What is the best API for payment processing?
Answer by Dean Young:
While it is difficult to say what is definitively “the best” API, I can shine some light on what WePay does differently. What we’re really talking about here is differentiation. It could be pricing, API docs, or fraud. I’m going to focus on fraud, since pricing is commoditized and API docs come down to personal preference.
But first, to provide some background, if you have a marketplace or platform, you usually create a website where buyers and sellers can find each other to exchange goods or services. There are many examples of these kinds of websites, such as airbnb (listers and renters), TaskRabbit (hirers and rabbits), Lyft (drivers and riders), Kickstarter (makers and contributors), etc. etc. The marketplace is the ecosystem where both parties meet.
In this case, you indicated that you want to install “chain payments” (PayPal’s term), or what we like to call an “app fee”. An App Fee is where a buyer makes a payment to a seller, but a small fee is taken out of (or in addition to) the payment in exchange for using the marketplace/platform. This is essentially what payment processors do to take their own fees.
An important consideration in choosing a payments API vendor for your marketplace is how much risk you are willing to assume. The daunting thing about integrating payments is that you have to deal with both buyer and seller fraud.
Using a fictitious crowdfunding platform (JumpStarter) as an example, they have to do a lot of work upfront to ensure that their “makers” are as legitimate as possible. However, can they ever really know? Will the makers put a project out there, charge a bunch of credit cards, and then not deliver? Sure, that’s against the whole spirit of the community, but it happens! If someone raises $40,000 and doesn’t deliver, then everyone charges back through their credit card companies, JumpStarter is now liable for $40,000. Now multiply that by however many of those accounts are fraudulent sellers, and JumpStarter could be dealing with a whole lotta hurt.
That’s just the seller side. What if a bunch of buyers start charging back for movies, art projects, etc. that they are unhappy with, but they received the goods or services for already? Again, JumpStarter is liable for those chargebacks. That’s not even accounting for fraud rings, money laundering, and other compliance issues.
Risk is a legitimate concern, and something that WePay actively assists marketplaces and platforms with all the time. We create accounts for the end merchants on your marketplace, so you are never liable for chargebacks, fraud, or compliance. You should be focusing on perfecting your product, not the payments.