May 05, 2009
Payment Options for Your E-commerce Site
The evolution of e-commerce has a resulted in a number of ways by which a business owner can conduct business online. In this article we will go over three of the most common methods for accepting payments: online check solutions, third-party processors and merchant accounts.
Online Checks
Online check solutions are services that allow customers to purchase items through their checking accounts. This calls for the customer to provide their checking account and routing number to the processor in order to make the payment. On the surface, this method appears to cover a greater range of customers as more consumers are likely to have a checking account opposed to a credit card. These services are easy to use and generally do not require that you open an additional bank account like the average merchant account. There are some drawbacks to this method as well. With online fraud on the rise and being increasingly covered in the media, consumers are growing more cautious about making purchases online. Providing a credit card number is one thing, handing over the keys to your assets is entirely different level of disaster.
Third-Party Processors
The services offered by third-party payment processors have become increasingly popular over the last five years or so. PayPal is the most well known example, a multi-purpose solution that not only allows you to receive payments, but send money to others as well. ClickBank is a similar service geared more towards products that require downloads while CCBill is one targeted at niche markets such as subscription sites. Third-party processors facilitate credit card transactions via their own merchant account and usually charge a transaction fee for the service. While these fees are typically higher than what you would pay with a merchant account, the convenience is what appeals to entrepreneurs and small businesses. Signing up for an account is easy and virtually anyone can get a quick approval. The major downside to third-party processing is that potential customers may not take you serious as a legitimate business. One school of thought is that if they can easily obtain a PayPal account, what makes your ability to do so special?
Merchant Accounts
A merchant account allows you to accept credit card payments without the aid of a third-party processor. When purchases are made, the money goes right into your account. With a merchant account, you can maintain the consumer confidence that online checking services and third-party processing let slip away. This is especially true when coupling it with an SSL certificate provided by a trusted security entity such as VeriSign. The major draw to merchant accounts is that the transaction fees are usually significantly lower than third-party services like PayPal. This biggest downside is that they are not easily obtained. One must meet strict qualifications to be approved for a merchant account. Stipulations such as a clean credit history is often enough to drive business owners to more intuitive solutions.
Conclusion
It is our hope that in reading this article you have become more familiar with the advantages and disadvantages of the most popular options for accepting online payments. Because there is really no right and wrong answer, it is up to you to sit down and determine which solution works best for your business.
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Tags: PayPal,
payment options,
online checks,
merchant accounts,
e-commerce,
credit card,
ClickBank,
CCBill,
third party processor
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