Payment Gateway Processors In Singapore

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You want to charge your customers’ credit cards for payment on your website or mobile app in Singapore. Depending on how you want to get this done with different Payment Gateway Processors, the whole experience can be a nightmare but we have some tips for you.

1. Merchant Banks and 3DS

Merchant banks in Singapore are very stringent these days. By default, all new e-commerce payment processing bank accounts should be 3DS enabled, meaning that when your clients make a payment using their credit cards, they need to receive one-time-passwords on their smart phones and type that in to authorize the transaction on their web browser or smart phones. If such a transaction workflow is acceptable, many payment gateway online processors are available for you to choose from.

If you really really need to allow transactions with credit cards with no 3DS, you can jump through some hoops and use international payment providers but this frequently involves setting up a legal business entity (company or sole proprietorship or other acceptable entities) overseas in a jurisdiction accepted by the payment provider. And you would also need bank accounts in countries accepted by the payment provider to receive proceeds from your transactions.

2. Exploring Payment Gateway Processors

We spent a few months in mid-2014 exploring a few different payment processors available to see if it is possibly to use them for seamless server side payment processing without 3DS.

 Tried Integrating With These Providers

Stripe (https://stripe.com/) – Hands down, the easiest payment gateway processor to integrate and use amongst those that we tried. If you have the required info, approval is basically immediate! Standard MDR pricing at 2.9% + USD0.30 MDR for USD transactions. For other currencies eg charging in SGD, there would be a hefty additional 2% charge. Officially supported in US, Australia and many European countries but not in Singapore yet.

BrainTree (https://www.braintreepayments.com/) – Supported in many countries and recently available to Singapore companies with standard MDR of 3.4% + SGD0.50 for domestic cards. An additional 1% more for multi-currency. If you have all the necessary information, approval might take a few days. Like Stripe, technical integration is easy.

Checkout (https://www.checkout.com/ ) – Very helpful sales and support staff in Singapore. With a merchant bank overseas, they can help you towards a non-3DS workflow and overseas entity. Technical integration is only slightly more troublesome than Stripe and BrainTree. After sales support seems to be responsive too.

AsiaPay (http://www.asiapay.com.sg/ )- Very helpful sales and support staff in Singapore. Technical integration took quite a bit of work because API design was awkward and API fields documentations were out of date and incomplete compared to actual API behaviour. Tried hard but couldn’t work with them to remove 3DS and didn’t proceed with them.

ENETS (https://www.nets.com.sg/ )– A local old favourite for payment gateway processor. With their old UMAPI Java API, Web and back-end payment technical integration was the most painful amongst all the payment providers we tried. This is the first payment processor we tried but due to difficulty of integration and little chance of removing 3DS, we didn’t pursue further.

We also explored other providers but decided not to go further with the rest for a variety of reasons either because they couldn’t support non-3DS or they were not responsive to us when we asked.

3. Selection Consideration

3a. MDR

Depending on your sales margins, the MDR (merchant discount rate) might substantially affect your bottom line. If your business is young, transaction volume is not high yet and you are just starting a new business relationship with a payment processor, you are going to get standard MDR rates of maybe 3.5% to 4.0% of transacted amount and maybe an additional SGD0.50 per transaction. In additional to the standard MDR rates, if you are going to support payment processing in a currency different from your payment gateway processor settlement currency, you will also incur another 1-2% of multi-currency charges.

3b. Other One Time Costs

Some of them might have initial setup costs or annual fees or support fees of up to SGD1000 annually or fees that apply if your transaction volume is less than a hurdle amount they set.

3c. Cost of Refund and Charge-Back

Other than the fees mentioned above, you should also find out the costs of handling refunds and charge-backs. Multiply that with your expected probability of refund or charge-back for each transaction and you can add on expected values of these probabilistic charges to your overall payment processor expenses. Payment processors monitor charge-back occurrences very closely and use that to determine if the merchant has managed its business and security well and reduce the chance of transactions that end-user refutes eg due to fraud or erroneous transactions. They might take action against the merchant if clients using your service have frequent incidences for charge-back.

