What is the best credit card processing setup for startups?

PayPal or Google Checkout are both good ways to start out with. But depending on the volume of transactions and the amount of control you want you may want to go with your own merchant account. They are not hard at all to set up. Talk to your current bank to see if they have an arm that deals with merchant accounts. Most banks that offer business accounts either have their own or partner with a third party to provide the services to customers. Note that you will need an SSL certificate if you go with a merchant account. I’d recommend VeriSign ( they will also most likely end up being your Payment Gateway if you do decide to set up your own merchant account). Their SSL certificates are a bit pricy, but the most trusted name in the business. You want to make sure you get a low processing fee (percent of the transaction that the bank ends up taking – shoot for under 2% and a low per transaction fee (shoot for 20 cents or lower – hard to find). After a lot of shopping around, we ended up going with Bank of America. Best of luck!

what do people recommend for handling subscriptions/automatic recurring billing that can change over time?

Google Checkout and/or PayPal until you handle enough volume to justify the hassle of something else. Authorize.net makes you go through a reseller, and the resellers are less competent than a poorly trained chimp. It took me two months to get through the process:

"The merchant account provider needs to see your website."

"OK, here it is."

"No, they need to see the shopping cart."

"What!? We don't have merchant services yet. We're not going to put up a shopping cart that people can't order from!"

"They won't set it up until they see the shopping cart."

"OK, fine. Here's the link."

"They said they went to your site and didn't see a shopping cart."

"I sent you a link to the shopping cart. It isn't visible on the index page yet, because we can't take orders."

"Oh. It has to be the real website."

"Huh? It is the real website. I just haven't linked it from the front page...we already have users, I'm not going to confuse them with a shopping cart that doesn't work."

"It has to be a real website."

"You're kidding, right? Just send them to this link. I'm certain they'll be able to figure things out."

"OK. They said there is no terms of service or refund policy clearly linked from your front page."

"We don't sell anything yet. Why would we have those things on our front page? They're linked off of the store link I sent you." (This is the second time I've setup merchant services, and I knew they would need to see those things. It's not like they give a shit what they contain...they just insist they exist.)

"They have to be on the front page."

And so on. I won't bother to type in the exchange we had over the resellers first attempt to actually setup the username and password, or the fact that all payment information had to be faxed in. (Yes, you read that right. The reseller for Authorize.net that we went through would not accept payment online. And the form that was online was just a ruse...they made us fill out the exact same form again and fax it in.)

Next time I build a shopping cart, I'll spend that time writing a payment backend for a payment processor that isn't operated by the functionally retarded. Or maybe I'll just use Google Checkout instead, and let them worry about the banking industry monkeys.

You can't really complain about the fax. Getting a merchant account is a sensitive thing so I totally understand each time I have to fax my id with the application. Just part of the process.