What is the best way to accept payments online? How to choose a payment gateway
With the variety of options available to a business looking to bring its products and services to the masses online, this may be the first question on your mind: What is the best way to accept online payments? Further questions might follow: Which method will best suit my business and my clients? How much will it cost? Is it worth it? Each and every business owner may answer the first three questions differently, but for any business, the question of “is it worth it?” can be answered with a resounding YES. No matter what business you’re in, there are ways to increase your income online by making your store available 24/7 to a global market. Don’t limit yourself to local customers; you have the potential to expand your target market horizon indiscriminately. In this article, we will discuss the two best payment acceptance options for retailers when they first make the decision to engage in e-commerce.
Recently, many brick and mortar businesses have closed their doors due to the persistence of this country’s poor economy. Store locations carry with them the burden of high overhead and the absolute need to attract sales or face closure. Smart retailers have been able to absorb some of this loss by shifting their focus from brick-and-mortar sales to online sales. They have also attracted 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 don’t just shop online from the comfort of their homes. Seeing as how we live in a “I want it NOW” society, the market is moving even more towards mobile e-commerce sites. A potential customer might get stuck in traffic and remember to order a tail light for their truck. The company that gets this business is the company that reaches out to the customer who needs it right away. Just thinking about the potential situations in which a buyer would make use of your online shopping platform could generate a list consisting of hundreds of examples, but none of that means anything if you’re not prepared to accept online payments in a safe and secure environment.
Let’s first look at what is most commonly recommended as the go-to option for accepting online payments: PayPal. Known around the world for its integration with (and ownership of) eBay and 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 sell and process payments online, but in the world of e-commerce, it is 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 are just starting out in e-commerce and are not sure how much online processing you will actually be doing and whether it is worth investing in a more professional payment processing option. If you intend to sell your goods 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 fairly simple to transition your account to accept payments as well.
Now for the bad stuff: Yes, PayPal is easy to set up and understand, but from your customer’s perspective, a merchant who relies on PayPal to accept payments is seen as a less reliable, less established, and potentially unprofessional business. Your customers’ payment process is interrupted. Upon checkout, your customer is directed to PayPal’s external website to complete the transaction, requiring 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 won’t go over transaction fees here because they change constantly, but in general PayPal takes a remarkably large portion of each sale. PayPal doesn’t visually integrate with your website’s storefront, which means you can’t customize colors, fonts, headings, or maintain a consistent look with your brand image. A final downside to relying on PayPal to process customer payments online is that once the payment process is complete, you don’t have access to vital customer data. You haven’t learned anything about the person who just bought from you: where does he live? How did they hear about your company? Did they find your site easy to navigate? All this relationship building information is lost to you. If you realize how important this information is to the growth of your business, you’ll want to switch to another payment gateway as soon as possible.
Let’s say you’ve set up a PayPal merchant account, but you 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 may prefer to pay through them. It is important to offer what is most convenient for your market. You may want to wait and see what kind of credit card processing volume you do through PayPal and our second payment gateway option, Authorize.Net, and then decide whether you want to keep one or both options. of payment present on your site. Authorize.Net can seamlessly allow your buyers to enter their payment information directly on your site. It doesn’t force your customers to sign up for a third-party account and keeps your site looking consistent. By accepting payments directly on your site, you project a more professional image to potential customers. When a purchase is made, these funds are deposited directly into your company’s bank account. Unfortunately, there’s always a downside: Authorize.Net charges you a monthly service fee. Like PayPal, there is a fixed transaction fee that accompanies each purchase. You need to set up a merchant account (a merchant account allows your business to accept credit cards) with one of the Authorize.Net resellers, but this is not necessarily a negative as any business will find that having a merchant account it is essential to the survival of the business, especially if they also have a brick and mortar location. PayPal is not an option when doing face-to-face transactions.
In answering the main question of this article, “what is the best way to accept payments online,” it really depends on your situation and your business. Want to test the waters to see if an eCommerce solution is something that will improve your bottom line? Go with PayPal for a few months and see how it goes. Are you a larger company making hundreds 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 getting your payments in a way that negates any notion that a monthly service fee is considered a burden.
© 2010 Lorraine Wolfe
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