What is the best way to accept payments online? How to choose a payment gateway

What is the best way to accept payments online? How to choose a payment gateway

With the variety of options for businesses looking to make their products and services available to the online masses, this may be the first question you ask yourself: What is the best way to accept payments online? Follow-up questions may follow: What method will best suit my business and my clients? How much will it cost? Is it worth it? Each business owner may answer the first three questions differently, but for each 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 online income by making your storefront available 24/7 to the global market. You are not limited to local customers; you have the potential to indiscriminately expand your target market horizon. In this article, we’ll discuss the two best payment acceptance options for retailers when they first decide to get into e-commerce.

Recently, many physically based companies have closed their doors due to the persistence of this country’s poor economy. Storefront locations carry with them the burden of high costs and the absolute necessity to attract sales or face closure. Smart retailers have been able to absorb some of this loss by shifting their focus from face-to-face sales to online sales. They also attract many new, loyal customers to their online storefronts by attracting previously unavailable customers due to the presence of their now-defunct competitors. Nowadays, people don’t just shop online from the comfort of their own homes. Seeing as how we live in an “I want it NOW” society, the market is shifting even more towards mobile e-commerce 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 extends to the customer in need of a location. Just thinking about the potential situations in which a buyer would use your online shopping platform can create a list of hundreds of examples, but none of that means anything if you’re not ready to accept online payments in a safe, secure environment.

Let’s first look at what is most often recommended as an online payment acceptance option for “newbies”: PayPal. Known worldwide for its integration with (and ownership of) eBay and its ease of use, PayPal has ended up being the choice of the majority of new merchant online payment gateways. A payment gateway is defined as an e-commerce application service provider that enables payments for businesses online. PayPal may initially be a good fit for your business and help you master online sales and payment processing, but in the e-commerce world it is not perceived as a desirable 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 starting out in e-commerce and aren’t sure how much online processing you’ll really be doing and whether it’s worth investing in a more professional payment processing option. If you intend to sell your items 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 pretty easy to transfer your account so you can also accept payments.

Now for the bad stuff: yes, PayPal is easy to set up and understand, but from your customer’s side, a merchant who relies on PayPal to accept payments is seen as a less trustworthy, less established, potentially unprofessional business. Your customer’s payment process has been interrupted. Upon 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 he/she doesn’t already have one. The main disadvantage of 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 are constantly changing, but in general PayPal takes a noticeably 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 look that matches your brand image. One 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 learn about your company? Did they find your site easy to navigate? All this relationship building information is lost on you. If you realize how important this information is to the growth of your business, you’ll want to switch to a different payment gateway as soon as possible.

Let’s say you’ve created a merchant account with PayPal, but you want to create a more professional image of your company online. You can keep PayPal on your website as a payment option available to your customers who may prefer to pay through it. It’s important to offer whatever works best for your market. You may want to wait and see what kind of credit card processing volume you do through both PayPal and our second payment gateway option, Authorize.Net, and then decide whether to keep one or both options for payment on your site. Authorize.Net is able to seamlessly allow your buyers to enter their payment information right on your site. This doesn’t force your customers to sign up for a third-party account and keeps the look and feel of your site 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 business bank account. Alas, there’s always a downside: Authorize.Net charges you a monthly service fee. Like PayPal, there is a flat transaction fee accompanying each purchase. You must set up a merchant account (a merchant account allows your business to accept credit cards) with one of the Authorize.Net distributors, but this is not necessarily a negative as any business will find that having a merchant account is of essential to business survival, especially if they also have a brick and mortar location. PayPal is not an option for 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 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 you do. Are you a larger business making hundreds or thousands of sales every day? I wouldn’t hesitate to jump right into Authorize.Net; you’ll end up saving more money and getting your payments in such a way that you’ll dismiss any thought of the monthly service fee as a burden.

© 2010 Lorraine Wolfe

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