You should also check the process to handle refunds and chargebacks. Does your payment processor have a portal for you to easily refund yourself? Or do you have to email them to handle manually?

3d. Tokenization – Storing of credit card details

If you are processing payments for credit cards, you need to be very careful to adhere to PCI standards. Plenty of info online about this:

https://www.pcicomplianceguide.org/pci-faqs-2/

http://usa.visa.com/merchants/protect-your-business/cisp/merchant-pci-dss-compliance.jsp

https://www.pcisecuritystandards.org/merchants/

As a start-up, you likely don’t want the heavily burden associated with being a PCI Level 1 Merchant that keeps credit numbers in their databases. This would require you to comply with a set of very stringent and onerous rules.

To simplify your setup initially, you likely want to store the credit card details with the PCI compliant payment processor or other credit card tokenization service (eg https://spreedly.com/) , so the first use of your system requires user to enter their credit details which would be “tokenized” and stored on your provider’s servers and you store only the basic information on your servers that links with these tokenized details on your provider’s servers. Subsequent transactions on your system by the same user for the same credit card details would not require the user to enter the full details again. Such tokenization services might come free from your service provider or at a fee. In any case, when you first start small and process payments on your online service, outsourcing this function to the payment processor will be wise and saves you a lot of unnecessary overhead.

3e. User Experience

For web sites, do you want your users to stay on your site throughout payment or can you allow the user to be directed to payment gateway processor page for payment processing? Many payment processors might only support one or the other workflow, so you need to choose one that supports the workflow you need.

For smart phone applications, you need to consider whether to process payment directly from your front-end or have your front-end invoke your backend which uses the server side APIs of your payment gateway processor to process payment. Do you really want your users to have to type in OTP due to 3DS? All these considerations could restrict you to only certain payment processors.

If you and your payment gateway processor are using an overseas bank for processing payments (eg if you want to set up non 3DS payment flow), there might be additional cross-border charges for your customer’s credit card transactions, on top of the transaction amount your service is charging. You can read about them in the links below. Many customers might just ignore these credit card charges but some might dispute the charges which might lead to refunds or charge-backs. So you can consider reminding your customers of such charges during the actual transaction.

http://blog.moneysmart.sg/credit-cards/credit-card-fees-you-probably-dont-know-youre-paying/

You should also arrange with your payment gateway processor to have your merchant name show up clearly and correctly for transactions so your customers are not confused when they see charges from a merchant that they don’t recall buying anything from.

3f.  Payment Flow

How do the transacted proceeds actually flow from the payment gateway processor to your bank account? Sometimes the settlement cycle might take a week, sometimes more if the payments are aggregated before they are released to you. Do you need the cash in sooner to make payments to your suppliers? If so, your short-term cash liquidity needs might be noticeably affected by the speed of your payment processor settlement process.

3g.  Ease of implementation

Implementation issues tend to be just the pain experienced in the beginning and they either can be solved technically (great) or not (still early and can quickly change provider). Good modern payment processors tend to have very programmer friendly APIs, documentations and sample code, so the technical integration process might take between a week or two if your programmers have time to focus on it and the payment processor’s support team, if needed, are readily available to set up your test accounts and answer your questions.

The other business considerations above are more important. But all else being equal, you should also have your programmer take a look to investigate how difficult it might be to actually integrate with the payment gateway processor.

Other Suggestions

There is an amazing array of different payment gateway processors for you to choose from and the list above is only a small subset. When you are planning to integrate a payment processor into our online service, do ask around again to find out the latest info and let us know your experience.

If you are in Singapore and want to try a local payment start-up and use the usual 3DS authentication, you can also check out SmoovPay (https://merchant.smoovpay.com/). They aim to make technical integration simple.

If you plan to set up a US entity with US bank accounts, and you have support from an institution (eg backed by venture capital fund or you are in an accelerator program or with an incubator) you can consider using banks like SiliconValleyBank (http://www.svb.com/) which might allow you to set up a bank account remotely without having to physically show up in a US branch to open your account. Another bank that you can try to set up accounts remotely is Everbank (https://www.everbank.com/)

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