10 Jan

The Many Paths to Accepting Payment

Here’s the best case scenario for every artist: someone finds your music and falls in love with it, and they decide to support your project in some way. They want to buy some tracks or a full album. Or if they catch your live show, grab a t-shirt or other merch after your set. The worst thing that you could do in this situation? Making it hard for them to pay you.

The good news is that new ways to pay for physical or digital goods are popping up seemingly every day. And with them, many more options for the types of payments you can accept. The support of your fans is now a tap, swipe, or click away.

If you’ve never attempted to set up anything online or at your merch table outside of making sure you have enough change on hand to break a $20 bill, this article is here to help gently guide you into the process.

Accepting payment via the web

PayPal is, at this point, the default for most folks looking to accept payments online. Most often that comes from personal accounts where people can log in and pay using a PayPal balance or using stored credit card or bank information. For folks without an account, they can simply enter in their credit card information

Another great option is Stripe, but customers don’t have to set up a Stripe account like they do with PayPal. Stripe plugs into websites and apps, providing back-end credit card processing that is invisible to consumers except at the time they buy something from you online. With Stripe, people have to enter their credit-card information the first time they use it, but they can opt to link their payment information to a mobile phone and reuse it later at any site that relies on Stripe.

While PayPal and Stripe charge almost the same fees to accept payments, PayPal is often seen as more impersonal and sometimes hostile to merchants, freezing payments when a lot of money is collected at once—such as with an album release or a big event. Stripe has better and friendlier policies and customer support, and should be easier to work out the kinds of issues you’d face. The good news, though, is that you don’t have to pick between them. The CASH Music platform supports both PayPal and Stripe, and it makes sense for most purposes to accept both so that you don’t miss out on people who use their PayPal account balance to pay for things.

If you use Squarespace for Web hosting, you can connect Stripe there, too. On a plain Web site, you can also make a simple PayPal payment button that doesn’t require any programming, but you’ll have to handle sales manually. (There are many other payment processors, and different ecommerce and hosting sites may have relationships with them or let you use Stripe, too.)

The advantage with Stripe, however, is that you can also use it with Apple Pay, Apple’s smartphone-based payment system. Apple Pay launched in October 2014, and until October 2016 you could only use it for paying at a store’s point-of-sale terminal or for an in-app purchase on an iPhone (or via an Apple Watch).

But in October, Apple extended Apple Pay to work with its Safari browser in the latest operating systems for Mac and iPhone/iPad (macOS 10.12 Sierra and iOS 10). For people who have both Apple Pay set up and use Safari, when they go to pay on a Web site that uses Stripe, an Apple Pay button appears automatically. They can click or tap it, and then their associated iPhone or Watch lights up with information for them to approve. Much, much easier than entering credit card details.

Accepting payment by text, app, or person-to-person payment sites

Web sites are a great way to take payment directly, but there are other digital options that could be easier for some of your fans, and being set up to take them could result in retaining sales you might have lost from people who don’t want to pay on a Web site or don’t have a credit card or debit card.

Pay via Circle, Square Cash, Venmo, and others. Several companies have set up person-to-person payments systems that let you send small to large amounts of cash directly via their app. Many require that you set up a business account, in which every transaction has a fee that’s about the same as a credit-card payment. But these systems let people draw funds from a bank account or debit card at no cost and can be an alternative for many to credit cards. (See my in-depth article.)

Pay via P2P Web site. All of the sites above also let you use a Web site on a mobile or desktop browser to handle the transaction.You don’t have to have an app.

Pay via Apple’s iMessage. If you’ve got an iPhone or iPad running the latest operating system release, someone else with the same setup can “text” you money as an iMessage through Circle, PayPal, Square Cash, and Venmo. Accepting payment in person

I’m probably preaching to the choir here about accepting in-person payments, because anyone who performs in public and sells stuff themselves has already figured this out. But you might not be up to date with the latest.

Many artists I know long ago got a Square Reader, a dongle that plugs into an Apple or Android phone or tablet, and lets you swipe a credit card. PayPal makes a rather ugly versions of the same, offering up its Mobile Card Reader. The trick is that while the Square reader is free, PayPal charges $14.99 for its swiper (though you may find a better deal via retailers like Office Depot).

