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Taking payments online in Europe in 2013

jamesmaskell.co.uk

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Re: Taking payments online in Europe in 2013

#101

Post by mrkmcknz »

Silhouette wrote: post #63
mootothemax wrote: post #24

Not to forget the other half of the story: issuing invoices. In Europe this can quickly become a pain, not only due to the extra information you need to collect (names, addresses and so on) but especially if you also need to collect Value Added Tax (VAT). This means asking for VAT IDs for companies - if they have them - and then calculating the tax based on whether the customer is in the same country as you or not. T…

Oh, VAT, how I hate you so! You'd think if the tax authorities were going to saddle us all with worrying about other countries' VAT rules, they could at least provide a list of the ISO country codes and applicable tax rates we need to charge in a format that could easily be imported into a database. Some sort of simple automatic notification system for when the rules change would be useful too. At least that way, eve…

So I sell a simple SaaS service and asked my accountant one question.

Do I charge VAT. Here is his reply:

" Vat rules You need to identify B2B and B2C UK, EC and outside EC customers. A vat registration number is usually accepted as evidence of B2B.

1 All sales outside the EC have no vat implications and are ‘outside the scope of vat’.

2 All sales to UK customers (B2B and B2C) have UK vat to apply to them and are standard rated.

3 All B2B sales to EC customers have no vat and are ‘outside the scope of UK vat’.

4 All B2C sales to EC customers have UK vat to apply to them and are standard rated.

There is a further twist. If you can identify where your service is effectively used/enjoyed, then If the place of supply would be the UK (2&4) but the service is enjoyed outside the EC, then no vat (outside the scope) or If the place of supply would be outside EC (1) but the service is enjoyed in the UK, then UK vat applies."

Re: Taking payments online in Europe in 2013

#102

Post by mootothemax »

mrkmcknz wrote: post #101
Silhouette wrote: post #63

Earlier quoted context omitted.

Oh, VAT, how I hate you so! You'd think if the tax authorities were going to saddle us all with worrying about other countries' VAT rules, they could at least provide a list of the ISO country codes and applicable tax rates we need to charge in a format that could easily be imported into a database. Some sort of simple automatic notification system for when the rules change would be useful too. At least that way, eve…

So I sell a simple SaaS service and asked my accountant one question. Do I charge VAT. Here is his reply: " Vat rules You need to identify B2B and B2C UK, EC and outside EC customers. A vat registration number is usually accepted as evidence of B2B. 1 All sales outside the EC have no vat implications and are ‘outside the scope of vat’. 2 All sales to UK customers (B2B and B2C) have UK vat to apply to them and are sta…

All B2B sales to EC customers have no vat and are ‘outside the scope of UK vat’.

Interesting. I was under the impression that EC B2B sales were zero-rated only for companies that are VAT-registered. This is why we grab and validate a VAT number for each EC company that we issue an invoice for.

That said, God only knows how this might tie into the living hell which is Polish bureaucracy.

Re: Taking payments online in Europe in 2013

#103

Post by jusben1369 »

stevoski wrote: post #74

Every time I see an article along these lines, I can't figure out why software startups don't just use a third-party payment processor like FastSpring or Avangate. It makes all these complications go away. Outsource anything you can, especially the things that others can do much better than you because it is their core business. Payment processing is definitely one of those things. I started my software company in Ge…

PayPal, PayMill, Braintree etc are all 3rd party payment processors. So I don't quite understand your distinction. I believe FastSpring may mean you avoid having to get a merchant account directly so perhaps that's the difference you see? The biggest objection I've heard is the 9% flat rate they take vs 3% and 30 cents per transaction that you'd roughly see from a payment processor.

Re: Taking payments online in Europe in 2013

#104

Post by jmaskell »

patio11 wrote: post #87

Vinetrade has the kind of business model that scares banks and card payment providers. We trade high value goods (prices in the region of £1.5-20k) that are rarely delivered to the buyer (they're stored in remote warehouses). I love virtually all startups and wish for their success. That said: I'm thinking that when every bank in Creation was saying "We won't take CC payments for that. No, no, you simply can't convin…

There were two big problems with the banks:

1. A number of wine investment companies took card payments but never bought the wine. So the bank was liable for the money lost in those situations - and as a result that put a blanket ban on all fine wine companies. We were able to talk Barclays around on this.

2. Storage of wine would be handled by a third party warehouse. If they screwed anything up (e.g. broke the case, had a fire, and insurance refused to pay out), there was a chance that buyers could get the money back through their bank if they paid by credit card.

and for us when we did accept this:

3. Getting the fees to work with our model - we wanted to offer a fixed fee for trading cases, but all banks / payment services wanted to take a percentage, including for debit card payments (hence my point about doing more work to get the model to work payment charges).

Obviously fraud is a major concern, and is something that we do a lot of work on as we scale up (e.g. at the moment we're manually processing all orders, taking ID for anyone buying more than £10k total etc). It's not something that we're naive too and we're definitely not going to launch a completed automated system without adequate processes in place.

