What is the Best Payment Processor for Digital Products?

Although digital products as a whole have only emerged as mass-market commodities in recent years, the market in general is huge. According to figures published by Precedence Research, the global market in digital products (defined as ‘the exchange of products and services, or the transfer of money or data, through an electronic network basically the internet’) was worth an estimated $4.6 trillion in 2021 and is expected to reach approximately $19.2 trillion by 2030. This amounts to a compound annual growth rate (CAGR) of 17.21% from 2022 to 2030.

However impressive these figures might be, they mean nothing for the average business selling digital products if that business isn’t getting paid in a secure, reliable and friction-free manner. Any issues with payment processing could impact negatively on cash flow, profits and growth. For that reason, it’s vitally important to ensure that your business uses the best payment processor for digital products. In this article we’ll look at some of the payment systems for digital products which are available, outlining their good and bad points and explaining how they work. 

What is a digital products payment gateway?

In simple terms, a payment gateway is the name given to the technology which is put in place to capture, store and transmit the information contained on payment cards. This information will be transmitted from the customer to the acquirer. The acquirer refers to the institution which processes card payments on behalf of you, the merchant. Once a payment has been accepted or declined following processing, this decision is relayed back to the customer. 

In this way, the payment gateway functions as a form of middleman between the customer, the merchant’s website and the merchant. A payment gateway for digital products has to function in a seamless, fast and secure manner if the merchant in question is to maintain customer satisfaction and a steady flow of income. In the case of many software as a service (SaaS) providers, the payment gateway for digital products will need to be equally well-equipped to deal with one-off payments and recurring payments for software which is ‘hired’ on an ongoing basis. 

Choosing the best digital products payment gateway

The following are some of the market leading digital payment gateways:

GoCardless

The reasons for putting GoCardless at the top of the list of the best payment processors for digital products are many and varied. In the first instance, it has an extremely user-friendly dashboard, making it simple for you to navigate and use without taking too much time away from your core business, and in addition it integrates seamlessly with a wide range of other products, such as accounting  and invoicing software and billing software. Market leading names such as Salesforce, Intuit QuickBooks and Xero all work seamlessly with GoCardless, making it easy to integrate with the technology already driving your business. 

GoCardless operates via payment mechanisms, such as Direct Debit and Instant Bank Pay. Instant Bank Pay is a system which harnesses the power of open banking to facilitate one-off payments while Direct Debit is the ideal solution for recurring payments such as subscriptions to SaaS products. It operates on a ‘pull’ basis, putting you as the merchant in control and cutting down on problems such as failed payments. The Success+ tool works to automatically retry any failed payments, thus cutting the actual number of failed payments by 76%. The account-to-account nature of the systems makes it possible to accept payments for your digital products from anywhere in the world and using any currency.        

Fastspring

Fastspring enables customers to pay using PayPal, payment cards and bank transfers, and offers a pay as you go plan for new businesses which is free to set up. It also offers a recurring billing function and an automated system for dealing with failed payments. The fee charged per transaction is higher than for some other payment gateways, particularly under the free set-up plan, but businesses which have a sufficient volume of sales can switch to a plan with a monthly charge and lower transaction rates.    

2checkout

2checkout makes it possible to take payments for digital products without having to set up a separate payment gateway or shopping cart. It doesn’t involve monthly fees and the charges per transaction are relatively low, although these fees do increase when compared to competitors once the volume of sales being processed begins to climb. In addition to this, a downside of 2checkout is that it doesn’t allow users to edit the email templates used. 

SendOwl

SendOwl integrates with whatever payment gateway you are using as well as facilitating the delivery of digital products. What this means is that merchants using SendOwl must also choose a payment gateway. Once it is in place, SendOwl accepts payments using payment cards, PayPal, Apple Pay and Bitcoin, enabling merchants to offer features such as ‘pay what you want’ for products, including licence keys, memberships, eBooks and subscriptions. 

Gumroad

Gumroad makes it easy to take payments from customers using methods such as payment cards or PayPal, and as well as selling products you can use Gumroad to offer a rental service, i.e. giving customers the ability to stream video content for a set period of time. Other features, besides the ability to sell digital products, include the creation of analytics which can be used to audit sales trends and make plans for future growth. 

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.