VS
We’re currently evaluating possible payment gateways for our new project, DoLeaf. Given that it’s a marketplace app, your standard one-size-fits-all payment system just won’t work. We need to be able to transfer money from any buyer to any seller, and hopefully take a cut for ourselves in the process. With that in mind, we’re looking at both Amazon FPS and PayPal Express (via ActiveMerchant).
Here is our list of pros and cons for each solution:
PayPal Express
Pros
- Can assume that most sellers will already have a PayPal account.
- Buyers are used to using PayPal.
- Integrates with ActiveMerchant, and PayPal + AM looks fairly simple.
Cons
-
High barrier of entry for sellers:
- Seller must sign up for PayPal Premier or Business account.
- Seller must create API credentials (PayPal provides a walkthrough)
- Seller must provide us with their credentials (cut & paste, with the possibility of typos and such)
- Credentials are quite sensitive and must be treated as such, with encryption in the database at the very least.
Amazon FPS
Pros
- CoBrand UI can be used to install recipient tokens, making setup easy for sellers.
- Tokens are transferred automatically, meaning no possibility of typos or transmission errors when seller is etting up.
- Can run all the transactions for a cart quickly and seamlessly, rather than 1-per-seller.
- Probably could set up a 1-click ordering sort of system.
- Overall fees will probably be lower since there’s only 1 transaction per sale (rather than 1 for buyer-to-seller and 1 for seller-to-us)
- Tokens are not nearly as sensitive as PayPal API credentials.
Cons
- FPS and Remit are both still kind of unstable.
- Locks us out of ActiveMerchant, unless we want to support multiple pathways.
- No convenient pre-built seller interface. We’d probably need to create an account panel for handling refunds and such.
Thoughts
Overall, I’m leaning toward PayPal at this point. ActiveMerchant and the ability to possibly integrate future payment gateways with ease is a big plus in PayPal/ActiveMerchant’s favor. In addition, people are used to using PayPal for these sorts of transactions. So, buyers in the market we’re targeting will almost certainly have a PayPal account, but not necessarily an Amazon payments account. If only there were a way to make it easier for sellers to get set up.
Anyone else go down this path and come to a different conclusion?
January 18th, 2009 at 9:07 pm
We evaluated FPS for one of our client projects and although it’s attractive it’s also rather complicated for simple marketplace applications. Remit is working to make that simpler, from what I’ve heard, but I haven’t personally used it yet. It looked very much like a work in progress at the time.
My solution was to use Amazon’s SimplePay, which worked well for our situation. It’s basically a streamlined version of FPS that is much more constrained. Only recently was marketplace support added to the service by Amazon. In any case, there’s a Gem available (thanks to Nathaniel Bibler), and I added marketplace service support to it a few weeks back so you’ll now be able to use it for building marketplace solutions as well. Check it out at http://simplepay.rubyforge.org/
We’ll be launching our first (small) project using this work pretty soon. Good luck!
January 19th, 2009 at 6:44 am
Nap,
We actually have used FPS and Remit, and can say for a fact that it’s dicey. We did the work almost a year ago, and it seems like things have progressed since they, but we still feel a little burned.
In any case, thanks for the heads up!
January 20th, 2009 at 6:18 am
We’re looking at using FPS for Skribit – mainly b/c their rates are better. In your case, I don’t imagine that applies much since you’re passing along that fee. I’m looking at FPS as having a lower rate, but w/ higher setup fee (in the it takes for me to implement the solution). Then the question is if the higher setup cost is worth the lower transaction rate.
January 20th, 2009 at 7:38 am
Calvin,
IMHO, it’s better to pay for simplicity. So, I’d rather pay higher fees and get it developed quickly. For an unproven startup, this can be important just to see if anyone will bite. If they do, you can start to implement multiple payment pathways to allow your customers to use their payment method of choice.
Note: this only applies to transaction fees. I’m not a huge fan of paying big setup fees like a lot of merchant accounts charge. PayPal, Amazon, and Google have the right model: no setup, pay as you go.
February 12th, 2009 at 1:41 pm
Great thoughts here. I had been struggling to avoid the double charges in my marketplace app. Does anyone know which is a better choice for international transactions?
February 12th, 2009 at 1:53 pm
Great thoughts here. I had been struggling to avoid the double charges in my marketplace app. I was going through the documentation on Paypal Express. Not able to find how to use it for Marketplace apps. Can you please give a good link to read?
May 31st, 2009 at 8:05 am
Hi, as Dheeraj, I cannot find how to use it for Marketplace apps. Can you please give a good link to read?
July 25th, 2009 at 2:37 pm
[...] Amazon FPS vs PayPal Express for a marketplace app [...]
December 23rd, 2009 at 5:34 pm
So what did you end up using for the site? I’m working on a similar project (processing a cart shared between individual ‘merchants’) and am curious how you handled it.
July 20th, 2010 at 4:50 pm
FPS is in a stronger position than Google Checkout, because Amazon already has 69 million customers’ credit cards on file. If Google is serious with this, they could turn it better than Paypal in no time. If the eBay users sue Ebay for restricting Paypal only in their sites, then many will use Google Checkout.