Posted by: OurKudos | April 9, 2011

Learning about merchant services

It’s easy to get caught up in the day-to-day excitement of product development and marketing plans. But at the end of the day, we have to remember that we’re launching  a business and that means dealing with money.

What we’re finding is that it’s easy to find services, like Shopify, that are set up for building an on-line store, processing payments, etc. When when your business model isn’t boilerplate, things get a little more complicated.

In the case of OurKudos, we’ll need to process a number of different types of payments. We’ll have conventional products for sale, promotional products that might be sold during marketing events and subscriptions for business partners that use our service.  A few minutes of Googling turns up lots of company ready to take you money, but which ones fit the bill, have good support, a well worked out API and enough of a track record to give us confidence that they’ll be dependable into the future?

Fortunately, our technical lead, Ben, has done quite a bit of e-commerce work, so he’s helping to guide these decisions, saving us a lot of frustration and missteps. We’re really lucky to have Ben on board, for many reasons!

What have I learned so far (a lot of these we all know but sometimes misplace in the heat of the battle)

  • Make sure you’re very clear about what you are trying to accomplish (always a good rule in business).
  • Prioritize! What are the required features? What are the desired features? What are the nice features?
  • Companies have a wide variety of fees, presented in ways to confuse us so we can’t properly compare costs.
  • When you want a shortcut, look at what more mature businesses with similar business models are using.
  • Try it out – use rapid prototyping to test APIs and make sure they work for your business. There’s nothing like a prototype to quickly determine the real-life limitations of a system.
  • Don’t be afraid to throw things out. This is all Agile philosophy, but sometimes it’s worth repeating.
  • It’s hard to find anything for micropayments that is worthwhile for charities – even the lowest cost services are too expensive.

We still haven’t decided on a specific platform and set of companies to work with for financial services, but we’re quickly homing in on a solution. Right now Braintree looks pretty good for some of our needs.

And if anybody knows of a viable way of helping charities using on-line micropayments ($1-$5) that doesn’t waste much of the contribution on processing fees, please let me know!

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