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    • Mon Mar 17, 2008

    PayPal as a serious ecommerce tool

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    PayPalPayPal has been around now for quite some time. It’s always been a choice for Internet marketers looking for easy ways to get and send money. Then eBay purchased PayPal and pretty much made it a household name for people doing all sorts of commerce on the Internet.

    Many people are familiar with PayPal only as an easy way to send and receive payments online to and from PayPal users, but they offer so much more. As a business account holder you can set-up a full suite of online tools and accept many forms of payment, including standard credit card transactions, from non PayPal users.

    About a year ago PayPal purchased the real-time processing gateway from Verisign, a proven name in this field, and completed, in my opinion, the total online and offline ecommerce solution.

    Reliably and securely accepting forms of payment over the Internet is a bit of a feat really. There are so may moving parts that must be hooked together to make it work.

    At the very least you need:

    • Internet merchant account to accept and process credit card payments online
    • Don’t forget that you’ll need American Express and Discover account separately
    • PayPal account integration to offer the PayPal payment option for PayPal users
    • ACH account if you want to accept checks online as a form of payment
    • Real time processing to get authorization of those cards instantly during a transaction
    • Secure shopping cart to offer products and services and shopping experience safely
    • Delivery mechanism for any digital products

    In many instances ecommerce sites get the tools above working by linking together up to five separate vendors with five different fees attached.

    If you are in this boat or considering ecommerce for your online marketing take a good hard look at PayPal for your merchant account, gateway and perhaps even shopping cart. They have put together a tool called PayFlow Pro that works very well with many shopping carts and are very aggressive with merchant account and gateway fees, including currently waving set-up fees that can run in excess of $500 from some vendors.

    At the very least it has become a standard practice to offer the PayPal Express Payment option and equip your shopping carts with the code to hand a payment off to PayPal from a PayPal user.

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    Posted by: John Jantsch on Mar 17, 08 | 5:05 am
    Category: Internet Marketing, online marketing | Tags: , , ,

    « Creativity is a wonderful motivator | Home | Personal branding is a decidedly human endeavor »
    • I disagree with using JUST PayPal for your ecommerce payment solution.

      Micro-payment solutions are the next wave of payment processors, and the longer PayPal is around and continues to act as the bully on the block, with it's heavy-handed customer service, the more that other payment solutions will become necessary.

      PayPal is all I use right now, but I am currently setting up other payment processor options, for reasons mentioned above.

      Thanks,

      Dan
      http://marketersrelief.com
    • Considering the recent problems with Paypal, before you commit to using Paypal only you need to make sure you understand their Terms of Service (TOS). I know a number of Paypal users that have had big disputes with Paypal
    • John Jantsch
      Dwight,

      Share some specifics - it's easy to cite "recent problems" - I'm not familiar with any.
    • Weak customer service is a price we pay for digital transactions. I am not condoning poor service, but after 15+ years, I have accepted this reality as a nature of the beast.

      New companies have something to prove and will provide better care in the beginning when wooing new customers. Then service will slide, forcing users to depend on automated CS and limited live help. This is the cycle.

      My complaints about PayPal are no different, but they are secure and the rare snafus are just a cost of doing business online.

      Just another opinion.
    • And thanks for the info John!
    • TimW
      PayPal will freeze any money you have in the account if you happen to sell something they decide is against their TOS. I had over $500 frozen for six months. I've also had friends who had money removed from their accounts when a recipient "complained" they never received the item my friends shipped to them.

      If you DO have PayPal, remove the money to your bank account as soon as you can.
    • Jon
      PAYPAL IS NOT A BANK. This is the most important thing you need to know when dealing with paypal.

      If you treat your paypal account like another savings/checking account you'll probably get boned. If you understand that they're not a bank and don't have the rights/responsibilities to account holders associated with banking, then you'll do okay with paypal from a consumer or business perspective.
    • Thanks for starting this conversation John.

      I would like to use PayPal for accepting recurring payments in a membership site. I know this is possible, but I've been told that...

