"Buyers send money to a seller's
account at the online payment site using a credit card, and then the cash
can be deposited right into the sellers bank account with the very
convenient ACH (Automated Clearing House) feature. Some sites
will also send a check or money order to the seller..."
FAQ'S:
How Online Payments work
What's a
Merchant Account?
Why YOU need online payments!
Features for Buyers
Features for Sellers
Make More Sales!
Forms of payment
How safe are they?
Quick Tip
Caution!
Accepting Credit Cards on the
Web
How Online Payments Work
Online payments enable
their users to transfer money online, safely and quickly. Buyers
or sellers at online auctions and e-commerce websites can register for
free at payment sites like
Paypal,
Ikobo,
StormPay, and (westernunion.com
).
Registration is fast and easy, and usually only requires an e-mail
address, a credit card, and in some cases a bank account number.
Once registered, anyone can rapidly send and receive funds over the
internet!
Buyers send money to a
seller's account at the online payment site using a credit card, and
then the cash can be deposited right into the sellers bank account with
the very convenient ACH (Automated Clearing House) feature.
Some sites will also send a check or money order to the seller...
With a personal account,
it is usually free to use these sites- For serious auction sellers
who require extra features, professional style premier and business
accounts are available for a small fee... these premium features
can be worth every penny, if used correctly. See our individual
payment site reviews for more details about these worthwhile extra
features.
Why you need to use online
payments
Who needs online payments
or merchant accoubts? If you are reading this, then the answer is
probably: you do! Why? Anyone who is doing business online
should have the ability to use and accept credit cards, especially when
selling goods at an
online auction or e-commerce
site.
Do you sell in online
auctions or on websites? If you do not accept online payments from
customers,
YOU ARE LOSING SALES RIGHT NOW as you read
this! Why? Because the majority of people online want to use
a credit card like
Visa,
MasterCard or
Discover to pay
for their goods, and do not want the hassle or delay that comes with
mailing a check.
You can also accept a
westernunion.com
money order from your customers, if they don't want to pay with a credit
card and if you don't feel comfortable accepting personal checks.
Remember, the more types
of payment you offer your customers, the better your chances of closing
the deal- At the very minimum, you should accept
Paypal, especially if you are selling goods on ebay... many bidders
will simply move on to another auction if you don't offer Paypal as a
payment option. Paypal is owned by ebay and is available for
international transactions.
See our
full article about Paypal
An interesting new payment
site for many auction sellers is
Ikobo- it is similar to Paypal in that it allows international
payments...
However, one interesting
option when you send money through their service is that they send the
party you have chosen an ATM card called an 'i-Kard' with funds on it.
This is useful if you have
friends or family in say, India or South America, who don't have access
to a computer or the web, but who have an ATM branch in their local town
or village. Plus, the i-Kard is reusable, and you can add new
funds within 30 seconds, according to Ikobo.
EASY Money Transfers
...The biggest advantage to
ikobo is you can send money online right now to
your friends, family and clients worldwide, and they don't even need a bank
account or an internet connection to withdraw the money!
Ikobo has a HUGE network
of international countries, and the peace of mind that comes from using
a product tied to the VISA symbol.
Plus, they have a generous MLM
affiliate program, which all users can participate in!
Read our
full review of Ikobo here...
Features
for Buyers
Buyers will also enjoy
using online payments, because they can send money to friends &
relatives around the world, who otherwise may not have been able to
accept a credit card payment. (See
Paypal and
Ikobo descriptions above).
Another great reason is
the protection and privacy offered to the buyer: since the online
payment site is actually accepting the credit card and not the seller,
the buyer and seller now have a 'go between' party which insulates and
protects them both.
This is probably the
single best feature for buyers: the seller NEVER sees the actual credit
card number, only the payment site knows it. This goes a long way
in preventing credit card fraud. Plus, auction buyers know they
only have to enter their card number once on their favorite payment
site, and it is now stored safely for all their auction deals.
This is far more convenient than giving it out to hundreds of
auctioneers individually.
Last but not least,
consumer's are far more willing to give sensitive personal data to a
reputable site like
Paypal with 30 million online members, as opposed to some stranger
out there online. Do you really want to e-mail a credit card
number or wire funds to some far away land when the seller has only six
positive
feedbacks?
Features for Sellers
The reasons sellers should
definitely offer online payments are simple: When looking for
items at an auction site, many people simply won't bid, if they have to
go through the hassle of writing a check or sending a money order.
