One of the most common questions I’m asked by customers and
subscribers like you who are interested in starting online
businesses is "How do I start accepting online payments from my
customers over the Internet?"
The logistics of setting up your web site to accept online payments
can seem like a big hurdle for new business owners. But the fact
is, if you want your business to be successful, you MUST offer convenient
and easy ways for your customers to pay.
Credit cards are currently the 900 lb. gorilla of the online payments
world. In fact, over 90% of all the orders I receive are
placed with credit cards, and no online business can survive
without offering this payment option.The good news is that setting
yourself up to accept credit cards online payments on your web site is way easier
than you think, and in this article I’ll show you how to do
it in as little as 48 hours.
However, just because credit cards are the most popular way to
pay for goods and services online, it doesn’t mean that you
can sit back and relax just because you’re already accepting
If you’re serious about maximizing your sales, you’ve
got to think about offering other online payments methods, including:
PayPal, which has recently improved its service
-- making it even easier for your customers to use, and
Debit cards, which are poised to become the
online fundraising vehicle of the future.
Plus, it’s still important to provide traditional offline
payment techniques such as 1-800 numbers, and order
forms that can be printed out and faxed or mailed.
It’s all about giving your customers choices -- and about
capturing every sale you can. Web-based businesses that don’t
offer online payments alternatives to credit cards are shutting out millions
of consumers who either don’t own credit cards or are nervous
about using them online.
According to a study by CyberSource
Corp., web sites providing four or more online payments methods other
than credit cards have a sales conversion rate that is 12% higher
than those offering just one payment option in addition to credit
But before I get ahead of myself, let’s take a step back
and let me tell you how accepting credit cards will dramatically
increase your sales.
Capture 85% more sales by accepting credit cards online
The simple truth is that you must take online payments by credit cards on your web site if you expect to stay in business. It’s been repeatedly
proven that if you do NOT accept credit cards on your site, you
will capture only about 15% of your potential sales.
You have to make it easy for visitors to your web site to buy your
products. Internet users expect instant access
to information, goods, or services, and online customers can be
If dial-up users have to log off of the Internet to clear up the
phone line in order to call in their order, you can forget about
doing a large volume of sales. This is too much work for most of
your customers, who would be far more likely to find one of your
competitors that accepts credit cards online.
Accepting credit cards will also...
Give your business a degree of credibility,
Allow you to capture the sales of impulse buyers, and
Provide you with a fully-automated online payments and tracking system.
But before you can start accepting credit cards at your web site,
there are two important things you’ll have to do:
At this point you may be thinking, "How I am I going to do
this? I don’t even know what secure servers or merchant accounts
are!" Don’t worry -- the concepts are really simple. With just
a little effort and patience, you’ll soon be accepting credit
card payments on your web site and reaping huge rewards.
Online ordering via a secure server
For your site to be as professional as your customers expect it
to be, it must feature a secure server that protects your customers’
confidential information and gives them the confidence to safely
enter their credit card numbers.
A secure server is simply a computer server that can accept and
transmit confidential information such as credit card numbers without
the risk of someone intercepting the transmission and "stealing"
the information. The data is kept secure through encryption, which
only the oldest web browsers don’t support.
You can find out more about secure servers by contacting merchant
account providers, which is the next step in getting your site ready
to accept credit card payments.
You have a few different options when getting a merchant account.
- Get your own merchant credit card accounts with a local
If you have a good relationship with your bank -- and they don’t
require a large security deposit -- it’s best to get your
merchant credit card accounts through them.
You may, however, have to go through two different banks to process
the major cards -- Visa, MasterCard, American Express,
and Discover -- because some banks deal with only two
out of the four.
Another problem with local banks is that they often charge a very
high "discount rate" or require a very large security
deposit (between $5,000 and $10,000).
For those of you who don’t know what a discount rate is,
it’s not really a "discount" at all! It’s
the percentage you pay on each transaction for the privilege of
using credit card services, and it varies according to your credit
rating, business history, and the amount of business your site
For example, if you have a discount rate of 2.5% and you make
a credit card sale for $100, you’ll only receive $97.50.
