South African Payment Gateways: Payfast Or Paystack?

Payfast has been the go-to payment gateway for South Africans for many years. 

They were one of the first gateways to allow small businesses to accept credit card payments on their website without having to open a merchant account with your local bank, and fill out enough documentation to finish your new Bic pen. This was revolutionary.

Paystack has however been making waves this year. Originally founded in Nigeria, Paystack was acquired by Stripe earlier this year and is on a mission to make selling online in Africa even easier. 

Let’s Talk Fees

I signed up for a Paystack account as soon as I heard about the acquisition and that they were moving into South Africa. I was admittedly a little biased because I knew that Stripe was behind it – I didn’t look at anything else. Stripe’s fees, documentation, and reliability have always been excellent. I knew Paystack would follow the same culture.

For the purpose of this post, I thought I’d compare pricing between Paystack and Payfast – I was pleasantly surprised.

Paystack charges Credit & Debit Cards 2.9% + R1 for each transaction.

For a R100 transaction, your fees would add up to R3.90, paying you out R96.10

For the purpose of comparing apples with apples, we’ll only look at the Credit & Debit Card fee for Payfast. They do however offer a number of other payment methods such as Instant EFT, Snapscan, Masterpass, Mobicred & more. 

PayFast charges Credit & Debit Cards: 3.5% + R2 for each transaction.

For a R100 transaction, fees would add up to R5.50, paying you out R94.50

You’ll also be subject to a R10 payout fee when requesting a payout from your Payfast Wallet.

Real-World Example

Comparing transaction fees for a R100 transaction gives you a general idea of how much you could save between the two, but let’s use a real-world situation. 

Let’s take an eCommerce store that produced approximately R112 000 in sales in March 2020, accounting for 126 orders. All transactions went through Payfast. 

This means that for R112 000, you paid (R112 000 * 3.5%)  + (126 * R2 = R252) = R4172 in transaction fees. 

Had you used Paystack, your fees could have worked out to ( R112 000 * 2.9% ) + (126 * R1 ) = R3374

That’s a R798 difference in fees between the two. While this might sound like a small amount, add it up over a year or two and it becomes quite a pretty penny you could have saved. 

This is of course only a broad overview of the difference between the two. If your customers primarily pay using InstantEFT, then you’d want to keep using Payfast, but if you are getting more payments from Credit & Debit Cards, making the change might not be such a bad idea.

International Payments

This is something I’ve been keeping an eye on for a while. Selling digital products internationally isn’t as difficult as it was 10 years ago, but the easiest options are to either 1) Open a PayPal account and sell through there, or 2) Set up an account through Stripe Atlas, register a company in Delaware, and work from there. 

Paystack has the option to accept international payments in ZAR. Customers can purchase from anywhere in the world but will be billed in ZAR. I’m hoping that at some point we’ll be able to charge in USD. 

Disclaimer

This isn’t to ‘bash’ any of the payment gateways mentioned in this post. While one has better pricing, the other offers an array of payment methods. This is just to show some basic math as I will be making the change on my own eCommerce websites. 

It’s been a tough year with COVID19, lockdowns, and many struggles for businesses. If you can save on fees, I’d encourage you to do so, I know I am.

Comments (2)

Paystack feels more ‘to the point’ where the page loads with the credit card form straight of the bat. I always find I have to look twice when I checkout using Payfast, even though I’ve been using it for years. Running Paystack on a live site until the new year, let’s see how things go from there and how the everyday customer feels about it.

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