And an e-commerce site is
even less likely to close a deal with a shopper, when that person's
payment options are limited to mail only. If a customer MUST mail
a payment to get that one of a kind item at the auction site, well then,
they might do it. But if you don't accept credit cards for
popular, widely available consumer goods, and some other large
e-commerce site does, what are the odds your site visitor will buy that
CD, book or blouse from you instead of the competition? Not very
good, no matter how engaging or specialized your site is.
But wait, you say.
You have a merchant account already? Well that's great, and for
many of your customers, they will appreciate and use this level of
service from your business. But remember, as we mentioned above,
many customers are far more willing to give out their credit card number
to an established site like
Paypal,
Ikobo or westernunion.com,
than they are to an individual or small business owner whom they've
never heard of, or that they just found randomly on the web.
Make more
Sales!
Why do people prefer
paying with a credit card online? Our society has become more fast paced
with technological advances, not less- people who shop the web do so
because of the speed and convenience it offers, and if you insist that
they send you a payment in the mail, think about what they have to do
to: They must sit down and write a check, or worse, buy a money order
and spend even more of their hard earned cash on the MO fee to buy your
goods. Then, they have to spend the time to find an envelope and
stamps, and finally, they have to go out and mail it.
With each step that they
have to follow, you have just decreased the likelihood that they will
ever actually follow through- and if they do, it may take several weeks
before you see a payment. Then there's all the hassles of
contacting the customer to find out when the payment will finally be
sent, and excuses back about lost payments. And beware the
nightmare of REAL lost payments... have you ever tried to get
reimbursed for a lost money order? It takes months! All of this
spells a MAJOR headache for you and real opportunity cost due to lost
time.
Now think of the customer
using Buy it Now on
ebay. The auction ends, they press a button and get taken to a
secure site with https (128 bit SSL, or secure socket layer). They
enter their checking account or bank info to join a payment site, or if
already registered, they click a few buttons- Presto! The money is
yours, deposited into your own checking or savings account, or mailed to
you quickly by the payment site.
Yes, we know- online
payment programs have fees in some cases. But they are very small,
especially when you consider the potential bids and sales you may be
losing otherwise. But if you don't give them the speed and convenience
of online payments as an option, you are only cheating yourself in the
long run.
Remember when Pepsi was
first introduced into the former Soviet Union? Since their were
still exchange difficulties between the US dollar vs. the Russian Ruble
at that time, do you remember what the folks at Pepsi accepted as
payment? Vodka. Yup- hard to believe, but true. They
then sold it back in the states, and made a bundle.
The point is, as an online
seller, you should still accept as many forms of payment as possible:
money orders, checks, e-checks, clams, pesos, chickens, camels or
whatever you are willing to take. The more options, the better.
Remember, your customers
will be far more likely to bid or buy, the more options they have!
ATM card option - Ease of
Use
FLEXIBILITY is why we like
Ikobo and westernunion.com-
it may seem hard to believe in our technologically advanced age, but not
every one around the world has access to a web connected computer yet.
But almost every town or small village has access to a public ATM.
Now, buyers can send sellers money or friends and family can receive
funds in person from a special ATM card they receive in the mail from
the payment company. They don't have to fill out anything or get
approved- they simply receive a card from you through the company, with
the funds already on it.
Read more about these
kinds of transfers at:
Ikobo or Western
Union.
Quick Tip: Couple the above payment
process with a debit card from
Paypal, and you can now go on down to your local bank or ATM and
WITHDRAW the MONEY immediately after the buyer sends it... or use it to
buy dinner, pay for gas, movies, ebay fees, whatever! And get
this- Paypal even GIVES YOU BACK a bonus amount, whenever you pay for
goods with the card (currently 1.5%). You'd be surprised how fast
this rebate adds up! We have experienced all of these examples
many, many times as auctioneers ourselves. It is one of the best
deals around, and it's an amazingly quick turnover in payment time.
See our full article about Paypal here.
Forms of
Payment
Online payments can be
made through several sources, but the primary method is with a credit
card: Visa,
MasterCard,
Discover, etc.
Customers can also fund payments at certain sites like
Paypal with an instant checking account transfer, or by using an
e-check from their checking account which takes a few extra days to
clear. Other payment sources are available in some cases- Check
with individual
payment sites for
details.
How safe are Online Payments?
Online payments are VERY
safe, when used correctly and with common sense (see 'Caution'
below).
Remember, these sites
offer levels of insulation and anonymity between the
buyer and
seller, and a great security feature
for buyers: only the payment service sees their credit number- the
seller never sees it.
