An underrated solopreneur life hack
Diversify your payment gateways.
If you run multiple brands/businesses online, it might be worth using multiple payment gateways just for the sake of it, as in:
- Business A runs on PayPal.
- Business B runs on Stripe.
- Business C runs on 2Checkout.
- Business D runs on Paddle.
This is doubly important if you make money primarily from monthly subscriptions.
Because with subscription and SaaS products, if you lose your payment processor, you lose all your subscribers.
Your MRR starts from $0 again — there's no migration process to save you.
Why bother?
Because payment processors ban people, often arbitrarily, and it happens more often than you think.
You can have a few friendly fraud disputes on record, and all of a sudden Stripe or PayPal puts you on the ban list.
And yes, payment processors ban people — read: they blacklist your social security number — not accounts.
Which means if you have 5 Stripe accounts, and only 1 has an elevated chargeback risk, all 5 will be banned at once.
Eliminate a single point of failure
If you make a living online, this is probably the most important thing to take care of if you want to build a robust, resilient, and sustainable business.
You don't want to be in the same situation as a corporate employee, where you're beholden to just 1 person for your entire paycheck.
You want multiple platforms to cut you a check every month, so if one goes down, you have 4 others keeping you afloat.
Here are 3 things you can do:
1. Set up redundancy
If you sell digital goods, list your products simultaneously on 2-3 different platforms or MoRs (merchants of record).
If 1 bans you for any reason, switch to another immediately.
You'd be surprised how hard and slow it is to get approved on a new payment gateway.
Ideally you should create custom domains for each product you sell (e.g. yourdomain.com/productName), so you can redirect that URL to whatever platform you want and swap them out if they ban you.
2. Use different payment gateways, even if you only have 1 business
For Zlappo, I use Stripe for subscriptions and AppSumo for LTDs.
For Zylvie, I use Paddle for subscriptions, AppSumo for LTDs, and Stripe for commissions.
So not only do I diversify my revenue model, I make sure that each revenue channel is handled by a different payment processor.
3. Use a subscriptions aggregator like Chargebee
I haven't personally used Chargebee, but I've only heard positive things.
Basically it acts as a load balancer and spreads out your subscriptions across different payment gateways in the back end.
So instead of putting all your subscribers on Stripe or PayPal, it puts some of them on 2Checkout and Authorize.net as well.
It's very unlikely that all your payment gateways will ban you at once.
Pour conclure
If you're serious about building a robust and sustainable business online, platform diversification is a must.
Going all-in on anything is hardly necessary and rarely smart, so do it right from the start.
Redundancy is good. I'm not a big fan of the overhead though.
Here's a hack - especially for people starting out or gaining traction on a single product.
As soon as your sales start picking, contact your payment processor.
It might seem like Stripe or PayPal are rigid platforms and don't care. But you'd be surprised. I've gotten stripe to shave off a % on one of my accounts in the past. And those few % fee add up.
Once you have a point of contact in the company, you can start to build a relationship. (I even got one of my employees to visit a Facebook office once. That didn't go as planned but was worth the effort.)
This drastically reduces the risks of random bans without a way out. You can always be in communication with your point of contact.
Think about it - Stripe doesn't really "want" to ban you. Once there is a person in the company who can make your case, things get easier.
Chances are 80% of your revenue will end up coming from one business or one source. That means there's still going to be a single point of failure for majority of the revenue.
To address the point of starting from $0...
If the engagement on your app is high, people are going to be okay to enter their card details again before the next billing cycle.
If the engagement isn't high, then what are we charging them for anyway 😅.
And what point is that?
Ohh... Are we talking about SaaS industry's dirty little secret now?
All founders know that "forgot to cancel" is one of the main reasons a good chunk of their customers are paying for their app.
I don't understand this question fully. Are you asking what's the point of contacting someone in payment processing company?
If the goal of the founder is to turn code to cash, then what you're saying may be right.
If the goal of the founder is to build a product that is remarkable. A product that serves people, that people love to use and recommend, then I wouldn't depend on "forgot to cancel".
