Processing $5,000 per month or less in card payments?
- Date Established
- Columbus, OH
- Predictable flat-rate pricing
- Month-to-month agreement
- No setup or application fees
- No monthly fee
- Ideal for international merchants
- Good developer tools
- Excellent website & advertising
- Not suitable for card-present merchants
- Account stability issues
- Not good for high-risk merchants
Since the early 2000s, 2Checkout (2CO) has served as a third-party payment processor for ecommerce merchants. As the name suggests, 2Checkout allows customers “to check out” and pay when completing an online purchase. 2CO bares similarity to Stripe and PayPal, and competes for much of the same marketshare. You may have encountered 2Checkout as a payment processing option within one of the its many partnered shopping cart, invoicing, or booking platforms. As far as I can tell, the primary advantage to selecting 2Checkout over competitors has been its availability in additional countries — over 200 markets in all.
In March 2017, an ecommerce platform called Avangate purchased 2Checkout and decided to adopt 2Checkout’s branding going forward. Up until the acquisition, Avangate’s platform was specifically geared toward the sale of digital goods (i.e., software and software subscriptions). Avangate now calls itself “2Checkout (formerly Avangate).” Essentially, we have an ecommerce platform that purchased a payment processor, and then took on the name of the payment processor. You know, just to make things confusing.
It looks like Avangate has only just begun to incorporate some of 2Checkout’s capability. The purpose of the acquisition was to expand Avangate’s global reach and to branch into the sale of physical goods in addition to digital goods. However, at the time of this review, the 2Checkout website still exists separately in roughly the same form as before the acquisition. The products and features of 2Checkout have remained basically the same, and it’s still a global payment processor at its core.
Therefore, for this review update, I am still referring to the “original” 2Checkout processing company, not the ecommerce platform that was once called Avangate and is now known as 2Checkout. For now, merchants still come across 2Checkout as a processing option in many shopping carts and software platforms, and can still sign up for 2Checkout accounts when simply adding payment capability to their websites.
There are several positive and negative factors to consider when working with 2CO. Withheld funds and terminated accounts are the main complaints of 2CO users. Still, with more than 50,000 vendors around the globe, including many in under-served countries, 2CO remains a real alternative to competitors like PayPal. If you keep reading, you’ll gain a better grasp of this processor and see if it’s the right fit for your business.
So without further ado, on with our review of 2Checkout — not 2Checkout (formerly Avangate)!
Table of Contents
Products & Services
More often than not, I find myself digging through the depths of a processor’s website to piece together what it actually offers its merchants. You’d think all payment companies would make basic information about their own products and services crystal clear, but you’d be mistaken. The marketing copy is often vague or meaningless, the site is poorly organized, or all of the above. As a result, I’m tasked with essentially rewriting the company’s own website for them in this section of the review. (I’ve yet to receive any thank-you notes.)
Refreshingly, 2Checkout’s main product offerings are outlined very clearly. Take my word for it — this is a minor miracle. Below is essentially the same information you’ll easily locate at 2Checkout.com, organized in pretty much the same way:
- International Processing: Through 2CO, payments are accepted in 87 currencies and settlement is possible in 27 currencies. The platform is available in 15 languages and spans 200+ markets/countries. Your customers won’t have to sign up for 2CO themselves, but can quickly make purchases using one of the eight accepted payment methods (including PayPal if they have a PayPal account).
- Hosted Checkout: A hosted payment page is the classic 2Checkout payment acceptance setup, with two options for redirecting customers to 2CO’s site to complete transactions. Both may be customized to mimic the look and feel of your own website.
- Standard Checkout: This solution is marketed to sellers just starting out, or with a smaller number of product offerings. The checkout screen is optimized for the customer’s device (laptop, tablet, phone). Note: this was formerly called “Dynamic Checkout,” and the name still appears in some places on 2CO’s site.
- Inline Checkout: Here, the payment screen is overlaid on top of your own website. While still a 2CO-hosted form, this method gives customers a stronger impression that they’re still on your site. This option also reduces the number of fields that must be completed to finish the transaction.
- Payment API: 2CO has now added a third option for checkout: directly integrated payments. This solution gives you the most control over the payment process and is the most streamlined for your customer. Buyers place sales directly on your website without the need for redirection to a hosted payment page. Card data is tokenized, and you submit the charge from your own server via the 2Checkout API.
