PayPal is the top dog when it comes to online payment services. It’s generally easy to use and a secure way to send money while buying products and services online, but it does have its downsides.
Fortunately, several other businesses have stepped up to provide their own payment services. They range from smaller startups to well-established players. Let’s go over a few of these online payment services and check out the differences and why you might use one over another.
Venmo works like a social payment service. Its interface is a mix of digital wallet and a social media feed. You can add comments and notes that other friendly Venmo users can browse like a social media wall. Venmo takes online payments and makes it a more welcoming system to suit you and your friends.
Venmo’s pricing structure supports this notion, too. When you send money using your Venmo balance, bank account, debit card, or a prepaid card, there are no transaction fees. Credit cards carry a standard 3% fee. However, receiving money and making purchases in other apps is always free.
Comparing Venmo and PayPal is tricky. They’re both online payment services, but they cater to different markets. PayPal has evolved into a massive, global payment institution, while Venmo retains its handy, quick-payment feel. For instance, you won’t pay your restaurant bill with Venmo. But you can instantly transfer your part of the bill to whoever pays. In that sense, it works alongside PayPal, rather than completely replacing it.
Amazon released their payments service back in 2008. Since then, the service has taken several different guises, including the now defunct WebPay service. WebPay was a direct PayPal competitor that ceased operation in October 2014. Fortunately, this wasn’t the end of Amazon Payments. MakeUseOf’s Christian Cawley explains:
If you’re already using Amazon, there’s a very good chance that the online marketplace already holds your credit card details. With Amazon Payments, you can use your Amazon account credentials to login and make purchases on thousands of websites and apps with the Login and Pay system, without scrambling around for your credit card.
With Amazon’s usual protection also safeguarding the transaction, this is one of the stronger alternatives to PayPal. We’re just a little surprised it hasn’t been more widely adopted.
While Amazon Payments no longer offers a personal payment service, the security offered by its Login and Pay system makes it an excellent choice. Furthermore, it offers merchants a strong partner to help grow their business. Amazon Payment is a worthwhile service to check out.
The advent of Android Pay led many to believe that Google Wallet would be consigned to history. Alas, the many are wrong again. Google Wallet switched from being both a peer-to-peer payment service and tap-to-pay system to focusing on only the former.
Google Wallet focuses on making payments easier. “But Gavin, don’t all payment services do that?” Sure, they do, but Google Wallet allows you to send money to anyone with an email address or phone number — even if they’re not a Wallet user. The recipient can instantly cash out to a bank account or debit card, granting instant access to your money.
Unfortunately, the Google Wallet Card, a fully featured MasterCard, was withdrawn from service.
Skrill is one of the strongest PayPal competitors around. Formerly called Moneybookers, Skrill is a global service that is beginning to feature on a number of popular websites, including Skype, eBay, and numerous online betting sites (outside the US). Furthermore, funds can be easily transferred to a Skrill-branded prepaid MasterCard to make purchases almost anywhere.
The service offers competitive transaction fees. Sending money receives a 1.9% charge of the total amount. However, sending transactions are capped at a maximum of €20. Money can be sent to Skrill accounts or email addresses, and receiving funds is usually free (any transactions involving a fee will be clearly marked).
Unfortunately, Skrill has some clear downsides. For instance, you’ll incur a deposit fee of up to 7% depending on where you transfer money from. Bank, Maestro, and Swift transfers are free, whereas MasterCard and Visa incur a 1.9% fee. American Express users receive a 2.5% fee, while a paysafecard receives a massive 7% fee. Skrill also charge a dormant account fee. If you don’t use your account within 12 months, they will debit €1 per month (unfortunately, I am not sure if they continue until your account is dry).
2Checkout is a payment processor that acts as a middleman between you (as a seller of items or services) and the payer. You can accept credit cards, checks, and even PayPal itself as a form of payment but ads a management layer as well handling the whole checkout process.
This is definitely a service meant for merchants, and not people who want to send money to their friends. You can see this in the style of their pricing, which is 2.9% + 30¢ per transaction in the United States. If you plan on running an online business that needs to accept payments, you may want to look into 2Checkout.
If you’re just looking for a way to send money to your friends or pay for pizza, though, this is definitely not going to be an option.
6. Traditional Merchant Accounts
Having a merchant account from a bank gives you the ability to accept credit cards directly. There is often a monthly fee, and you must be compliant with PCI Council security standards. However, if you do a lot of business and need to integrate a payment solution into your own shopping cart or system, this is the best way to go.
Ask your local bank about merchant accounts, or do some research to see if there’s an online solution that fits your needs. Make sure to find a reputable provider that doesn’t have a record of poor customer service, too. If you’re not going to be doing a significant volume of online business, though, or you’re content with using another service to process your payments, don’t worry about getting a merchant account.
Which One Is For Me?
The answer to this question depends on how you use the online payment service. If you simply transfer money between friends, Venmo and Google Wallet are great choices. If you’re selling items to strangers, a big name like Google or Amazon may inspire trust. Finally, if you’re running a lot of transactions, 2Checkout or even a merchant account might be the best way to go.
Do you have any other recommendations for PayPal alternatives or experiences with the ones above? Let us know in the comments below!
Originally written by Dave Drager on December 13, 2010.