However, the latest and greatest Square scanner handles contactless payments from mobile devices, from an iPhone or Android phone, and accepts chip cards. The specialized reader for that costs $49 and also works with Apple and Android devices. Its full name is the Square Contactless and Chip Reader. (Check its list for phone and tablet compatibility; it’s much more restricted than the swiper.)

The price tag may seem high at $49, but people increasingly want to pay in a way that makes them feel more secure. The ease of tapping a phone reduces hassle, and both tapping and “dipping” a chip is safer overall, making people more comfortable with the purchase. The scanner has a built-in battery you can recharge through a standard USB cable, and Square also sells a charging dock for it. (You’re also protected against reversed charges or “chargebacks” if customers tap or dip if the card has a chip. If you swipe a chipped card, you’re responsible if there’s a dispute and you can’t prove the transaction involved the real cardholder.) PayPal offers much more complicated Chip Card Reader that also handles contactless payments and card swiping, and has a tiny screen, so the transaction can happen entirely on the device. But it costs a whopping $149 without any real advantage.

There’s one last low-tech/high-tech in-person payment method. If you’ve been reluctant to take personal checks, many banks and credit unions offer apps that let you deposit a check via a picture taken by a smartphone’s camera.

This option isn’t without issues. Snapping a check on the spot doesn’t verify whether the person has enough money in their account to cover it. Nor does it ensure the check isn’t forged, however unlikely that would be for someone buying your music or merchandise.

But it does have two benefits: first, it makes sure the check can be deposited correctly, and there’s nothing that will keep a bank from processing it, including the numbering information at the bottom that identifies the financial instituti on. Second, it clears more quickly: once you snap and deposit, the funds are available within a business day in most cases.

What you’ll need

Typically to get paid, all you’ll need is a checking account, although a few services also let you withdraw funds via a debit card account or even as a credit to a credit card. But make sure to read the fine print for any service you sign up for, because fees and timing may vary in cashing out the funds collected.

P2P services, like Venmo, tend to accumulate cash in an account, and have limits on how much and how frequently you can transfer funds out. But services will increase limits of all sorts if you provide them more information, such as your social security number’s last four digits and your date of birth, which further verifies your identity.

PayPal and Stripe don’t have a limit on how much you can accept, but do impose delays on withdrawals under certain circumstances, and may require you provide more documentation on your transactions if you’re charging hundreds of dollars a week and then suddenly bump up to thousands at once.

What this will cost you

The fees for transactions reflect a combination of the risk that a payment processor and credit network thinks it’s exposed to, the cost of overhead for handling moving money around, and a profit margin that’s impossible to know. But because there’s so much competition for small businesses (like yours!), fees and conditions started low and stayed there. That’s great news.

For most transactions, you pay about 3%, with an additional 30¢ if the transaction is not done in person. And that’s about it. There are no recurring fees and no rentals required, although as I explain above, you might have to pay for certain kinds of adapters or peripherals to accept cards and mobile payments.

So for an online $5 charge, you pay 45¢ of it: 3% of $5 is 15¢; add the 30¢ flat fee for a net of $4.55. This is rougher on small transactions, like someone buying a 99¢ track: you wind up paying about 33¢ (3¢ as a percentage plus the 30¢ flat fee) and keeping just 66¢.

For in-person charges where someone hands you a card, dips a chipped card into a slot, or taps to pay, the percentage is slightly better for you: 2.7 or 2.75% and there’s no flat fee added. For a $5 charge, you pay just 14¢, netting $4.86. You can also take phone orders and tap in a card with some of these systems designed for in-person use, but you pay a higher rate, because there’s more risk: it’s usually 3.5% plus 15¢.

For now, there’s no lower fee for dipped and tapped transactions, but that may change in the future.

Friction free

The fewer steps and the less typing and tapping, the more likely someone is to make a purchase or complete one in person. Take advantage of everything that’s out there so you’re not leaving fans who want your work and want to support you, but need more options through which to hand over the dough.

By Glenn Fleishman, distributed under a Creative Commons CC-BY license.

Image by Daniel Paxton, distributed under the CC-BY-NC-ND creative commons license.

Henry Rollins - The impact of music in our world

If that’s how you’re listening to music—you’re only ripping yourself off.

The Career of Being Myself

I am consensually working these long-ass, impossible hours to be paid in less money, but more freedom.

Why Am I Doing This To Myself?

This independent creative life has myriad simultaneous jobs, no days off, no assurance of security and requires extreme self-­discipline.

View all articles