- Shopping Cart Integration: In addition to hosted payment pages and direct integration options, 2CO already integrates with an ever-increasing lineup of established ecommerce shopping carts. The current cart count is over 100. Note that invoicing, booking, and other types of software integrations are also included in 2CO’s “shopping cart” list. You’ll also have access to 2Checkout’s simple Plug and Play cart.
- Recurring Billing: 2CO has long catered to clients with recurring billing and subscription needs. An automatic account updater feature minimizes declines when your customers’ credit card information changes or expires.
- Fraud Protection: This part of the site is a little vague (2CO might say that’s because the features are “proprietary”). At least we know 2CO is PCI Level 1 compliant. Ask a sales rep about the “three-tier defense strategy” to pinpoint fraudulent activity, or challenge your agent to list the “more than 300 variables” the system analyzes in under three seconds to identify fraud markers. If they tell you, they have to kill you. One would assume, anyway.
- Developer Resources: You’ll have access to plenty of documentation, FAQs, and a developer sandbox for testing out the features we’ve covered here.
- Virtual Terminal: Okay, this feature is more hidden than the others, probably because you’re not allowed to even ask for one until you have three months of processing history with 2Checkout. Still, the option is worth mentioning, even if it’s not really part of 2CO’s core offerings. A VT allows you to manually enter orders on behalf of customers.
If you’re wondering how each of the three main checkout options play out for your customer, try the interactive product demo. You can toggle between Standard, Inline, and Payment API under “settings” to compare. It’s pretty neat. Additionally, the links on 2CO’s master list of third-party integrations tell you which checkout options are compatible with each cart or service, as well as whether recurring billing is available. Hooray for an organized website!
Fees & Rates
The Rates page at 2Checkout.com allows you to quickly view the base processing rate for businesses within your specific country. For the US, this is 2.9% + $0.30, which is in line with competitors such as Stripe, Braintree, and PayPal. Keep in mind that as a US merchant, you’ll be charged an extra 1% for any cross-border transactions. All other supported countries have a cross-border fee of 1.5%.
At one time, merchants were required to pay $49 when signing up, but 2CO now advertises no monthly or setup fees. To see the rest of the rates and fees for your particular country, head over to Appendix B of the Sub-Merchant Services Agreement (for the US) or the International Sellers Agreement (for all other countries). I’ll tell you that the only other significant fees currently listed within these documents are for specific payout methods such as international wire transfers, which range from $15-20 each. Direct deposit/ACH for payout is free for USD, CAD and a few other supported currencies.
Conveniently, there is no additional fee for recurring billing and subscription features. Some processors (such as PayPal) charge extra for this.
Here’s a quick summary of 2Checkout’s standard pricing for the US and Canada:
- 2.9% + $0.30 per transaction
- 1.0% cross-border fee
- $20 chargeback fee
- 3.4% + $0.45 per transaction
- 1.5% cross-border fee
- $25 chargeback fee
Note that I said “standard” pricing — there are a couple of caveats. First, expect to pay more per transaction if, as the website states, “the Products or business practices of a Sub-Merchant create a potential or actual financial or reputational risk to 2CO, such as the sale of Restricted Products or high chargeback percentages.” Meanwhile, lower-risk sellers processing over $50,000 per month may negotiate for better rates than the base package. It’s also worth noting that for several European countries, the base rate is 2.4% + $0.30 — slightly lower than for North American merchants.
Although not described specifically in the fee schedule, the main pricing page indicates that conversion to your home currency incurs an average fee of 2-5% above the daily bank exchange rate. This is in addition to your regular transaction fee and cross-border fee. Yep, international processing can be expensive!
For payouts, 2CO is on a weekly schedule that commences each Thursday. While that seems long in the age of next-day and even “instant” funding, it looks like they’ve chosen to standardize this frequency internationally. When viewed in this light, the length makes more sense. Some international businesses may even want to extend this period by adjusting their payment release level, in order to cut down on wire transfer fees. Still, this schedule will be a deal breaker for some businesses who need their money “now.”
2Checkout may also set up a reserve for your account (see section 4.J of the service agreement). This is separate from your settlement account for managing your regular fees and payouts. The exact amount of the reserve depends on your risk level and chargeback activity, but expect a percentage of your gross sales for each pay period to be set aside and released after 90 days. Reserves often come as a surprise (and resulting offense) to merchants if they haven’t understood their terms of service properly. Be aware that reserves are widely implemented across the processing industry to protect against risk, and 2CO is no exception.