Re: Taking payments online in Europe in 2013

#105

Post by steve8918 »

patio11 wrote: post #87

Vinetrade has the kind of business model that scares banks and card payment providers. We trade high value goods (prices in the region of £1.5-20k) that are rarely delivered to the buyer (they're stored in remote warehouses). I love virtually all startups and wish for their success. That said: I'm thinking that when every bank in Creation was saying "We won't take CC payments for that. No, no, you simply can't convin…

This is an extremely important message. Fraud is very easily the thing that can sink many small companies that aren't used to the levels of fraud that you will see on the Internet. And because there are so many ways to defraud a merchant that isn't obvious, merchants need to be extremely careful and educated on the process. And handling chargebacks will become a full-time job for someone in your company, once your company becomes big enough. I work at a payments company, and fraud is something that ends up being a headache, although we are at lower-than average industry norms.

It seems relatively easy for someone to turn credit card payments directly into cash, by making a trade and then extracting cash through the bank account. And the gap between your withdrawal policies and the chargeback policies of credit cards are pretty wide. I would be very careful about this. Forcing users to enter bank accounts make it a bit harder for average people to defraud, but not a motivated fraudster. Also, allowing people to take delivery of wine through the purchase of a credit card, and then being subject to a chargeback will be extremely painful, although I'm not sure how easily chargebacks are fought in Europe. If you do suffer a lot of chargebacks though, even if you successfully fight them all, be prepared to be dropped by your credit card processor.

I think your business is actually very interesting, but I'm surprised that credit card companies would allow you to accept credit cards at all, since I would think they would lazily lump you in as a form of brokerage site. Not that I believe this, but it seems like an easy translation to stock brokerages, which don't accept credit card payments, but force you to transfer real cash into your accounts before you trade. Then once you have money in a brokerage, they can extend margin, but they maintain their own risk by monitoring the margin levels, etc.

Good luck though, I read through your site and I think it's a very neat idea!

Re: Taking payments online in Europe in 2013

#106

Post by tope »

I use Braintree for appdesignvault in thr UK and have found their service to be top notch.

The only issue was Ayden settling the funds into our UK business account every 4 days and getting charged £6 for the privilege. A quick support email fixed that

Re: Taking payments online in Europe in 2013

#107

Post by jmaskell »

steve8918 wrote: post #105
patio11 wrote: post #87

Vinetrade has the kind of business model that scares banks and card payment providers. We trade high value goods (prices in the region of £1.5-20k) that are rarely delivered to the buyer (they're stored in remote warehouses). I love virtually all startups and wish for their success. That said: I'm thinking that when every bank in Creation was saying "We won't take CC payments for that. No, no, you simply can't convin…

This is an extremely important message. Fraud is very easily the thing that can sink many small companies that aren't used to the levels of fraud that you will see on the Internet. And because there are so many ways to defraud a merchant that isn't obvious, merchants need to be extremely careful and educated on the process. And handling chargebacks will become a full-time job for someone in your company, once your co…

Thanks! Our preference was actually to take debit cards only - but regularly got told that it's all (credit cards too) or nothing.

Re: Taking payments online in Europe in 2013

#108

Post by pakitan »

mmaunder wrote: post #79

I don't get it. Just call MerchantWarehouse (sp?) and get them to hook you up with a merchant account and an authorize.net gateway. We take payments from all over the world using them and get dinged around 3% total with very few chargebacks. It's really not that big a deal.

I don't get your post either. On first glance, MerchantWarehouse seems to be servicing US businesses only. "Just calling" them from Europe would likely result in a very short conversation :)

Re: Taking payments online in Europe in 2013

#109

Post by simon02 »

zimbatm wrote: post #80

One big missing pain: EU VAT taxes. According to the law you're supposed to tax EU customers if your business is in the EU. Obviously the tax is different for each country and changes from year to year: https://en.wikipedia.org/wiki/Tax_rates_of_Europe . Businesses with a VAT ID can be exempted from the tax but only if they provide a valid VAT ID. At the end of the year your business then provides the list of transac…

We operate from Belgium. We only have to charge the Belgian tax rate (21%) for other Belgian companies or consumers living in the EU, in all other cases VAT rate is 0% (have to put a disclosure on the invoice referencing Belgian law though). Then again we don't sell any physical goods (luckily).

We don't automatically check validity of VAT number, so maybe I'll be able to answer that question in a couple of months.

Re: Taking payments online in Europe in 2013

#110

Post by steve8918 »

jmaskell wrote: post #104
patio11 wrote: post #87

Vinetrade has the kind of business model that scares banks and card payment providers. We trade high value goods (prices in the region of £1.5-20k) that are rarely delivered to the buyer (they're stored in remote warehouses). I love virtually all startups and wish for their success. That said: I'm thinking that when every bank in Creation was saying "We won't take CC payments for that. No, no, you simply can't convin…

There were two big problems with the banks: 1. A number of wine investment companies took card payments but never bought the wine. So the bank was liable for the money lost in those situations - and as a result that put a blanket ban on all fine wine companies. We were able to talk Barclays around on this. 2. Storage of wine would be handled by a third party warehouse. If they screwed anything up (e.g. broke the case…

2) If you're talking about chargebacks, it would be YOU that the buyers would be charging back the money from, not the warehouse, since you were the merchant that accepted the payment.

And am I right in that you are basically saying that the buyers take on all risk of storage at the warehouse facility? If so, you should probably outline that as well, including what the insurance policy of the warehouse, covers, etc.

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