With the variety of options available to a business looking to make its products and services available to the masses online, this may be the first question you ask: What is the best way to accept payments online? The following questions could follow: Which method will best suit my business and my clients? How much will it cost? It’s worth it? Each and every business owner may answer the first three questions differently, but for any business, the question “is it worth it?” can be answered with a resounding YES. No matter what business you are in, there are ways to increase your income online, making your storefront available 24/7 to a worldwide market. It is not limited to local customers; you have the potential to expand your target market horizon indiscriminately. In this article, we’ll look at the top two payment acceptance choices for retailers when making the decision to engage in e-commerce for the first time.

Recently, many brick-and-mortar businesses have closed their doors due to the continuing poor economy in this country. Storefront locations carry with them the burden of high overhead and the absolute necessity of attracting sales or facing closure. Savvy retailers have been able to absorb some of this loss by shifting their focus from selling face-to-face to selling online. They have also been attracting many new and loyal customers to their online storefronts, picking up customers previously unavailable due to the presence of their now-defunct competitors. These days, people aren’t just shopping online from the comfort of their homes. Since we live in a “I want it NOW” society, the market is shifting even more towards mobile eCommerce sites. A potential customer might be stuck in traffic and remember that he needs to order a tail light for his truck. The company that gets this business is the company that reaches out to the customer who needs it on the spot. Just thinking about the possible situations in which a buyer would use your online shopping platform could lead to a list consisting of hundreds of examples, but none of this means anything if you’re not ready to accept online payments in a secure environment. .

Let’s first look at what is most commonly recommended as the “newbies” preferred option for accepting payments online: PayPal. Known worldwide for its integration with (and ownership of) eBay and its ease of use, PayPal ends up being the choice of most online payment gateways for new merchants. A payment gateway is defined as an e-commerce application service provider that authorizes payments for online businesses. PayPal may be a good fit for your business at first and help you learn how to sell and process payments online, but in the world of e-commerce, it’s not seen as a desired permanent solution. One of the main advantages of using PayPal is that they do not charge a monthly account maintenance fee. This may be important to you if you’re just getting started in e-commerce and aren’t sure how much online processing you’ll actually be doing and whether it’s worth investing in a more professional payment processing option. If you intend to sell your products on eBay, you definitely need a PayPal account to accept payments through the auction site. If you’ve sent payments through PayPal in the past, it’s very easy to transition your account to be able to accept payments as well.

Now for the bad stuff: Yes, PayPal is easy to set up and understand, but by your customer, a merchant who trusts PayPal to accept payments is seen as a less trustworthy, less established, and potentially unprofessional business. The payment process of your customers is interrupted. At checkout, your customer is taken to PayPal’s external website to complete the transaction, forcing the customer to sign up for a PayPal account if they don’t already have one. The main downside to this is that your customer may not want to sign up with PayPal. This plausible reaction will result in lost sales. We’re not going to review transaction fees here because they’re constantly changing, but in general, PayPal takes a remarkably large chunk of every sale. PayPal doesn’t integrate visually with your website storefront, which means you can’t customize colors, fonts, headers, or maintain a consistent look and feel with your brand image. One last downside to relying on PayPal to process customer payments online is that once the checkout process is complete, you don’t have access to vital customer data. You haven’t learned anything about the person who just bought you: where does he live? How did they find out about your company? Did they find your site easy to navigate? All that relationship building information is lost to you. If you realize how important this information is to growing your business, you’ll want to move to a different payment gateway as soon as possible.

Let’s say you’ve created a PayPal merchant account, but want to present a more professional image of your business online. You can keep PayPal on your website as a payment option available to your customers who prefer to pay through PayPal. It is important to offer what is most convenient for your market. You may want to wait and see what kind of volume of credit card processing you do through PayPal and our second payment gateway option, Authorize.Net, and then decide if you want to keep one or both of the payment options present in your place. Authorize.Net may allow your shoppers to enter their payment information directly on your site. You don’t force your customers to sign up for a third-party account, and you keep your site’s look and feel consistent. By accepting payments directly on your site, you project a more professional image to potential customers. When a purchase is made, those funds are deposited directly into your business bank account. Unfortunately, there is always a catch: Authorize.Net charges you a monthly service fee. Like PayPal, there is a fixed transaction fee that accompanies every purchase. You need to set up a merchant account (a merchant account allows your business to accept credit cards) with one of Authorize.Net’s resellers, but that’s not necessarily a negative as any business will find having a merchant account essential for the survival of the business, especially if they also have a brick and mortar location. PayPal is not an option when transacting face to face.

When answering the main question of this article, “what is the best way to accept payments online?”, it really depends on you and your business situation. Want to test the waters to see if an eCommerce solution is something that would build your bottom line? Go with PayPal for a few months and see how it goes. Are you a larger company generating millions or thousands of sales every day? I wouldn’t hesitate to make an immediate jump to Authorize.Net; you’ll end up saving more money and receiving your payments in a way that negates any idea that a monthly service fee is considered a nuisance.

© 2010 Lorraine Wolfe

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