Overall, fees and rates for 2CO are similar to its competitors. Whether or not 2CO is the best deal for your situation will largely depend on your specific country, risk level, processing volume, and cash flow requirements.
Contract Length & Early Termination Fee
2Checkout’s payment solutions are offered on a month-to-month basis with no early termination fee. Your agreement may be terminated with 30 days prior written notice. Again, be sure to read the full service agreement under the Policies section of 2CO’s website.
While you’re there, definitely scan through 2Checkout’s lists of prohibited and restricted products. If your business is even remotely close to a restricted category, save yourself some future pain and clear it with 2CO from the beginning. Also, merchants with a chargeback rate of over 1% are automatically prohibited, which is fairly standard for this type of provider. You may need a processor that specializes in high-risk industries, or else live in perpetual fear of a frozen or terminated 2CO account.
Sales & Advertising Transparency
2Checkout doesn’t appear to use gimmicky marketing tactics. Pricing is straightforward and easily accessed. Advertising is standard and mostly limited to the web. 2CO attracts new customers via its site or referrals, and I found no evidence of an old-school sales force making cold calls to potential customers.
As I’ve already mentioned, the website is clear and quite easy to navigate, which goes a long way toward transparency. The Policies center contains several handy resources such as service agreements and restricted industries. I’d like to see a clearer explanation of the reserve policy with some hard numbers included. I eventually found that 90-day fund release figure within the depths of 2CO’s support resources.
Customer Service & Technical Support
Even though Avangate acquired 2Checkout, you still can (and probably should) go directly through 2Checkout’s original website to access support materials. Not much has changed in this area. Several resources are offered, including:
- Phone Support: Monday-Friday, 8 AM-4:30 PM EST. I reached a live operator with minimal hold time.
- Support Tickets: Inquiries outside normal the operating hours listed above are answered ASAP.
- FAQ: A dozen or so basic topics are covered.
- Glossary: Not extensive, but better than nothing.
- eCommerce Resources: Topical, short ebooks and longer PDF articles on the industry, written a few years ago.
- Blog: Looks like this could eventually be phased out in favor of Avangate’s blog.
- Developer Resources: Includes a knowledgebase and API documentation. I’d definitely suggest perusing these resources if you’re considering 2CO. I found very important bits of information here, such as the existence of a virtual terminal and details on payout options.
You may also still reach out on 2CO’s Facebook, Twitter, and LinkedIn pages. I’ll be interested to see if and when these channels merge or are replaced with Avangate’s. I get the impression Avangate was actually more active on social media, and 2CO has begun referencing more content created by Avangate in its posts. At the time of this review, the @Avangate brand is still alive in places like Twitter, so it’s probably worth following those accounts if you’re interested in staying up with the effects of the acquisition on 2Checkout.
Negative Reviews & Complaints
Remember how Avangate bought 2Checkout and then started calling itself 2Checkout? (That’s a rhetorical question at this point.) Well, I’ve already noticed some confusion amongst reviews around the web regarding which entity in which form is being critiqued. Unfortunately, I suspect the confusion will only get worse before it gets better. Another source of confusion is end-customers complaining about the sellers 2CO serves, not 2CO itself. Despite the slightly muddled feedback, however, we can identify a couple of consistent patterns on both the positive and negative side.
First of all, 2Checkout maintains an A+ rating with the Better Business Bureau, with 39 complaints issued in the past three years. This number has remained relatively stable since our last check-in, with eight complaints filled in the last year. Trustpilot, Google reviews, and other sites gather up a few more complaints. Overall, the first two issues I’ve mentioned below come up most often:
- Account Termination: 2CO appears to closely monitor accounts, with users reporting account closure with no notice or a highly inadequate explanation. Some sellers claimed the rules about what’s prohibited and what’s not suddenly changed, resulting in an immediate boot out the digital door. If your business could be considered high-risk, you might want to choose a processor such as Durango Merchant Services. Before filling out a 2CO application, learn how to avoid freezes, fees, terminations. Most importantly, review that prohibited products list.
