Checking Out Online Payment Methods

Credit cards are king. If you do nothing but take MasterCard and VISA, you’re pretty thoroughly covered. Nearly everyone who can afford a computer has one or both of them. Toss in American Express for the high-end customer and the business client, and you’re all set. But some alternatives are out there, and you may want to add some or all of them to your setup.

PayPal

When it comes to online payments, one very impressive option is PayPal, now part of the eBay empire. PayPal takes a slightly different approach to online payments, and it’s worth a good look. With PayPal, you can accept credit card payments without having a merchant account, and your customers can pay you directly from their bank accounts.

What do you have to do? Not much. Just sign up for an account at www.paypal.com. (See Figure 14-1.) What does it cost? Nothing, unless you actually make some sales. In that case, you pay $0.30 per transaction and anywhere from 2.2 to 2.9 percent of the selling price on top of that. Rates can be higher for international sales.

Figure 14-1. PayPal provides easy shopping and payment facilities.

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PayPal offers a complete payment system for you to use at no extra cost. You can integrate its free Web tools into your site’s pages easily. Throw in a thorough payment-reporting system, which PayPal does, and you couldn’t ask for a better setup for a startup business — or even an established one.

Google Checkout

Google Checkout is an exciting new opportunity for the online entrepreneur. Part of Google’s ever-expanding variety of services, it may be the easiest way yet to set up the most important part of your store: the part where you actually get paid.

It’s not very different from using PayPal; you simply place a Google Checkout button on your site. When your buyers click it, they’re taken to an order form like the one in Figure 14-2. Except for the specific information from your store (item, price, and so on), it’s the same form for all Google Checkout customers. This familiarity helps to create a high degree of comfort in your buyers.

Figure 14-2. Google Checkout presents your buyers with a familiar order form.

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Considering the vast user base that Google brings to the fray, this is a sales tool you can’t do without, especially considering the price — it’s free until 2008.

To sign up for the program, point your browser to:

https://checkout.google.com/sell                                           

Once there, sign in via your Google account. If you don’t have one, see Chapter 6 for the details on how to get it.

Cash alternatives

E-cash. Digital wallets. Sounds cool. Nice, easy-to-understand metaphor. You use digitally signed certificates online just like you’d use cash in the non-Net world. But it really hasn’t worked out. There’s no standard yet, although something called ECML — the Electronic Commerce Modeling Language — seems to be the first fitful attempt at one.

The most telling thing, though, is that no one’s telling. What I mean is that when you ask the folks who are trying to market e-cash exactly how many customers they have, exactly how many merchants are using their systems, and exactly how profitable this all is, they clam up real fast. This is not a good sign. When people are winning, they generally like to trumpet it to the world. But e-cash has nothing to show so far but hype and broken promises.

Phone checks currently offer a more accepted alternative. Here’s the scenario — you print checks with other people’s account numbers on them, take them to your bank and deposit them, and then watch the money roll in. It’s not some kind of criminal operation, either. It’s a perfectly legitimate business practice — as long as you have permission from your customers to do it.

The way it works is that your customers give you authorization to create a draft on their accounts. A draft is a check. You ask your customers to give you the information off their checks — bank name, check number, those little bank and account numbers across the bottom, and so on — and then you enter that information into a check-writing program. Next, you toss some special safety paper into your printer — that’s the kind of paper checks are printed on — print those checks, and you’ve gotten paid just as if you had received a check in the mail.

Figure 14-3 shows a sample screen for creating a draft with Draft Creator from www.advancemeants.com/draft. See Table 14-4, at the end of this chapter, for more sources.

Figure 14-3. You can use a paper draft in place of a normal check.

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This is one of those systems that you really should have in place. It has only two drawbacks. One is that few people are familiar with this system, but that situation is changing rapidly. The other is not a problem for you, but some of your more savvy customers may object that they’re paying the full amount up front (whereas with a credit card, they can repay the purchase price over time in small amounts).

There’s one thing you just can’t beat about this payment approach: All you pay for is the software and the paper (which you can get at any good office supply company). You have no monthly fee, no minimum charges, no discount rate, no nothin’ that you’ve gotta put up with when you deal with credit card companies.

Phones, faxes, and snail mail

You should always give your customers some way to purchase from you offline. Even if you’ve got a fully secure system, plenty of people are still uncomfortable with entering their financial information online. If you can have someone answering the phone (at least during normal business hours), put that phone number on the order form. If you have a fax, put your fax number on there, too. And don’t forget to add a physical address. That way, anyone who wants to order, but fears online security gaps, can still do so in the old, traditional ways.

If you work from your home and don’t want to give out your home address, you can easily get an office address by renting a private mailbox for about a buck a day at most package-shipping companies (not the big ones like UPS that drive trucks around, but the small storefront operations, like Pak Mail or Mail Boxes Etc., which wrap and send packages for you). Many of them will even forward your mail to anywhere in the world. Table 14-1 gives the URLs of several private mailbox companies.