The remaining $2.50 goes to the credit card company.
- Get merchant credit card accounts through a broker
Getting your merchant credit card accounts through a
broker is my personal preference for a number of reasons:
||They are web-based specialists in getting credit card
accounts for online businesses, and, as should be expected,
you can apply over the Internet.
||They have a higher approval rate than banks and should
be able to get you a discount rate of 2% to 3% -- even if
you’ve been bankrupt.
||They are affordable and can often have you accepting credit
card online payments on your web site in as little as 48 hours.
Finding a broker is not difficult. Besides searching online, you
can find plenty of brokers in the back of DM (Direct Mail) magazine.
But do some research, and make sure that the broker you choose
has a good track record.
There are lots of shady operators out there, so be careful of
who you choose.
Hire a fulfillment house and use their credit card accounts
If your company is doing only a few thousand dollars of business each month, a fulfillment house may be a good option for you.
A fulfillment house is a company that will...
a) Take your orders through a 1-800 number with live operators,
b) Process credit cards,
c) Provide some customer service,
d) Ship orders, and
e) Maintain your customer database.
These companies will also let you use their merchant credit card
accounts to process your orders for a fee. The downside is that
the fee is usually a 5% discount rate instead of the 2% or 3%
you would pay if you had your own accounts.
Because of the high discount rate charged by fulfillment houses,
I’d recommend that once your business grows larger, you
get your own merchant accounts and save some money.
A great place to find nearly 100 fulfillment houses is is Yahoo!’s
Fulfillment Services Directory. To get there, just click on "Directory"
at Yahoo!'s homepage and then search for "fulfillment houses."
Use a "third party" merchant account provider
Like fulfillment houses, companies such as iBill
let you use their merchant
accounts. The upside of third party providers is that they can
get you up and running quickly, set up your order forms, and process
The downside is that they charge you a processing fee of 11% to
15% of the selling price -- depending on the volume of business
you are doing.
While the discount rate offered by these companies is substantially
higher than the other options I’ve been talking about, most
do not require any setup fees, software, or security deposits,
which make them a simple and convenient option for some.
In addition to iBill, you could also check out:
a) CC Bill,
How using PayPal can expand your customer base and increase your sales
PayPal is an increasingly popular way to accept online payments.
Founded in 1998, it enables any individual or business with an e-mail
address to send and receive payments over the Internet affordably,
securely, and quickly.
First of all, I’d like you to know that PayPal has recently
improved its service -- making it an even better payment alternative
for your online business. One of PayPal’s biggest limitations
used to be that customers needed to set up a PayPal account before
making payments...but not anymore!
For new users, signing up for a PayPal account is now optional.
This means your customers can complete their online payments and then decide
whether or not to create an account.
The need for an account used to drive people away, but by eliminating
that requirement, PayPal has dramatically increased your potential
customer base and made buying your product easier -- which always
translates into higher sales and growth for your business.
And in addition to reaching an already established network of over
64 million accounts in 45 countries, PayPal has tons of other benefits
It’s secure. After setting up an account,
customers don’t have to give out credit card details to
each individual company. And you know you’re dealing with
There is no need for a merchant account to
accept credit card orders, which is convenient and cheap if
you’re just starting out.
Your customers can choose to pay by credit card, bank
account, or PayPal balance.
It supports payments in US Dollars, Canadian Dollars,
Euros, Pounds Sterling, and Japanese Yen, making cross-border
sales easier than ever.
It’s FREE for customers and affordable
for small businesses.
Set-up is fast, and you can get started in
PayPal charges you 1.9% to 2.9% of the transaction plus 30 cents
per order, depending on your company’s sales volume. The best
part is that fees are only applied when you accept online payments, and
there are no setup or monthly charges.
To get started using PayPal, just go to their web
site and click the "Sign Up Now" button. The rest is easy.