- Withheld Funds: Some merchants report dissatisfaction with 2Checkout’s reserve policy — the automatic holding of a certain percentage of each payout for 90 days to protect against risk and chargebacks. Occasionally, merchants have complained of an increase in the reserve percentage without notice (even though this is specifically allowed in the service agreement.) Most often, sellers were frustrated that their money was (or still is) being held for an indefinite period after an account is suddenly frozen for review or just plain closed. This period is typically at least 90 days and sometimes much longer.
- Poor Customer Service: The most common complaint of this type is a frustration with the lack of urgency and clarity in the resolution process with 2CO. Merchants feel strung along or left in the dark for long periods.
That all sounds pretty bad at first glance, but it’s important to point out that for 2CO, dissatisfaction is the exception and not the rule. Compared with its prominent competitors, and even considering its smaller size, the overall complaint total for 2Checkout seems “reasonable” to me.
I know — we’d all love a company with a perfect track record. Yet, when pretty much anyone can initially sign up and start selling, things are almost guaranteed to go awry a certain percentage of the time. Some accounts will never make it past “further review.”
I don’t believe 2Checkout relishes closing accounts or holds funds simply for its own gain. On the other hand, it’s clear that improvements could be made to 2Checkout’s communication and notification process. My best advice is to not leave the tiniest bit of ambiguity about what you do and don’t sell, keeping 2CO updated at all times.
Positive Reviews & Testimonials
There are no obvious case studies or testimonials at 2Checkout’s website. Around the web, I found bits of praise for 2CO in the form of written reviews and Youtube videos made by merchants:
- Widely Available: 2CO works in multiple payment methods, currencies, and languages. Most significantly, there are only handful of countries 2CO does not serve. Some merchants have selected 2CO essentially by default, but have been happy with the option nonetheless. Several sellers expressed gratitude that 2CO is available in countries where companies like Stripe or Shopify Payments are not.
- Convenient Checkout: Sellers appreciate that the one-page checkout is fairly straightforward.
- Easy To Use: Merchants report that 2CO is quick to set up and operate.
By now, you might also be wondering about Avangate’s reputation. The Artist Formerly Known as Avangate does include several testimonials and case studies on its site, and has some pretty big-name clients. HP Software is probably the most recognizable. Elsewhere, reviews are mixed. The G2 crowd folks seem to like Avangate overall, while the Trustpilot outlook is not as good. This is another one of those situations we’ll just have to watch as the acquisition progresses.
We’re still waiting for the marriage between Avangate and 2Checkout to fully manifest long-term results. Although Avangate is now “2Checkout (formerly Avangate),” I still felt comfortable reviewing 2Checkout in its own right as a payment facilitator for this update. Meanwhile, we’ll be keeping an eye on both parts of the larger company that is now named 2Checkout.
Along with its easy-to-navigate website, I appreciate 2Checkout’s two simple hosted payment page options, as well as its experience handling payments for both physical and digital goods. I also like that they’ve added a third option to host checkout yourself using 2Checkout’s direct API. (Note: If they dare change their name to “3Checkout” because of this, I’m going 2Befurious.)
Anyway, the point is, there are now three payment setup options — so no coding needed unless you want to — plus compatibility with virtually all shopping carts. 2Checkout is most definitely a viable option when compared to other merchant account alternatives like Stripe or PayPal, especially in under-served countries. Considering this, along with 2CO’s fairly solid reputation up to this point, I’m giving the company 4 stars.
Like other third-party processors, 2Checkout is more likely to take on sellers with less than flawless credit scores and is better at dealing with risk than a lot of traditional merchant account providers. At the same time, the meaning of “risk” is always a bit subjective. 2Checkout reserves the right to close your account if you’ve crossed the acceptable threshold in its eyes. If you choose to work with 2CO, familiarize yourself with the processor’s procedures, as well as the fee and payout structure, so you’re one step ahead of the game. Talk to a live risk department employee before applying for an account if there’s a modicum of doubt.
If possible, apply for a traditional merchant account as well as a third-party processor like 2CO. That way, you’ll have access to funds in case there’s ever a problem with either resource. Whether or not the commission you earn after paying 2CO fees makes sense with your bottom line is important to consider. Lastly, I’d suggest reading through the comments at the end of this review, at the BBB, and around the web. That should help you wrap your mind around the types of sellers and products that most of often result in account instability with 2CO.