1. You'll get killed with currency conversions with PayPal. They're the equivalent of thieves in this regard. If you're expecting lots of non-GBP income, this could become a significant cost of running the business. But they're very convenient and easy to link to UK bank accounts.

2. Don't get married to one provider. Use a "meta" API like Spreedly (http://spreedly.com/ ) so that you can quickly/easily switch if something goes wrong. With all the "PayPayl is evil" stories of late, this is simply prudent. I haven't used Spreedly yet, but heard good things about them, and they answered a quick question I recently asked them.

3. Google Checkout is not as well-known as PayPal. Funny anecdote I can't find the reference for now: A website was using PayPal and thought to add Checkout, with both icons next to each other on the page. Their Paypal earnings shot up significantly, and Checkout got very little additional revenue.

4. If you accept credit cards for payment, ne careful with PCI compliance, even if you don't accept credit cards on your own servers: http://en.wikipedia.org/wiki/Payment_Card_Industry_Data_Secu... . If you process the CC info yourself, PCI compliance can be very expensive for a sole hacker or small business, so consider off-loading the processing to a provider. You'll still need to have some level of compliance as I understand it, but it's easier. IANAL so get proper advice from your lawyer and accountant type friends.

5. Taxes and HMRC. 'nuff said.

They limited my account, I never got a human reply to my questions, and I ended up canceling it - which fortunately restored my account. Next time I think I'm going with a bank.

Currently working on a site for a client who definitely 100% unequivocally has to have Paypal integration. It's pretty horrible to work with....

I've also used Spreedly in the past with good results.

http://danieltenner.com/posts/0006-how-to-get-a-merchant-acc...

http://blog.boxedice.com/2009/05/20/taking-payments-online-m...

I'm considering google checkout and I'm wondering if anyone has experience with them.

UPDATE: based on another response, I learned that google checkout is available only for USA and UK customers? That makes it pretty unusable in my opinion. Are there similar services?

I've never used PayPal (other than as a purchaser) so don't know what they're like to use for the average seller, but that statement seems a little strong. I imagine it's very much the case that the few percentage of people who have a bad experience make up a far larger percentage of the people writing blog posts about PayPal. So it might be that 2% of people have bad experiences with PayPal, and 80% of them write it up on their blogs, while 98% of people haven't had any problems with PayPal but only 1% of them write about their great experience. So something like 60% of the things you read about PayPal will be negative.

All those figures are pure speculation, and PayPal may be absolutely terrible to work with, but I think it's worth bearing in mind.

The problem is when you are selling non physical products, that's a different story because they can't guarantee security.

What is evil to me is that once you are blocked, they can't do nothing. A common point I hear from people who have problems with paypal is that although they have sent fax and spoken with real people, they can't re-abilitate their account. Another scaring thing is that most times (this is very common through ebay sellers, which I was one) is that they can keep your money! So imagine that you go live today and you sell 100 copies of your product for 30$ cad, and your account gets blocked and they keep your 3,000$, that's the reason I'd like to avoid dealing with them in the first place.

The API documentation is a bit frustrating, but the service itself is good and gives you the option of recurring payments. We can also accept payments in multiple currencies, which a lot of customers appreciate - if you bill people in GBP but they have a dollar card, how much they actually pay is an unknown.

We use http://www.paypoint.net/

I find this to be a far better experience than PayPal, Google Checkout and some of the others. They have great support and a really nice, intuitive backend admin interface. I think their fee (which can be 5.9%+$0.95 or 8.9% flat) is well worth it.

It's certainly a good starting point, even if you then build a custom solution later.

Good luck with your venture.

EDIT: Spelling :P

Since you're in the UK, I'd recommend looking into Google Checkout -- I understand it's available in the US and UK, albeit not the rest of the world. Then you can offer your customers a choice.

EDIT: I'm also looking forward to using Amazon Payments -- so far it's US-only, but I'm sure they'll be expanding to the rest of the world any decade now...

You get the choice of using their servers to handle card details and processing, or you can do it yourself and hand the numbers off to them using an API. They were recommended by RBS.

This makes taking payments in the EU even more complicated.

For most web-based startups, VAT accounting should be relatively trivial.

Anecdote: in three years I've had six inquiries about alternate payment methods and all of them were because "I don't or can't pay online".

For Tarsnap, I've had all of four people say that they didn't want to use PayPal -- and of those, two ended up using it anyway, and one had a friend make a payment for him. Of course, I have no idea how many customers I'm losing who never complain.

http://www.mxtelecom.com/uk/payforit#about http://www.mxtelecom.com/uk/tech/cta/webpfi

Just a thought, I work for these guys, so I can't claim to be impartial.