Most, if not all of the
sites use 128 bit secure socket layer (SSL) protection, and conduct
transactions on a secure server. Make sure you see the 'https' at
the beginning of the site's URL address in your browser window, or look
for the little yellow padlock at the bottom right hand corner of your
screen. Most computer security people agree that this is a very
safe method of sending information, as long as the site is reputable and
you are logged on through a secure server.
Also, when choosing a
password at any website, make sure to use letters and numbers- Don't use
any names, dates, addresses or other personal information- this is
just asking for trouble. And don't use one word or common terms
like 'Camelot' or 'hotdog'. These can either be guessed, or can be
figured out by hacking programs out there on the web.
Never give your password
out to anyone. You should never even give out your user ID or
e-mail address, unless you absolutely have to register or complete a
sale with a customer. Passwords are far harder to guess, when
thieves don't have this information to start with. Plus, by
keeping your e-mail addresses a little more private, you won't get
nearly as many spam offers to buy golf balls or the latest weight loss
plan.
Finally, don't keep your
password or PIN (Personal Identification Number) written down in your
briefcase, organizer, wallet or purse- If they are ever lost or stolen,
you are in BIG trouble. Before you even notice these personal
articles have gone missing, the thieves can use the info tidbits inside
of them to drain your accounts and make all kinds of seedy purchases.
Just remember, no method
of encryption or security is 100% foolproof, so use common sense
everywhere online and stick with the bigger names in payment sites;
Paypal,
Ikobo,
StormPay, and (westernunion.com)
are all reasonably safe bets. See our article on
auction fraud for more info to protect
yourself online.
Caution: A word of
advice to sellers! When accepting online payments for large ticket
items or when doing business with international customers in certain
high-fraud risk countries, it might benefit you to insist that the
online payment be funded with a checking account.
The reason is, some buyers
have been known to purchase with a credit card, receive the item, and
then do a 'chargeback' to their credit card. A chargeback is when
they call the card issuer, and report the goods as defective, damaged,
etc. The customer promises the credit card rep that they sent the
goods back. Of course, they keep the product any way, and you never hear
from them again.
And guess whose side the
card issuer takes? You, the established merchant with 3700
positive feedbacks?
Or the guy from half way around the world with 120
negative feedbacks
in one week, who Interpol is currently looking for. Of course, you
guessed right: you can now officially join Interpol's victim list.
Credit card companies are not only notorious for siding with the
customer in these cases, it's policy and even the law in some instances.
But hey- it IS great if you are ever actually ripped off and you're the
buyer, so we're not knocking the card companies here.
The solution: In my
shipping terms, I always insist that certain customers who want to pay
me with an online payment at
Paypal,
Ikobo,
StormPay, etc, must fund
the transfer with their bank account. For them to use a credit
card at the Payment site, I ask that they must have a certain positive
feedback level (50 for domestic, 100 for international etc.) with no
pattern of recent negatives. This seems to make everyone happy- my
serious, international buyers who pay quickly appreciate it, and I don't
have to worry about chargebacks. I have yet to experience any
online auction fraud using this system.
Follow the tips above, and
you should be able to quickly and safely enjoy using online payments.
Just use common sense, as no safety strategy is 100% foolproof, and it
is your money after all.
How a
merchant account differs from a payment site
If a seller's business is
limited to the internet, then they are probably fine with just an online
payment service. But if a seller is doing a lot of business
in the real world and needs card readers, mechanical card swipers and
real-time credit card processing, then they probably need a
merchant account.
Merchant accounts
tend to have higher signup and usage fees, and a more lengthy
application review process. After all, you are dealing directly
with the big credit card companies, or a middle man representing them,
and merchant acceptance standards are high.
There is also a detailed
credit check, and your business might need to meet certain
characteristics of sales volume, licensing, etc. Remember how long
it took to receive an answer the last time you applied for a personal
credit card? Now imagine that you are going to be a business owner
accepting those same types of cards from hundreds or thousands of
people- the credit card issuers want to make sure that you know what
you're doing and can be trusted.
With an online payment
service, the difference is the website is technically the merchant,
acting on your behalf. They process the card and accept payment,
and then transfer it to you. There's still an application, but due
to the lower level of risk for them, it's a far less complicated process
for you, and almost everyone who applies gets accepted.
Try these Merchant
Accounts:
Cardservice International
Electronic Transfer Inc FREE
See our reviews of Online
Payment Sites
Do
you use an online payment site or do you have a merchant account?
