What Start-Ups and Freelancers Should Know

Originally posted on PIxel Prose Media Blog.

One of the most important business components for any freelancer, consultant, or start-up company is determining exactly how you will collect payment from customers. While there are a lot of payment processing providers out there, it’s imperative to take your time in assessing their respective pros and cons, and select the service that is best suited for you and your business. I can tell you from personal experience that this is no one-size fits all matter.

Borrowing from some of these experiences, we’ve decided to list the most viable (and regularly used) options available today and assign a grade to each. Still, we encourage you to do the research and decide for yourself which of these are well-matched to your specific needs:


Ah, good ol’ Paypal. Likely the most recognizable of them all, we picked this as a first choice because it’s often the preferred option for online shoppers and merchants alike. What could be more comprehensive and less stressful than a service that offers same-day deposits, simple invoicing capabilities, and debit cards for immediate fund withdrawals, as well as easily accessible merchant data including annual account summaries, tax information, and other pertinent financial documentation? If you can get past the 2.9% plus $0.30 USD service fee per incoming payment transaction, Paypal is a relatively decent option to go with. In fact, I know quite a few people who use it as their personal bank accounts.

A seemingly minor yet very tedious aspect of Paypal (mainly on the customer/client side) is the requirement that one must set-up an account before they can make payment. While most clients we’ve dealt with tend to not mind or use Paypal regularly already, there are some for whom going through the sign-up process is a great inconvenience. The biggest concern, however, is that Paypal’s seller/merchant security guidelines do not offer adequate protection for those not specializing in tangible goods or items. If you cannot provide proof of delivery via a shipment company or tracking number, your account is significantly more susceptible to unscrupulous activity, such as unauthorized refunds, charge-backs, or payment reversals.

This aspect is especially problematic for independent contractors, graphic designers, freelance copywriters, and other creative types whose work products tend to be more conceptual than corporeal. In other words, any digital or electronically-generated goods (such as websites, company logos, infographics, or banner ads) are not protected. This means that despite your hard work and right to payment, a disgruntled former client (alas, they do exist despite greater efforts) could potentially contact their credit card company claiming to never have received the item, and request an immediate reversal of charges — a request with which Paypal must comply. While you have the option to challenge the charge-back or reversal and submit documentation supporting your side (which can take anywhere from 30 to 72 days), the Paypal dispute team will always refer back to the original guidelines.

If you fall within this category, you’d be better off going with a payment service that understands and adheres to the nuances involved with project-based agreements.

Overall Grade: C+


Anyone who currently banks with Chase or has in the past can attest to the high fees associated with maintaining a checking account or sending a bank transfer. Never ones to be left out in the cold — or miss out on the lucrative opportunity to cash in on a steadily-growing freelance-based economy — the folks at Chase introduced the free and convenient “person-to-person” payment service, Chase QuickPay. What’s great about this option is that you don’t need an official Chase bank account to qualify for the service; all you need is a valid email address and an active bank account with any U.S. bank. In addition to its very user-friendly digital interface, Chase QuickPay offers a very savvy app that allows for quick and easy mobile payments (which actually isn’t all that novel, considering Paypal and most others listed here also have apps with similar functionality).

Still, Chase QuickPay is certainly not without its hangups. Despite the easy transfer set-up, the actual transfer between accounts can take up to two business days to clear, sometimes longer. Depending on the size and financial stability of your business, that may not be a big deal. However for freelancers who rely closely on these payments for their basic expenses and livelihood, a longer wait could be more trouble than it’s worth. In this way, Chase QuickPay appears to be more beneficial to existing Chase customers, since transfers between two Chase accounts appear immediately or the next business day. Another minus in our book is the fact that Chase doesn’t offer free built-in invoicing, creating yet another step for merchants who are diligent about keeping organized payment records.

Overall Grade: B


These days a good number of people shop on Amazon.com, and therefore may already have a credit or debit card attached to their account. In this case, Amazon Payments may end up being the easiest option, as this would prevent existing account holders from having to undergo yet another account registration. What’s also great about this option is that it saves customers even more time by making their necessary billing and shipping information readily importable. In particular, Amazon Simple Pay is well-suited for non-profits and fundraising entities in need of safe and simple ways for people to make online donations.

So what’s the catch? Well, if your client doesn’t already have an account with Amazon.com, they will definitely have to create one in order to use this service. In addition, Amazon requires all new sellers to adhere to a reserve system, which allows them to hold all pending transactions for a 14-day “observation period” in the event of a customer dispute or refund request post-payment and delivery. Basically this means that you won’t get all of your money right away, not until you’ve gone through each “reserve tier” and built up a positive history as an Amazon seller. While this is very beneficial to Amazon’s ability to protect themselves against potential losses or deficits, it certainly is not so for small businesses and start-ups who need their funds available immediately upon receipt.

Overall Grade: B+


Oh, where to begin? First, a piece of advice: always — and I mean ALWAYS — do a web search for customer reviews prior to signing up with any payment processing service. This is the best way to get a clear sense of common complaints and public opinion about the company. What does the payment process involve? How is their customer service? Does the company adequately address customer questions and concerns? These questions are critical to consider in every case, especially when it comes to the newbie in the bunch, WePay, which markets itself as the ideal alternative for digital service providers.