A business that depends on "forgot to cancel" has shaky foundations IMO. I would fix that instead of worrying about the redundancy.
Plus that has the added benefits of lower disputes and chargebacks. I've seen situations where customers charged back for 4 months. Working on the foundations and building relationships helps mitigate the risk of random bans from the payment processor too.
No, I'm asking where in your revenue should you start contacting someone from Stripe/PayPal.
Basically what revenue must you hit before they start taking you seriously and are willing to negotiate rates.
I don't think there's a magic number. I would reach out as soon as things start to gain traction. That might be $1k MRR or $10k MRR.
The worst case scenario is that they say no. In which case you would wait a bit and contact them again.
With my accounts, it was usually when an account had processed around 5 figures and payments were coming in regularly.
This is a great point. Having spent countless days fighting with gateways over documents, bans and every other hoop that I had to jump through I decided that it would be good to setup conditions to provide payment options so that one site had multiple payment options based on pricing threshold.
and what are your payment options now?
we are thinking about doing the same.
Still the usual suspects, Paypal and Stripe, but I just set it so that if the order value is X then it only shows a specific payment gateway. This keeps things on rotation and minimises the need to be stuck with one option.
Nice advice!
Doing this is like creating a moat that ensures the survival of a solopreneur,
Fantastic advice.
Anyone who's experienced relative success online has had to deal with this at some point. It's part of why I'm trying to pivot to SaaS entirely after experiencing years of success in e-commerce. If you are actively using your cashflow to manage inventory, a simple hold on your account is a kiss of death, let alone a banning!
Sadly, many payment processors consider your success a mark of suspicion, especially if it's rapid.
Yes, there's technical overhead to working with multiple payment processor APIs for different businesses, but you can always take boilerplate from one project to use in another.
This is damn true.
The additional technical overhead is well worth it for peace of mind and to build a more resilient and sustainable business on a solid, diversified foundation.
A solid, diversified foundation - words to live by.
Switching from one payment processor to another due to a five-figure hold was one of the most stressful periods of my entrepreneurial career, even though it was as simple as swapping one WooCommerce plugin for another.
I can't imagine having to wire up API calls and deal with the technical overhead of different naming conventions under such high pressure. You're saving people's businesses with this advice, Jay!
Well if Stripe bans me now, it can also cause me a lot of pain, since I'll have to "wire up API calls" and redo basically everything.
Praying it doesn't happen!
Definitely an interesting take! I think if you have multiple businesses all doing well then yes may be worth it. But most people have one viable business so it’s harder to do. Interesting still
Sounds like a great advice. Only, when I count the hours we spent to make Stripe work for us and when I count the hours we cried about it because Stripe won't give us the payment options we need for our SaaS, I don't feel an immediate let's-do-it-impuls. But thanks anyway. First time I heard about this issue.
Disagree on Chargebee. Dealing with their staff and documentation was impossible.
Project moved to using Laravel Cashier instead. Supports both Stripe and Paddle.
IMO aggregators like chargebee mostly exist for compliance requirements across providers for corporate use cases. Otherwise it's the same as using paid services for core app functions like auth - you really shouldn't.
Thanks for your insight!
Like I said, I had no personal experience with Chargebee.
It just sounded like something that is good in theory.
This is quite insightful. Coming from a fintech industry, never thought this was a pain point. This just confirms why bridge services are relevant.
What are bridge services?
Its like creating wrapper over the standalone services. A very popular product strategy. For example, you have multiple players offering PG services. Now, create a wrapper service on top of every such service. This enables developers to integrate with one set of API and leverage all the offerings in the market.
Same can be done for KYC or over Plaid + Yoddlee
I am curious ... What do I need to do that a payment gateway is going to ban me? 🤔
You sign the terms and conditions and if you do not sell any shady stuff there should be no ban incoming!? What do I miss here?
You've never heard of friendly fraud?
With Stripe, for example, if your dispute activity is above 1%, you could get suspended permanently.
