Thorough comparison of free monthly online payment services!

Thorough comparison of free monthly online payment services!

Modified at: 2023.12.15Posted at: 2022.3.3

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Who is a free monthly online payment service suitable for?

Among online payment services that are basically fee-based, the fact that online payment services offer free plans is meant to "lower the hurdle for introduction.

In this sense, free monthly online payment services are

  1. individuals and sole proprietors
  2. small and medium enterprises
  3. new projects

This is often used for smaller services, such as

However, online payment services rarely cut back on features just because they are free per month, and the difference between them and paid versions is the payment fee.

In other words, ultimately, you can use a free monthly online payment service regardless of the size of your service, because you only have to choose between "paying a monthly fee and paying a lower payment fee" or "paying a free monthly fee and paying a higher payment fee.

However, as the scale of your service grows, there will be a point in time when "total payment fees > monthly fees" and it is best to upgrade from a free plan to a paid plan at that point.

Are there any disadvantages to free monthly online payment services?

Payment fees are often higher than for paid plans

When online payment services offer their services for free, most of them charge higher payment fees than paid plans.

This is a strategy of online payment services to encourage the adoption of paid plans, but it is an unavoidable part of such disadvantages as long as the service is free to use.

Switch to a paid plan at a time when you can judge that the payment fee will pay for itself.

Functionality may be limited

While most online payment services offer the same features in both paid and free plans, some features may not be available in the free plan.

If the basic functions are sufficient for your needs, there is no need to be concerned. However, before signing a contract, be sure to check if there are any features that you "can't miss" that are only offered with a paid plan.

"6 points" to consider when choosing a free monthly online payment service

The most important point is the introduction method

The most important factor in using an online payment service is the implementation method.

Depending on the service, there are

  1. just post a link
  2. integrated into the system (requires programming knowledge)

The method of introduction differs depending on the type of product.

The easiest way is to simply post a link, but the work cost increases as the number of products increases due to the time required to register the products with the payment service.

On the other hand, if the system is embedded in a system, all you have to do is tap the API, so once it is embedded, there is no need to do any work even if the number of products increases. However, of course, in order to incorporate the API correctly, knowledge of the program and understanding of the API specifications are required.

Decide which you prefer depending on how you run your service, the number of products you handle, etc.

The more payment methods supported, the better

The abundance of supported payment methods is directly related to purchase behavior. This is because the more payment methods a user can choose from when purchasing a product or service, the less likely he/she is to interrupt the payment process.

The "lower likelihood of payment interruption" helps to improve CVR when looking at the overall purchase flow.

However, the type of payment method does not have such a large impact on CVR, which is basically

  1. credit card
  2. cash on delivery
  3. convenience store payment

The three are sufficient to meet most user needs.

Choose a place with low payment fees.

For free plans of online payment services, the average payment fee is around 4%. However, some services offer lower payment fees, such as 3.6% for free plans.

Although the difference in commission is only about 0.4%, the larger the scale of sales, the more the commission will have an effect like a body blow. For example, a 0.4% difference in transaction fees can mean a difference of $40 for sales of $1,000 or $400 for sales of $10,000.

In addition, some services offer a 0.5% reduction in payment fees if you become a paid plan, so you should keep in mind the possibility of becoming a paid plan in the future.

The point at which you determine that it will pay off even if you move to a paid plan for an online payment service is when the "reduction in the number of payment steps > the monthly fee".

Choose those who do not need to log in and those who do.

Users dislike unnecessary registration and login. Therefore, it is better to avoid the need to log in on the payment service side as much as possible to improve CVR.

However, there are exceptions, such as Paypal and Amazon Pay, where the name value of the online payment service used contributes to the CVR.

In the case of Paypal and Amazon Pay, the mentality of "Paypal and Amazon's login system = safety and security" works, so if you want users to feel secure, it is possible to incorporate the payment flow of a well-known service even if it is a page-transfer type.

Pay attention to the deposit term!

Cash flow is very important in running a business. At the core of this cash flow is the deposit term.

The deposit term is what differentiates online payment services from their competitors, with the earliest services allowing payment from 5 business days after receipt of payment. On the other hand, longer services may pay at the end of the second month following the confirmation of sales.

Especially when purchase and labor costs are involved, the payment term can be so short that it can lead to "bankruptcy in the black" depending on the payment term.

Check the transfer fee as well.

Surprisingly, what is not checked is the transfer fee for collecting sales proceeds. It is a small cost that all services charge only a few hundred yen, but it should be noted for individuals and small-scale services.

For example, if a transfer fee of $3 is charged when sales are only $10, it is almost equivalent to a 30% settlement fee.

As long as you are small, it is a good idea to choose an online payment service that does not charge a transfer fee or that can hold sales (carry over transfers).

Compare monthly free online payment services

Now let's compare free online payment services from different perspectives.

Compare by offer method / payment method

First, we will compare the provision method and payment method.

| Item | Method | Login required | Payment method | |: --- |: ---: |: ---: |: ---: | | Paypal | Page Transition Expression | Required | Credit Card
Bank Withdrawal | | Square | Page Transition Expression | Required | Credit Card
Apple Pay | | Stripe | Built-in | Not required | Credit card
Apple Pay
Google Pay | | Amazon Pay | Page transition formula | Required | Credit card etc. | | | Embedded | Not required | Credit card
Apple Pay |

While there are many built-in formulas that do not require login, Amazon Pay and Paypal use their prominence to log in with page transitions.

As for payment methods, there are variations in the payment methods supported by each service, except that all services support credit card payment.

Compare with various fees

Next, let's compare with various fees.

| Item | Settlement fee | Transfer fee | |: --- |: ---: |: ---: | | Paypal | 3.6% ~ | $ 0
1.5% | | Square | 3.6% | $ 0 | | Stripe | 3.6% | Depends on the country of use | Amazon Pay | 3.9%
4.5% | $ 0 | | | 3.6% | & yen; 250 |

While the standard settlement fee is 3.6%, only Amazon Pay is a bullish fee, but the advantage is that the transfer fee is 0 yen.

Square has the best cost performance, and the settlement fee is low and the transfer fee is also free.

Compare as a whole

Finally, let's compare them as a whole.

| Item | Method | Login required | Payment method | Payment fee | Transfer fee | |: --- |: ---: |: ---: |: ---: |: ---: |: ---: | | Paypal | Page Transition Expression | Required | Credit Card
Bank Withdrawal | 3.6% ~ | $ 0
1.5% | | Square | Page Transition Expression | Required | Credit Card
Apple Pay | 3.6% | $ 0 | | Stripe | Embedded | Not required | Credit card
Apple Pay
Google Pay | 3.6% | Depends on country of use | | Amazon Pay | Page transition formula | Required | Credit card etc. | 3.9%
4.5% | & yen; 0 | | | Embedded | Not required | Credit card
Apple Pay | 3.6% | & yen; 250 |

There are unexpected variations, and each service has advantages and disadvantages. In that sense, there is no monthly free online payment service that is optimal for all services, and it is better to select the optimal service depending on the application.

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