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.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 them. If you're serious about maximizing your sales, you've
got to think about offering other online payment 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 payment 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 payment 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 cards. 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 accept 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 very
impatient.
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 payment 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:
Establish a secure server to process credit card transactions, and Set
up a merchant account.
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.
1) 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.
2) Setting up your merchant account
You have a few different options when getting a merchant account. You
can...Get your own merchant credit card accounts with a local bank. 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 is doing. 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:
a) They are web-based specialists in getting credit card accounts for
online businesses, and, as should be expected, you can apply over the
Internet. b) 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. c) They are affordable and can often have you accepting credit
card 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. Check out the broker we currently recommend at
Charge.com
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
your orders.
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,
b) Authorize.Net, or
c) CyberSource.
How using
PayPal can expand your customer base and increase your sales
PayPal is an increasingly popular way to accept payments online.
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 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 for you:
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 verified buyers.
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 minutes.
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 a payment, 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 next year, 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 in use.
When a payment is 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 payments online, 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 process.
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 available.
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 payment
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
maximum 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. Derek Gehl
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