On 22/05/2010, at 11:44 PM, James Bishop wrote: > The problem here is that only one bank offers a merchant account that accepts > multiple currencies, and it is very expensive. They require that you > establish a foreign currency account with them for every currency that you > accept, plus there is a $1200 set up fee. I would say that almost all > Australian developers who sell overseas use a third party payment processor. > > My original question was whether adding a merchant account to a PayPal option > might have a large effect on the abandonment rate. The reason I asked is that > the one expensive option in Australia may be more attractive if the impact on > the abandonment rate is very favorable. It's not so much the work involved in > setting it up that I'm worried about; it's more whether it stacks up > financially.
I'd say no. I'm in Australia too and we've found that it's not worth bothering trying to set up a merchant account. Unless you're doing some serious transaction volumes the costs are just too high. We are using FastSpring (switched about 6 months ago) and couldn't be happier. If PayPal Website Payments Pro arrived in Oz we'd certainly look at it, but from a financial management and taxation point of view it's much, much easier to deal with a payment processor like FastSpring, Kagi et al. This is because the payment processor is treated as a retailer to your wholesaler, and there is a single wholesale transaction fortnightly (FastSpring) or monthly (Kagi) which only has to be recorded once. Not only that, because it's an export transaction it's GST exempt, so you don't need to collect or submit GST for it. If you're using PayPal, you need to account for each and every sale because the Australia Taxation Office treats PayPal accounts like bank accounts. If you keep a foreign currency as the base currency for your PayPal account, you are responsible for tracking changes in the exchange rate from the moment the money hits your PayPal account to the time it is converted into $AUD in your actual bank account. This has to be done per-transaction, and you need to collect and submit GST for Australian sales per-transaction also. There are some shortcuts but in general from an accounting point of view, in Australia it's so much better to use a payment processor. -- Rob Keniger
