Knowledge Base: How does Chargify compare to PayPal?

PayPal, the defacto standard in online payment services, offers a wide variety of tools for merchants running subscription based sites. PayPal has two primary products for Web 2.0 and SaaS companies: Website Payments Standard and Website Payments Pro. They both offer similar functionality except for the fact that the Standard Version requires your customers to check out on a PayPal branded payment page, with limited opportunity for customization. Your customers also see PayPal as the Merchant of Record on their credit card statement which looks really unprofessional. It decreases the value of your brand and could increase the number of charge backs you receive.

PayPal offers its users limited analysis or business intelligence tools. At most, you can download a historical log of your transactions, but you can’t see how those trends are changing over time. Are you interested in how your marketing efforts correlate with sign ups? Or how your dunning strategy (how you handle declined credit cards) effects retention? That insight simply isn’t built into PayPal. It gives you very limited subscription management tools and all the while forces your customers to work through the PayPal interface to subscribe to your service.

Another major headache for subscription based companies is how to handle declined credit cards. From our experience; about 50% of lost customers are due to declined or expired cards. PayPal doesn’t give you a proactive means to address these credit card issues. Chargify gives you a powerful set of dunning management tools so you can proactively address credit card issues before they happen. If one of your customer’s credit cards is set to expire, you can set up custom notifications to help them remember to renew. This helps your business retain more customers. In addition, you can set up custom email notifications for all of the possible credit card failure reasons. You control how your customers get contacted and the messaging around how payments are collected.

Cost

PayPal uses the same tiered percentage fee structure as Google plus a fixed monthly fee for use of its recurring billing features. They take a tiered percentage of each transaction and a flat rate of 30 cents on top of that (for every transaction). They base the percentage on how much revenue your application is generating. The lower your revenue, the higher the percentage they take. Big bucks for a startup or growing company.

How is Chargify different?

• Provides robust reporting tools that help you analyze your billing data and learn from it
• Works with a variety of merchant gateways so you can shop around for the best rate
• Merchants have the choice of either integrating our API or sending customers to a custom-branded payment page. Customers will never feel like they’re leaving your site.
• Chargify never charges transaction fees or setup fees and has simple flat-rate billing plans. Chargify also support billing an unlimited number of customers.
• Chargify customers can setup and test different freemium pricing models and make changes without affecting customers who’ve already signed up.