With all the training and coaching done here at the Internet Marketing Center, we get a lot of clients asking which payment methods they should be accepting on their e-commerce sites. Should you just offer Paypal, or should you be having your own merchant account and taking payments directly? The truth is that this is really not really an either/or question at all. You need both as soon as possible, because if you are only accepting e-money, it is costing you.
It’s true! If you are only accepting Paypal or e-money, you are leaving sales AND profits behind.
Why is this?
Running a successful online business is all about first making your customers as comfortable as possible shopping on your site. Professionalism in layout, theme and content is key to be sure, but there is nothing more important than making customers feel truly confident with your checkout process. And the easiest way to do that is to you allow the customer to pay by whichever means that THEY want; and most importantly by the means they feel CONFIDENT in and TRUST.
It’s been proven time and again, that whenever you add another payment option to your site – especially a merchant account showing your business is real and credible – sales always seem to increase. So if your business is not offering multiple payment options, you are missing out on those sales.
How many of the payment options should we provide?
The broad answer is as many as you can. However the realistic one is to offer the options that 99% of your customers would use. Traditionally these come down to Visa, Mastercard, Discover, American Express and Paypal. I know there are many other e-payment providers and niche credit cards out there, but none to really worry about at this point, as it is equally important to not offer too many choices as it becomes confusing – especially e-money service clones of Paypal.
Which payment options should we offer first?
Paypal is the easiest and most obvious choice when in comes to third party payment services or when you are just starting out with your site. Realistically they are the only e-money site worth using as well, as they are the most widely known and accepted. However, outside of Paypal, the credit cards you should be accepting at a minimum are the big two – Visa and Mastercard – then followed by Discover and American Express.
Getting three of the four of these is easy as your merchant account provider will be able to process your Visa, Mastercard and Discover transactions from one simple gateway. American Express differs in that they are a standalone service that remains independent from merchant account providers. Therefore, you must apply for an American Express account separately.
From our experience, American Express transactions are much lower in volume as compared to Visa and MasterCard, so our advice would be to secure your merchant account with Visa, MasterCard and Discover first. These three combined with Paypal acceptance will guarantee you can accept payments from the majority of your customers. And truthfully, most of your customers who prefer to pay via AMEX will have one of the other cards as well for merchants who don’t accept American Express.
Perhaps someday AMEX will come to the party, but until they do, it is a separate application.
Are there any downsides to offering payment options through a merchant account?
There are no downsides that we have come across. The discount rates (the percentage of the sale price kept by the processor) is on par with what you would pay to Paypal and the money is deposited directly into your bank account once it has cleared processing, which makes everything quite easy.
The only thing you have to be aware of is that your shopping cart needs to be setup to accept payments through a gateway. This is usually quite simple and straightforward as all the well known shopping cart providers have this functionality built in.
Who should I speak with to get a merchant account?
Payment providers abound. There are the services available through many financial institutions and banks. There are dozens of third party providers. And there are top tier providers who do everything from handling your application; manage the underwriting and risk; and providing the payment gateway – all in house. Of the three, we recommend you only deal with the top tier providers. Here’s why:
- Financial institutions are ultra conservative, especially after the latest financial difficulties the world has faced.
- Their application processes are generally long and tedious.
- Many of these processors don’t really understand the e-commerce model – even though they advertise they do
- Stringent underwriting and risk departments
- They are generally uncomfortable when you start selling non-tangible products like e-books, training, coaching or anything else you can’t ship
- You may get surprises with a mandatory holdback of your funds, which could amount to 30-50% of your sales volume, or higher
Third Party Providers
- These providers are usually just brokers in between you and the banks
- Not only do you have all the difficulties of jumping through the bank’s hoops, but your point of contact is basically just a salesperson instead of a true business partner
Top Tier Providers
- In house approval team
- In house risk and underwriting departments
- Dedicated account representatives, not salespeople
- All in one gateway, merchant account and fund deposit
- Can get account approvals done in days instead of weeks
- You will find these people to be part of your business team, not just a vendor
So which service do we recommend?
Of all the services out there that we have tried – and there are many – the service we recommend and use ourselves is PowerPay , simply because they understand e-commerce the best of any of the merchant providers out there. And after building many online businesses in multiple countries and going through the endless forms, questions and paperwork of applying with other payment providers, we can’t recommend them highly enough. Their process is seamless, simple and quick.
There are other upsides to using a top tier provider like PowerPay as well. Because they handle everything in house, there are no application fees or setup fees like there is with third party providers – and sometimes even banks. So you are nothing out of pocket by applying.
We don’t want to sound too salesy here, and you are more than welcome to use any merchant account provider you wish, but if we can help you avoid 4-6 weeks of unnecessary paperwork and stress, then we recommend you take a look at PowerPay.
They have also put together a great FREE report for you on the ‘10 Biggest Merchant Account Mistakes: And Why You Need to Avoid Them!’ Make sure you grab it.
I don’t know about you, but getting a service that costs nothing to setup and increases sales conversions – sounds like a no-brainer to us!
If you have a website that is making sales and you don’t yet have a merchant account, go and apply for one now and stop missing out on those extra sales.