Recently, I spoke with a software developer who needed a payment processing solution for his software. It wasn’t the first time I received such a question, and I know it won’t be the last. So, I decided to write an article to explore this topic.
Many skilled software developers find payment processing confusing when it comes to integrating it into their applications. This is understandable; the world of payment processing—often called Fintech—is filled with complex terms, jargon, regulations, fees, devices, and more.
Brands like Stripe, PayPal, and Square are well-known and, at first glance, seem like the easiest way to integrate payments quickly.
This is often considered the “easy road.”
To simplify this discussion, I’ll present it from three perspectives: the developer, the business owner, and myself as the author.
Developer
Here’s a common developer’s dilemma:
The question: Should I integrate a payment processing platform?
The answer: Yes, our software needs an integrated payment solution.
Let’s see what’s out there. Oh, look—Stripe is the top result in search engines!
It’s easy enough. I got the Stripe API, started testing in their sandbox, and found lots of documentation and sample code online. Integration was quick and straightforward, adding payment capabilities to my software for my customers.
Being a developer, it’s logical to set up a process for my customers to use the “integrated payment option.” I’d ask them to sign up with Stripe, then share the required credentials to activate payment processing in the software. Easy!
Business Owner
As a business owner, I visit Stripe’s website to sign up. The first thing I look for is the fees associated with processing credit cards:
2.9% + $0.30 per transaction (as of this writing).
This means for a $100 transaction, I’d receive $96.80. Is this reasonable? Is it fair?
I also read:
“Get started quickly.”
Sounds good.
“Join millions of businesses.”
But that also means I’ll be just another number to Stripe.
Next, I explore Stripe Terminal for credit card processing.
I need to contact the “Sales Team” to obtain the device, or perhaps the software vendor can provide it.
I ask my software vendor if their payment solution supports Stripe Terminal.
I then calculate my costs with Stripe:
If I process $20,000/month, my fees would be:
2.9% of $20,000 is $580.
Since my average ticket size is $40, I’d process 500 transactions in total.
500 x $0.30 = $150.
Total fees: $580 + $150 = $730.
So, I’d pay an effective rate of 3.65% ($730 / $20,000), which is significant with tight profit margins.
Stripe also charges additional fees for features like fraud detection, subscriptions, and invoicing. These extras add to the overall cost.
Conclusion: Stripe isn’t for me!
My Turn
Initially, I mentioned Stripe, PayPal, and Square. Stripe stood out as the most attractive option, while PayPal has a history of account closures, questionable practices, and controversial policies.
“PayPal tells users it will fine them $2,500 for misinformation, then backtracks.”
Avoid PayPal.
Square offers its own point-of-sale software with many features.
Business Owner
After deciding Stripe wasn’t a good fit, I asked the software vendor if other payment processors were supported.
Unfortunately, the answer was no. This was disappointing because I liked the software but needed more options.
The developer tried to argue that Stripe is better than most processors. But I countered:
“In the restaurant business, quality burgers come at a cost. I can’t compete with fast-food giants on price, but I offer personal service and superior quality. It’s about providing choices and alternatives.”
To quote Michael Jackson:
“All I wanna say is that they don’t really care about us.”
Developer
I’m back to the drawing board. We need options. Jean-Luc Picard would say: “Options.”
My Turn
By now, it’s clear: small businesses should support each other to counter the dominance of tech giants.
Here’s my advice to developers:
If your software involves payments, offer a seamless and integrated solution. It enhances your product, reduces errors, and adds value for your customers.
Integrated payment solutions can also become a significant revenue source.
Smaller, private FinTech companies provide APIs and SDKs, support real developer interactions, and offer competitive rates—unlike faceless corporations.
After integration, your software can provide customers with better rates, while you earn from shared processing revenue. It’s a win-win model.
Working with Big Tech is a one-way street. They win.
The more customers you have, the more your revenue share grows, enabling you to reinvest or even enjoy a vacation!
Let’s recap:
- Partner with small businesses, not faceless giants.
- Use APIs and SDKs to build payment functionality.
- Provide your customers with competitive rates.
- Earn shared revenue from processing fees.
- Tech giants like Stripe, PayPal, and Square are the only losers in this model.
Integrated Payment Processors frequently add new features, making them a dynamic and valuable partner.
Explore this partnership. You’ll find more than just integration—you’ll build relationships with real people.
Kourosh