Any asshole who forgot to cancel can simply file a dispute for the last 12 payments and nuke your whole account.
Thanks @simplisticallysimple.
Indeed, I have never heard of it. I will read about it more and what to do best to prevent that. Thanks again.
Since you'll have multiple accounts, can also do A/B testing to determine which one gives the best conversion rate when looking for a primary.
Yes, this is a very good point!
Although this is a good suggestion, it is not that practical. It's already a lot of hassle to integrate one payment gateway. For a single payment provider, you still have to submit all the legal documents and taxes for working with that provider, get consent from your users for sharing your data with that processor, continuously test and maintain the integrations, login to different dashboards, create different pricing models depending on what's supported by that platform (VAT-inclusive, localized pricing, available currencies and payment methods, etc.), create all the different UIs and flows to integrate with all those platforms, etc.
So, I think it's a good idea, but it is probably more applicable for larger startups, not solopreneurs.
I did that (actually I have 3 payment gateways for my startup now: Stripe, Paddle, AppSumo if you count that), and I'm still adding PayPal now (just got approval).
So yes, it's extra work, and yes, it's worth it.
This is very important.
No matter how careful you may be, something might go wrong and it's better to be prepared.
Hey Jay, these are very valuable ideas.
I liked: "... do it right from the start."
I bookmarked your post.
Thx! 🙏
Great point. Do you think there’s a chance that customers might have preferences for payment providers, for example, not want to subscribe to a product through PayPal? Wonder if this also works in reverse in which some business just won’t work or prefer not to work with a payment provider thus losing you potential customers.
Well PayPal accepts credit cards too, so I don't see how that's different from Stripe.
Paypal is banning people for no reason lately, more than usual and they keep your money for 180 days. What is worse is that they don't give many options after those 180 days, I was offered a check from a bank no one accepts where I'm from.
True! If you have the bandwidth to deal with the technical overhead, this should probably be a priority. When I was building my previous startup back in India, I used a single payment processor and I'd receive suspension or non-compliance notices out of the blue every few months. As a non-technical founder, it was panic-inducing for me. Having several contingencies is the best way to not keep all your eggs in one basket.
Yup, ideally you should have several payment gateways ready to go.
For subscriptions, they should ideally be spread out among many payment processors so no single processor can hold your financial fate over your head.
Interesting point. So what do you do if you only have 1 business? One is basically dancing with the devil?
You can still diversify your payment gateway within 1 business.
Give your customers multiple options during checkout.
DAMNN! this is gold!!
I absolutely agree, as someone who have dealt with the pain of payment processing switching. In my previous business I diversified through different channels such as Paypal, stripe, and Amazon.
Now I am building a crypto SaaS and I was just checking out AppSumo, for payment provider diversification and exposure. However, I have reservations with offering LTDs. I see that you are using them. I don't mean to hijack the main topic but I would love to know your experience using them.
How do you manage user subscriptions with multiple gateways? Do you use some other subscription service that is capable of using different payment gateways? Moving user subscriptions from one service to another is not a simple task.
What's your experience getting money OUT of those services?
While it is true that using several different payment gateways can be a way to mitigate short-term loss of revenue, the basis should always be to mitigate fraud cases as much as possible. For example in a SaaS: Making it as easy as possible for the user to end a subscription and potentially even giving him some money back for the time until the end of the month (amazon used to do this). For e-commerce it is great to identify articles that have above average fraud and use processors for those who don't mind these above average fraud percentages. I'm not saying this post is wrong but this is something I'd do AFTER I have thought about all the possible fraud sources for my business.
Oh sure, but sometimes you get banned regardless of whether you mitigate fraud or not.
Friendly fraud is also a thing.
could someone pay with 5 cards on 5 different names, open disputes and get your account banned basically?
Super good point. Besides the options you listed, any other recommendations? Thanks.
https://www.lemonsqueezy.com is a newer Paddle competitor. I've never used them but plan to - their built-in affiliate tools and customer-accessible subscription dashboard look incredibly useful.
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Yeah yeah yeah