Startup Tools: Credit Cards/Payments

PayPal Payments Pro (Direct Payment) consists of APIs for accepting credit card, debit card, and PayPal payments; these payments can be immediate, authorized for later capture, and they can be recurring payments. PayPal Payments Pro (Direct Payment) also includes standalone applications for accepting payments.

In addition, PayPal Payments Pro (Direct Payment) includes Fraud Management Filters for automatic review and management of risk.

Settlements and Captured Payments

Often, you accept a payment and ship goods immediately, which is referred to as sale. In addition to immediate payments, Direct Payment and Express Checkout both allow you to authorize payments to be captured later, which is referred to as an authorization. An authorization is useful, for example, when you want to reserve a buyer's funds pending the shipment of goods; the actual payment is captured when the goods are shipped. An authorization can be reauthorized one time if necessary; for example, when you are unable to ship within 3 days of the authorization.

Express Checkout provides an additional option, called an order, which you use when a single authorization is insufficient. You can create multiple authorizations and capture them as part of the same order. This would be useful, for example, when an order is split into multiple shipments and you need to capture a payment each time part of the order is shipped.

Card Verifications

PayPal supports card verifications also referred to as authorizations without purchase or $0 auths. This feature is used to verify that a cardholder's account is in good standing without processing a purchase transaction or applying a card authorization. American Express does not support card verifications for American Express credit cards. This feature is limited to Mastercard and Visa at this time. It is available for the majority of currencies. The card issuer will decline invalid cards or those reported as lost or stolen. Also, AVS and CVV results are returned where supported by the card issuer.

The DoDirectPayment API operation accepts an authorization in the amount of zero for card verification purposes. However, no authorization or hold is placed on the card holder's account, and the transaction does not appear on the card holder's statement. Also, unlike typical authorizations which require settlement and capture, card verifications are considered completed immediately. The paypal.com transaction History page lists card verifications as authorization transactions with a zero amount and with a Completed status. Re-authorizations as well as capture and void attempts on card verification transactions are not permitted and will return an error.

Merchants who offer free trial periods, or plan to bill the first installment of a recurring payment at a later date, can mitigate loss by verifying the buyer's card prior to extending their services. This feature also allows merchants to verify a card before saving the card information and creating the buyer's recurring payments profile. Other merchants who only need to charge the card holder one time after a successful card verification can process a reference transaction.

Merchants using the Instant Payment Notification service should receive transaction notifications for card verifications. Also, similar to other transaction types, the GetTransactionDetails and TransactionSearch API operations can be used to retrieve information on card verifications.

The card networks discourage the use of $1 authorizations as a method of verifying card status. The rule is that you should only authorize amounts greater than zero on transactions that you intend to capture.

Per transaction fees will apply for card verifications, and there is no percentage or discount rate fee associated with these transactions.
For fee information:

• Go to the PayPal Merchant Fees page.
• In the Complete Payment Solutions section, expand View all discounts and fees.
• Scroll to view the per transaction fee for Uncaptured Authorization.

See integration details.

Recurring Payments

You can support recurring payments to manage subscriptions and other payments on a fixed schedule. Direct Payment and Express Checkout both process recurring payments.

When you support recurring payments for a buyer, you create a recurring payments profile. The profile contains information about the recurring payments, including details for an optional trial period and a regular payment period. Both periods contain information about the payment frequency and payment amounts, including shipping and tax, if applicable.

After creating a profile, PayPal automatically queues payments based on the billing start date, billing frequency, and billing amount. Payments reoccur until the profile expires, there are too many failed payments to continue, or you cancel the profile.

Permission to allow recurring payments is established by the buyer setting up a billing agreement with the merchant on PayPal. For Express Checkout, the billing agreement can be established either in advance or when the buyer first makes a purchase; in either case, it occurs when you call Express Checkout API operations. For direct payment, it occurs when you make an explicit call to set up the billing agreement.

Recurring payments using reference transactions is an alternative, which enables you to handle payments for varying amounts of money on a varying schedule. A reference transaction is a financial transaction from which subsequent transactions can be derived; for example, a buyer can make a purchase on your site and the PayPal transaction ID, called a reference transaction ID, can later be used to initiate another transaction.

Merchants who offer free trial periods and recurring payments may find it worthwhile to use the card verification feature to verify the buyer's card, as a potential loss mitigation tool, prior to extending their services. This feature also allows merchants to verify the buyer's card before saving the card information and creating the buyer's profile.

Note: The use of recurring payments with direct payment may incur additional fees.

Virtual Terminal

PayPal's Virtual Terminal is a web-based application that allows you to accept credit card payments. It is available to merchants in the United States, Canada, France, and the United Kingdom. Virtual Terminal provides your business with the functionality similar to a stand-alone credit card-processing terminal. Virtual Terminal is ideal when you receive orders by phone, fax, or by mail and want to accept credit cards. An optional card reader is available to process face-to-face purchases; however, some restrictions apply. You can use Virtual Terminal on any computer with an internet connection and a web browser.

For more information about Virtual Terminal, see Virtual Terminal Users Guide.

Hosted Solution

Hosted Solution, which is available to merchants in the United Kingdom as part of PayPal Payments Pro (Direct Payment), is a fast and easy way to add transaction processing to your website. It is a secure, PayPal-hosted, web-based payment solution that allows you to securely send your buyers to PayPal's payment page to authorize and process transactions. Buyers pay with a debit or credit card, or their PayPal account. You do not have to capture or store credit card information on your website, thereby helping towards achieving PCI compliance. Hosted Solution is the choice for merchants who prefer a solution where all financial details are handled by PayPal.

For more information about Hosted Solution for UK merchants, see Website Payments Pro Hosted Solution Integration Guide.

Fraud Management Filters

Fraud Management Filters (FMF) provide you filters that identify potentially fraudulent transactions. There are 2 categories of filters:

• Basic filters screen against data such as the country of origin and the value of transactions. PayPal provides basic filters for Business accounts and PayPal Payments Pro - Direct Payment (known asWebsite Payments Pro in Canada and the UK) accounts.
• Advanced filters screen data such as credit card and addresses information, lists of high-risk indicators, and additional transaction characteristics. PayPal Payments Pro (Direct Payment) merchants can upgrade to use these filters.

  Note: Using advanced filters might incur additional charges.

For more information about Fraud Management Filters, see Fraud Management Filters

Event Notification

In most cases you can use the GetTransactionDetails API operation to determine the information you need about a transaction. However, there may be some cases in which you must set up IPN; for example, when you need automatic notification about actions, such as disputes and their resolution.

IPN is a message service that PayPal uses to notify you about events, such as:

• Instant payments, including Express Checkout, Adaptive Payments, and direct credit card payments, and authorizations, which indicate a sale whose payment has not yet been collected
• eCheck payments and associated status, such as pending, completed, ordenied, and payments pending for other reasons, such as those being reviewed for potential fraud
• Recurring payment and subscription actions
• Chargebacks, disputes, reversals, and refunds associated with a transaction

For more information about IPN, see Instant Payment Notification Guide

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