How debit cards are poised to take the world of
online payments by storm
If you want to get the edge on your competitors, you may want to
look into setting up your web site to accept debit card payments
online. Here’s why:
Debit card use is becoming hugely popular. In fact, according to
AllBusiness.com, credit card purchases have been expanding by about
15% for the last five years, but debit card purchases have been
growing even faster at more than 50% per year.
And by the end of 2005, credit and debit cards
are expected to account for 43% of all purchases
in North America -- proving that you can no longer ignore customers
who want to pay by debit card over the Internet.
But before I tell you how accepting debit cards online will help
your business grow, it’s important that you understand how
debit cards work, as well as the different types that are currently
When online payments are made using a debit card, the funds are immediately
withdrawn from the purchaser’s bank account. There’s
no "pay later" option with a debit card. With a debit
card, you pay now.
There are basically two types of debit cards:
The first is a signature-based debit card
that has a Visa or MasterCard logo on it. You can use these
cards anywhere VISA and MasterCard are accepted. If you’re
already accepting credit card online payments, you should be
able to accept this form of payment as well. Just check with
your merchant account provider.
The second type is a personal identification number
(PIN-based) debit card. I’m sure that most of
you have at least seen this type of card used at offline stores
-- you swipe your card through a small reader and enter your
PIN number, making this type of debit card impossible to use
over the Internet... until now.
A company called UseMyBank has developed software that allows purchasers
to access their own bank accounts and pay for goods and services
in real time. The process is nearly identical to paying bills online
with your bank, and the money is immediately taken from your account
-- just like when using a debit card.
Here’s how it works. If your customer decides to use this
service to purchase a product, they will be asked to select their
bank, as well as which account they want to pay from. You are then
immediately notified of their payment and can start your delivery
One of the best features of this service is that your customers
don’t have to give up any of their credit or banking information to you, making this one of the most secure options
And in addition to providing another payment option for people
who don’t like to use credit cards for online purchases, this
method also targets teens, who represent a huge market, but who
often don’t have access to credit cards.
UseMyBank is currently available only in Canada, but the company
is launching its service internationally in the second quarter of
this year. That’s why I’m giving you this information
now -- so you can stay ahead of your competitors by providing your
customers with the newest and easiest ways to pay online.
For more information about how you can offer your customers this
online payments option, just go to UseMyBank’s web
site and have a look around. Signing up is straightforward,
and the site should be able to answer all of your questions.
Don’t forget to include offline payment options
In addition to providing the online payment alternatives I've been
talking about, it's still very important that you give your customers
the option of ordering and paying offline to ensure you capture
the maximim number of sales.
Many people are still nervous about giving out their credit card
information over the Internet, despite secure servers, and some
customers will always want to speak with a live person. Giving your
customers the option of speaking with a "real" person
adds credibility AND a human element to your online business.
Another benefit is that the person taking the call can answer customers’
questions as well as help "close" the sale by encouraging
customers and giving them the final "push" to buy.
To make sure you are able to capture the orders of these customers,
you should also...
If you’re not already accepting credit cards directly from
a secure order form on your web site, you are missing out on a HUGE
number of sales. With 90% of all online purchases being made with
credit cards, you literally can’t afford not to offer this
payment option on your website.
However, even if you are set up to process credit cards online,
you can’t leave your site off limits to the millions of people
who do not have or want to use credit cards.
To tap into this lucrative
market, you’ve got to provide some of the alternative payment
methods I have been talking about.
But don't forget that in addition to PayPal and debit cards, there
are still lots of other online payment methods, including e-checks,
e-wallets, person-to-person e-mail payments, etc., that you may
want to explore.
Making it easy for your potential customers to do business with
you is essential to your online success. That doesn’t mean
you need to provide all of the online payments methods available, but if
you’re serious about maximizing your sales, it’s good
to know what’s out there so you can make sure you're taking
advantage of the options that best suit your type of business and