I am the founder of a startup called Cotega and also a Microsoft employee within the SQL Azure group where I work as a Program Manager. This is a series of posts where I talk about my experience building a startup outside of Microsoft. I do my best to take my Microsoft hat off and tell both the good parts and the bad parts I experienced using Azure.
This past week I was able to move Cotega out of its beta stage and on to the production servers. Since my beta customers were not being charged to use the service, one final work item I needed to complete before moving out of beta was to implement a billing system. Since a number of people have asked me about my choices in this area, I thought it would be good if I talked about it today.
Without a doubt one of the most common choices for doing online credit card processing is Paypal. I really seriously considered using Paypal since I have trusted them so much in the past for my own purchases and I have read that their API’s are quite extensive. However, since I am building a startup, I felt I should see if there were any startups in the area of credit card processing. Two of the most interesting ones that I narrowed my choices down to were Stripe and Dwolla.
Stripe is a really interesting company. They are one of the many companies that have come out of the Y Combinator startup program. Their prices seemed to be very similar to what you would get from PayPal which is 2.9% + $0.30 / charge. But what I really liked about Stripe was their support. Although they have the typical support where you can email questions, they also have a Campfire based chatroom where you can go to ask questions in real-time. I have logged on a few times and each time there were always a large number of people online to answer my questions. But what was really surprising was that most of the questions were not in fact answered by Stripe customer support but rather by Stripe customers. Imagine having the support of customers who would take the time to help out other customers?
The other great part about Stripe were the API’s. Not only did Stripe offer their own API Library to integrate with languages like Python, Ruby, PHP and Java, but they also had a really extensive set of 3rd party libraries for even more languages (including two for .NET that both work really well).
Dwolla, was also really interesting. I still don’t completely understand how they keep pricing so outrageously low. Their pricing is also pretty simple. If you charge your customers less than $10 you do not pay anything for that transaction. If you charge anything more than $10, you pay a flat $0.25 / transaction. For this unique business model, they were ranked by “Fast Company” as one of the 50 most innovative companies.
Just as an aside. When I signed up for a business credit card from my bank they kept calling me to see if I wanted to use their credit card processing system. If I remember correctly, they wanted to charge me something like $100 to setup, plus $30 / month usage fee, plus 2.9% + $0.30 / transaction. When I told them about Dwolla’s pricing they stopped calling me.
In the end, I chose to use Stripe. I had just read so many awesome things about them and their support was just so great that it tipped the scales for me over Dwolla’s amazing pricing.
After spending a lot of time with Stripe and getting my first paid customers, I am still very happy that I chose to use them. Their administrative dashboard is very extensive and really easy to use. I also love how easy it is to switch from “live” and “test” mode which allowed me to fully test Cotega with simulated credit cards and subscription plans before going live. I am still not sure if customers will demand to be able to use PayPal, but Stripe has seemed to give me everything I need for now.