes accounting and administration much easier.
A common question we get, is how does Stripe work with Quick books (apparently everybody’s favorite accounting software). Using Stripe with most accounting software and specifically Quick books is simple – they give you a file export of all your transactions which Quick books uses (an .iif file).
We chose Stripe as the payment processor for our customers since we honestly believe it is the best tool for the job, based on our experience. It is likely we will be adding other payment processors in the future, for when a tournament organizer is already heavily invested in their existing payment solution. But for now, you can’t really go wrong with Stripe.