At first glance, WePay appears to in fact be the better solution for those seeking refuge from Paypal’s less than satisfactory protection parameters. For one, it has a really cool and simple-to-use invoicing feature that generates both a mailed electronic invoice and a link for ease of payment. This way, if the invoice keeps getting caught in clients’ spam boxes for some reason, you can simply send over the direct link. Even better, WePay requires no upfront account sign-up or registration on the customer’s part; they can literally just click on the payment button and enter their debit or credit card information. Why look any further, right?

Not so fast. Once you’ve stripped away these superficial benefits, you will find yourself in an incredibly frustrating and unsatisfactory situation. From personal experience, I can confidently assert that WePay’s customer service and administrative infrastructure are wholly underdeveloped. Despite the various contact methods, including phone, email, and live chat, none of the representatives seem to have accurate information when it comes to informing the customer about how the service works. Asking a simple question like “when will my funds become available” will likely yield vastly different answers from one customer service rep to the next, which is a huge no no when managing someone’s hard-earned money. WePay states that all withdrawals take at least 1-2 business days to clear into your personal bank account — but you’ll have to look very carefully through the terms of agreement to realize that it can take up to that long for the incoming payment to even become available in your WePay account to withdraw the funds.

Similar to Amazon Payments, WePay has a 7-day reserve system applicable to any payments over $500.00. So, if your expecting a client payment for $1500.00, only a third will be available within a minimum of 1-2 business days; the rest you’ll have to wait a week or more for. According to their website this limitation can be adjusted with a simple phone call, or by providing additional information, like urls to your Facebook business page, online review sites, Tax ID, and other relatively unnecessary info. However that is not the case. Instead you’ll get a spiel about the importance of building trust over time by continuing to process payments through them, which is the only way that WePay actually will lift the reserve — how long this process takes is unclear. Disturbingly, a quick glance of their online reviews also revealed unscrupulous practices such as reversing seller payments without prior notification or consent, contacting sellers’ clients directly to confirm authorization, or unexpectedly cancelling seller accounts altogether. All of this AFTER they’ve already deducted their 2.9% + $0.30 service fee. Our final verdict? WePay urgently needs to make some serious service tweaks before it can compete with the Big Dogs.

Overall Grade: F


Back in 2011, American Express introduced its own digital payment platform Serve to compete with the giant Paypal machine, offering the added benefit of being able to transfer funds directly from your credit or debit card, as opposed to relying solely on bank transfers. Serve also sends members their very own debit card in the mail within just a few days to ensure even faster fund availability, and to use wherever American Express cards are accepted. For Amex, which has long been considered more financially viable for elite customers, Serve offers a way to tap not only into merchant-specific needs, but to reach a wider and more diverse customer base as well. For those with less than stellar credit, this is also a good option as the company does not require background or credit checks to start an account.

Overall the functionality and user-friendliness of Serve appear to be favorable and well-received. Like Paypal, Chase QuickPay and WePay, Serve offers a free mobile app – but what’s even cooler is that clients can submit payments through their Facebook app as well. The company also provides html codes for business owners to embed Serve buttons and widgets on websites, blogs, and social media pages. The service fees are the same as Paypal and We Pay, and unfortunately they do charge a $2.00 ATM fee compared to Paypal’s $1.00 (although Serve does offer the first withdrawal each month for free). But given the relative ease of use, that may not end up being such a detraction after all.

Overall Grade: A

Again, the above reviews are not a composite of all that’s out there, but rather borrow from our own personal experiences and others we’ve spoken to. We still wholly suggest that you conduct your own thorough investigation and formulate an opinion based on what you find. In doing so, you want to remember some key things:

INVOICING IS IMPERATIVE. As with any business transaction, succinct and organized record-keeping is imperative. By providing your clients with details invoices prior to each payment, you are ensuring that both sides have sufficient information to protect yourselves in the unfortunate event of a misappropriated payment, contract dispute, or anything else that would compromise your receiving money in full and on time.

ALWAYS READ THE TERMS OF AGREEMENT. We can’t emphasize enough how important this is. Yes, it’s tedious, but you’ll be thanking your hard-earned dollars later that you did it. Trust us!

MAINTAIN AT LEAST TWO DISTINCT METHODS OF PAYMENT. The fact of the matter is, not every customer is going to be the same in regard to how they prefer to remit payment. In the event that something goes awry, it’s always best to have a Plan B and C in your back pocket in case the first option falls through.

What digital payment provider(s) do you use? Would you recommend or discourage using any of the ones we’ve listed here? Share your experiences with us in the comments section, we’d love to hear your personal feedback.

P.S. — We’re currently exploring ProPay as yet another option, and will keep you posted on how it ranks in comparison!

Janet A. Dickerson is a brand development and communications specialist and CEO of Pixel Prose Media. She earned her stripes in politics and public policy, developing and driving communications strategies for Cory Booker, NYC Mayoral Candidate Bill Thompson, and national civil rights organization PolicyLink. Dickerson is also Co-Founder and Managing Editor of epicurean blog Off The Beaten Plate (OBPNYC.com).


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