The Horror! How Caribbean Startup Hivesource Accepts online payments in the Caribbean

By Wesley Gervais

This is the first part of a multi-part series revealing how we run the operations of Hivesource including some of the challenges we’ve faced in our journey along with the solutions we’ve implemented to serve our customers.  Our hope is that this series not only helps establish a connection with Hivesource through understanding how we run things but also to help any entrepreneurs reading to learn more about the various things you can do set up your business cost-effectively while bootstrapping like us.

When it comes to setting up an eCommerce business within the Caribbean, the biggest challenge rests with the setup of online payments. For Hivesource, it was imperative that we had a secure means of receiving payments from customers via credit/debit cards online. Without this facility, our business would have been dead in the water.

In the early phases of our platform’s development, we began researching all the possible options that would enable us to accept online payments. In our journey, we came across many articles of various solutions but none of them were specific to our current regional context. This meant that we had to figure it out on our own. We established a list of specifications where at least 5 areas must be met by the potential online payment providers in order for us to proceed with that option. Our specifications included:

• Zero setup/upfront costs
• Zero monthly costs
• Reasonable transaction fees
• Can accepts major credit/debit card internationally
• Be easy to configure/setup
• Have access to funds within 7 days or less
• Provides a secure way of processing payments without us having to store customer card information and to be PCI compliant (this is expensive to maintain for a startup)
• Does not break the user experience of our site in order to process payments.

The Banks

At first we began exploring our options with the traditional banks. However after evaluating the offerings of Scotiabank and First Citizens Bank (FCB) we quickly realised that their solutions were not meant for the small startup/entrepreneur that is bootstrapping their operations. There was a not so cheap setup fee involved, along with monthly fees whether or not we had any transactions on our platform, not to mention the requirement (in the case of FCB) to provide a security deposit to cover chargebacks. Their assessment of your business would have determined what amount that deposit would be. Quickly we realised this was not an option for us at this time. Recently, sometime after we’ve found our solution, Republic Bank started a pilot project to enable online payments but of course, this also was not mean for the bootstrapped startup.

PayPal/Braintree

Naturally, PayPal was the other option under consideration. Personally I’ve used this option when freelancing to receive payments but when it came to running an online business with this as the primary option, this would not have been ideally suited for Hivesource.  Using PayPal would have meant:

• All customers must have a PayPal account in order to use our platform
• Waiting around 21 working days to have access to payments made via our platform. This would greatly delay our payment schedule and extend the time it takes for a provider to have access to their funds. E.g 21 days for funds held on our end and once we transfer funds to providers, they would also have to wait 21 days before they have access to it. Yes. That sucks.
• A higher fee of 5.5% (instead of the normal 2.9%) due to being from Trinidad and Tobago
• The risk of getting our account frozen as PayPal is notorious for doing

Due to not having a US based bank account and creating our PayPal account online from within Trinidad, we would not have had access to the additional services (e.g Braintree, Adaptive Payments) that could have made this option more viable. We considered flying to the US to open a bank account, but that would mean incorporation in the US which would have meat filing annual returns plus franchise fees and banking fees- not to mention the airline ticket to the US.

Skrill

This option was very similar to PayPal in terms of features, pros and cons. We looked at this option and even got as far as starting a conversation with the merchant services team trying to propose to them that we can help expand their market reach in the Caribbean if they were willing to support us since very few people from the Caribbean know or use Skrill. It seemed that they were not that interested and we surmised that because we were too small, they really didn’t care. They stopped responding after a while and we moved on.

2Checkout

We looked at 2Checkout as well however after discussions with one of their account executives we were told that they do not support online marketplaces (i.e. Hivesource) with their platform. 2Checkout however, is a good option to look at if you are a retail business selling products/services directly to your customers. We know of a few people within Trinidad that currently use this as an option and receive their funds via wire transfer.

Our Solution

In the end, we settled with a combination of two providers as our primary means of receiving online payments:

Stripe – Enables you to accept credit/debit card payments all without being redirected to a third party payment page. Stripe officially supports only a couple of major countries. With a transaction fee of 2.9% + 30 cents for each payment processed and zero upfront and fixed monthly costs, this was an ideal solution for us. Payments are normally processed accessible after 2 working days.An added bonus is the we can even use Stripe to accept Bitcoin payments when we are ready to do so.

Payoneer – Enables you to have a virtual US bank account via their US Payment Service (USPS) which is connected to a MasterCard debit card that we can use anywhere in the world.  Payments are received into our virtual bank account via ACH transfers from Stripe. There is a 1% fee charged for receiving payments this way but funds are available immediately. Aside from using the debit card, Payoneer now supports wire transfers to some Caribbean based banks including T&T.

Here’s what we did:

We signed up for Payoneer using our Trinidad based address and I uploaded a scan of my T&T passport. Once we received our debit card and activated our account, we applied to have USPS enabled from within our dashboard. Once we were approved for USPS, we were provided with a virtual bank account number and routing number. This is the information that’s required for Stripe.

We then signed up for Stripe and provided all relevant KYC information. As they don’t accept Caribbean citizens directly, I entered my personal skybox address and all 0s for the social security number. For the identity verification process I uploaded a scan of my T&T passport. As we’re already incorporated in Trinidad, our business registration details were entered as well. The bank account and routing number from Payoneer was then entered. Once our account was active, configured and tested within our platform, we were ready to receive payments. Once things were fully operational and we saw the first set of payments come in, it was a moment for celebration!!

This is what it looks like when ordering/paying for a Hivejob using Stripe:

Looking Back

While using Payoneer as the US bank account for Stripe isn’t 100% ideal, it has been the best solution for us for the time being. We refused to allow the lack of local ecommerce infrastructure for startups to impede us. So far, we have been receiving payments with this solution since we launched and everything has been relatively smooth thus far. As Payoneer’s virtual bank account can only receive via ACH (not send), we’ve had to turn off automatic transfers on Stripe in order to keep a float balance within our Stripe account. This would be used to protect us against chargebacks. If transfers were set to automatic and a chargeback occurred, Stripe would automatically attempt to do an ACH debit from the Payoneer account and as this account is only for receiving, the transfer will fail which could then result in the drama of having to deal with both Stripe and Payoneer to explain/fix the issue. This could put both accounts in jeopardy of being closed. Manual transfer is the safest route to take for now. When it is time for payouts or covering expenses we would only initiate a manual transfer on Stripe to send a specific amount to Payoneer. That said, we still have PayPal implemented within our platform as a contingency option.

Looking Ahead

Once we have enough revenue coming in, we will put US incorporation back on the table again. With the introduction of the Atlas program by Stripe, we can incorporate and setup a bank account relatively easily in the US without having to book a flight. This of course will have costs involved but this would be a long term solution for Hivesource as it grows.

In the next article in our series, I will cover how we handle payouts to service providers on our platform.

You can click these links if you’re interested in signing up for Payoneer https://hivesource.me/get-payoneer or Stripe https://stripe.com | https://stripe.com/atlas

If you’re interested in setting up online payments for your business, here are some Hivejobs on Hivesource that can help you out with that:

hivesource.me/hivejobs/setup-a-payment-gateway-for-your-website-to-sell-online

hivesource.me/hivejobs/setup-your-website-to-accept-online-payments