1. Online Payments: Theory for Understanding

To accept payments in an online shop, merchants need two contracts:

1. Acceptance Contract (Acquiring Contract): This is concluded with an Acquirer (see Chapter 1.2).

2. Processing Contract: This is concluded with a Payment Service Provider (PSP) (see Chapter 1.1).

The following explains exactly what an Acquirer and a Payment Service Provider are and how they interact with the online shop.

1.1 What is a Payment Service Provider?

A Payment Service Provider (also Payment Service Provider or PSP) enables the technical integration of online payment methods such as Mastercard, TWINT, PostFinance, and Apple Pay into an online shop. Instead of negotiating with each financial institution individually and integrating payment methods separately into their shop, online merchants (also Merchants) can work directly with a PSP. This way, they get all desired payment methods, integration systems, and e-commerce tools from one provider and also meet the required security requirements.

The Processing Contract with the payment provider regulates the technical processing of payments, i.e. the connection between the online shop, the payment provider, and the banks. However, in some cases, merchants may also need an acceptance contract with an acquirer — unless the PSP takes on this role itself as a Payment Facilitator (see Chapter 1.3).

Figure 1) Functionality of a Payment Service Provider (PSP)

1.2 What are an Acquirer and an Acceptance Contract?

An Acquirer (also known as Acquiring Bank) is a financial institution that processes credit and debit card payments for merchants. In order for an online shop to accept such payments, it needs an Acceptance Contract. This regulates the acceptance and processing of card payments and defines fees, security guidelines, and chargeback processes. 

1.3 What is a Payment Facilitator?

A Payment Facilitator (also PF or Collecting PSP) simplifies payment processing for merchants by acting as an intermediary between them and the acquirer (see Figure 2). The Payment Facilitator can sign the acceptance contract on behalf of the acquirer. Merchants then conclude their contract directly with the Payment Facilitator and therefore do not need a separate acceptance contract with an acquirer.

Thus, the Payment Facilitator makes it possible to integrate various payment methods from different acquirers into an online shop with just one contract — for example Visa, Mastercard, TWINT, PostFinance, and Reka. 

Figure 2) Functionality of a Payment Facilitator (PF)

In addition to these two basic models, there are other mixed forms that will not be further explained in this article.

2. How to Choose the Right Provider?

The choice of the right provider depends on several factors. Merchants should ask themselves the following questions:

• Which payment methods do I want to offer? A diverse payment offering increases customer satisfaction and conversion rate. Merchants should therefore check which payment methods their customers prefer. Not all providers support the same payment methods — especially for nationally popular options like TWINT or PostFinance Pay, the selection of the appropriate provider is crucial.

• Which shop system do I use? The technical integration of a payment provider can be facilitated by pre-made plugins¹. For well-known systems such as Shopify or WooCommerce, most providers offer ready-made plugins for easy integration. For individually developed shops, flexible API solutions can be found at some providers.

• What tools do I need? The functionalities of a payment provider should match the requirements of the shop. While some providers offer specialized solutions for donation platforms or subscription-based business models, there are also all-in-one platforms covering a wide range of business models.

• What costs will incur? In addition to transaction fees, any potential monthly fixed costs, setup fees, and additional costs for special features should be considered. This helps to avoid unexpected expenses.

• Which target group do I want to address? Depending on the clientele, different payment methods are relevant — young consumers often expect wallet solutions, while companies or international customers benefit from fast and cost-effective alternatives like Instant Payment. Instant Payment (also Pay by Bank) allows direct bank transfers in real-time and saves fees especially in international payment transactions. Currently, Payrexx is the only provider in Switzerland offering Pay by Bank.

In addition to these functional and security-relevant aspects, merchants should especially consider simple and stable connectivity, a wide range of payment methods and tools, reliable support, and a cost-efficient pricing model to avoid unnecessary expenses.

Moreover, it is recommended to choose a provider that also acts as an acquirer or payment facilitator. This way, merchants have a single point of contact for all payment processes.

¹ Extensions for shop systems which enable the integration of payment providers without programming.

3. Overview of the Features of Individual Payment Providers

The following table shows which payment methods are supported by the individual providers. For better overview, only the most common payment methods are considered. Additionally, the table provides information about which providers offer plugins for common shop systems.

Some payment providers also offer their own, mostly very rudimentary, shop systems, with which a small online shop for products, vouchers, subscriptions, or donations can be created without programming knowledge. Such solutions are listed in the table as "E-Commerce Tools".

To better assess customer satisfaction and service quality, the table also contains the Google ratings of all providers.

Figure 3) Function matrix of the different payment providers

4. Cost Analysis

This section calculates the monthly costs (subscription and transaction fees) of different providers. The analysis is carried out for two exemplary online shops: one with a turnover of 20,000 CHF and one with 100,000 CHF.

For the calculation, the cheapest offers of the individual payment providers for the corresponding sales volume were selected. The information on fees refers to transactions per Mastercard and Visa. The price data comes from the websites of the respective Payment Service Providers². Any setup fees are not considered in the diagram.

4.1 Online Shop with a Turnover of 20,000 CHF per Month

The following cost analysis shows the monthly fees for smaller online shops with a sales volume of 20,000 CHF at 200 credit card transactions per month. The average value of a transaction is thus 100 CHF per purchase.

Figure 4) Monthly costs with a turnover of 20,000 CHF (excluding setup)

² For the offer from Datatrans, a separate acquiring contract must be concluded additionally. The costs for acquiring are therefore dependent on the choice of the acquirer, which is why a sample value of 1.6 percent was used (average of all other providers).

A small online shop benefits from the lowest fees at Payrexx, closely followed by PostFinance. At 790 CHF, PayPal is the most expensive for online shops with this volume. The price difference between Payrexx and PayPal is 435 CHF. The costs of the cheapest payment provider, Payrexx, are therefore more than 50 percent lower than those of the most expensive.

Additionally, Payrexx offers start-ups and non-profit organizations exclusive discounts: 30 percent for start-ups and 50 percent for non-profit organizations on all subscriptions.

4.2 Online Shop with a Turnover of 100,000 CHF per Month

The next cost analysis shows the monthly fees for medium-sized online shops with a sales volume of 100,000 CHF and 1,000 credit card transactions per month. The average value of a transaction is therefore 100 CHF per purchase.

With monthly costs of 1,579 CHF, Payrexx is the cheapest provider for medium-sized online