Payment Gateways

Here is a quick introduction to choosing your payment gateway.

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What should you have in mind when choosing a payment gateway?

This widely depends on your business, but the main criteria are: 

• Price: set-up price and variable price
• Device compatibility: is it easy to pay on mobile? Does it matter to you? 
• Coverage of currencies and payment methods: Germany is notoriously known for having a specific payment method called Sofort for instance. Your user base might also require payments via PayPal (in that case, Stripe is not enough) or via cryptocurrencies. 
• Security: the gateway should be level-1 PCI DSS compliant, some come with fraud detection features as well.

You might want to change payment gateways or add options over time, that’s why we kept Lago’s architecture open: 

• Start with a payment gateway that is quick to implement, and upgrade to another one which covers more countries or is less expensive
• Start with only one gateway, and add new options, based on your users’ needs: PayPal, Cryptos, etc.

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Stripe lock-in

Please note that if you use Stripe Billing to manage your subscriptions, you can only use Stripe Payments to process payments. Stripe Billing charges 0.5% of the transaction volume, in addition to Stripe Payments existing fees. 

If you have an existing Stripe (Billing & Payments) setup, and would like to add PayPal or Crypto Payments to your checkout, you’ll need to build an entirely new billing logic outside of Stripe Billing. In other words, although Stripe built amazing products, you’re definitely locked in.

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Payment gateways overview

Here are the payment gateways we recommend. It’s very simple to pull data from Lago API into these gateways, and we’re working on building ‘point and click’ integrations in the future (you can contribute to this too!).

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Stripe Payments

Pros:

• Definitely the best API for payments

Cons:

• You’re locked into Stripe ecosystem, their main competitor is PayPal, so obviously they don’t offer to process PayPal payments.
• Adjacent products (Stripe Billing, Stripe Tax) are only usable with Stripe Payments. 
• Although Stripe is a global company, its products are notoriously US-centric.

Pricing: $0.29 + 1.4%-2.9% ; excluding: 

• FX fees, 
• the use of other Stripe products: Billing (0.5% of transactions), Invoicing (0.5% of transactions), Tax (0.4% of transactions)

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Paddle

Pros:

• Merchant of record, which simplifies most admin and tax duties, especially for European companies. 
• One stop shop solution for payments, invoicing, tax

Cons:

• Pricing: around 5% of transaction volumes

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Other payment providers

Mollie and Adyen are two well known payment alternatives based in Europe, that integrate with PayPal, European payment methods and actors (such as Buy-Now-Pay-Later leader Klarna). Mollie is targeting SMBs and growing companies, whereas Adyen is more on the Enterprise side.

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Cryptocurrencies

It’s also possible to accept payments in cryptocurrencies while you use Lago for billing. 

Why would users prefer crypto payments? Some of the most popular use cases are:

• Some web3 native companies raise funding in crypto, such as some DAOs for instance. Paying services and software in crypto enable them to stay on-chain and use their main wallets. 
• Payments in Cryptocurrencies and especially stablecoins (cryptocurrencies indexed 1:1 on fiat currencies: 1 USDC value = 1 USD, read more here) make cross-border payments faster (in near-time, versus several business days in fiat) and lower fees (usually max. 1% vs 2-5% in fiat).

Here is a non exhaustive list of crypto payment processors: 

• Coinbase Commerce;
• Coingate;
• Request;
• Coinpayments;
• Bitpay‍; and
• Binance Pay.

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Which payment gateway can you use with Lago?

Lago is an open-source, API-first application, and its architecture is open, by design. So you can use any and/or several of these gateways (and all the other ones we have not covered yet) with Lago, using our endpoints and webhooks. 

Lago will process and calculate how much you should charge a user and when, and send this information to your favorite payment gateway, so that your user can proceed to the actual payment.

We’ll also continuously work on creating native integrations with the most demanded ones. 

Do you still have questions about your Pricing Stack, and which payment gateway(s) you should choose? Reach out at hello@getlago.com.