What’s wrong with WorldPay?

One of the reasons WorldPay charges seem high is that they’re actually performing two services and each of those services attracts a separate fee.

WorldPay (owned by The Royal Bank of Scotland) fulfil the role of Payment Gateway, or Payment Service Provider and interface to a Merchant Account provided by Streamline (a brand name of NatWest Bank).

WorldPay is easy to set up

Many companies set up a WorldPay account because they’re new to processing credit cards and find the whole business rather confusing (we were definitely in that category).  That’s what WorldPay does relatively well:  They deliver an end to end solution for processing credit cards and you are spared many of the gory details involved in making this stuff work.

The cost of all that convenience is – well, cost.  By bundling the services of a Payment Gateway and a Merchant Account, WorldPay also bundle the fees they charge for each part of that service.

WorldPay is relatively expensive

As an example, we’re currently paying WorldPay an average of 3.75% across all credit card transactions.  So, if a client pays us €100 by credit card, WorldPay gets to keep €3.75.  Not such a big deal – until you start processing in larger volumes.  On €10,000 of credit card transactions, WorldPay charge us €375.

Compare this to a scenario where the Payment Gateway charges a per-transaction flat fee and the Merchant Account charges a percentage fee.  Using the numbers on the SecureHosting web site as an example, their typical per transaction fee would be 15 pence (roughly €0.20) plus a typical Merchant Account charge of 2%.

Given an average transaction value of €100, this produces a charge of €2.00 + €0.20 = €2.20.

The difference between the WorldPay charge and the SecureHosting charge is €1.55 per transaction.  On €10,000 of transaction value (assuming a €100 average transaction value), that equates to a saving of €155 – a 40% saving on WorldPay’s fees.

Speaking to other businesses processing credit cards, some Merchant Account rates are even below 1%, so a 2% fee should really be a maximum, rather than one to aspire to.

WorldPay is confusing

WorldPay have one of the worst interfaces I’ve ever seen for taking credit card payments. Its interface for merchants is equally as baffling. If you process recurring payments or subscription services -then WorldPay is very clunky indeed.

I don’t have a figure for shopping cart abandonment because of the WorldPay interface, but I’d be willing to bet that WorldPay merchants experience a higher percentage that those using another payment processor.

WorldPay hurts your cash-flow

Even though we’ve had a spotless trading history with WorldPay for over four years, they still hold on to our cleared funds for 6 weeks. That means that if a client pays by credit card today, we see that money (minus 3.75% changes) a month and a half later. WorldPay justify this retention because of the risk of chargebacks and clients changing their mind – something that has happened twice in four years and tens of thousands of transactions.

It’s bad enough that the WordlPay fees are so high but to add insult to injury, they also make you wait for payment. It’s not the fault of the merchant account – they settle immediately. Most other payment gateways settle within two to three days of the transaction – not 45 days as in the case of WorldPay.

Summary

If convenience and ease of set up is your number one priority, then WorldPay may be the obvious choice. The cost of that convenience will be high transaction fees, poor cash-flow and potentially lost revenue due to higher than normal shopping cart abandonment.

For a little extra effort, you can get a much better deal and, if you are already using WorldPay, then changing over should be quite simple.

Next Step: Save 40% on WorldPay fees

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