      1) If one of your membership site customers decides to bow out by canceling their recurring payment, that PayPal does not have a mechanism for automatically notifying me of this change so that this customer's membership site login details can be adjusted accordingly.



      2) If the PayPal customer changes their primary credit card, or if the expiry date on their card is not kept current, that the recurring billing also stops, again without any notification to me.

      Are these concerns valid... or can anyone suggest work around solutions?
    • Tim
      The best approach is to consider 2Checkout.com AND Paypal, possibly offering both. I've used 2Checkout.com for almost a year with zero problems and great customer service. They offer everything PayPal does and make a great alternative to consider to PayPal.

      For myself, I've never had a problem with PayPal which I use to handle payments for software development charges from programmers. But I've seen so many complaints it makes me think something is fundamentally wrong with how PayPal does business in some cases. That's why it is important to have at least one alternative to consider so you pick what works best for your business.

      Beyond 2Checkout.com and PayPal is WorldPay, a European company that has slightly higher standards and costs compared to 2Checkout. But there must be others, as well, that are legitimate alternatives to PayPal for people to consider. I tell my clients to look first at their current bank to see what they offer. And QuickBooks, which a few of my clients use, also offers a payment gateway bundled in at a somewhat reasonable cost.

      Finally, it would have been ideal if this post included some of the hurdles small businesses have to cross to qualify for these services, as well as policies like holdbacks which happen both to verify charges are legit and as minimum amounts you have to earn before they'll pay you your money.
    • John Jantsch
      The comments here are really interesting. I've been using PayPal in one way or another since 2002 and never had anything but great results. The level of dissatisfaction in some of these comments makes me wonder.

      I do think it's always a good idea to have a back-up plan and your local bank is a good idea - thanks Tim for mentioning and 2Checkout and Quickbooks as well.
    • Correct, you should make daily withdrawals to savings or checking aoccunt associated with your PayPal account if you're processing a lot of money through PayPal.

      That's just prudent.

      Thanks,

      Dan
      http://marketersrelief.com
    • I have never had a problem with PayPal as a merchant, but as a user I found that they had loose description of fraudulent transactions. (I could not get a refund on a stolen software key, even though developer of the software said that it was stolen, because the seller never claimed that it wasn't stolen.)
    • I have to say we have not had any of the problems described above. We have a websites payments pro account that we use to process the monthly charges for our online services. We also have an option for people to pre pay their accounts with PayPal Express.

      So to say that we run a large number of transactions through PayPal would be a drastic understatement, and I have had nothing but great success with the system. I already transfer money every few days, but not because I didn't trust PayPal (because of interest - which is non trivial with an online business of our size).

      I guess I would be curios to see what the specific issues arose that caused these issues. Was the person selling a product that was against PayPal's terms of service? Or are most of these issues relating to one person selling something on e-bay to another? I imagine issues could arise much more easily there because you have an used product that the buyer's expectations may be different then the seller's. That doesn't seem as likely in a tradition retailer (or especially someone like us who sells an online service).
    • I have had to setup a merchant account for a client in the past (more of a favor really). It really is a pain to get everything set up from scratch. I have not had any problems with paypal thus far (and neither has my client) but after reading the comments on here I am also starting to wonder. I don't have any experience with
      2checkout but I'm certainly going to look into it!

      Great post and very informative comments, thanks guys.
    • What do you think about using google checkout - http://checkout.google.com? Also, Google Checkout is an excellent opportunity for non-profits as they are processing charges for free until 2009 - https://checkout.google.com/seller/npo/
    • Nan,

      Don't you think Google Checkout is sort of a different thing? I mean with Websites Payments Pro you can process credit cards without ever sending the customer to PayPal or anything (ie. you have complete control of the transaction). It seems to me GC is a good add on, but shouldn't be the only option available to a customer.
    • You're right that website payment pro keeps a more consistent brand look. On the other hand, Google Checkout is less expensive when billing less than $100k per month. I'd have to see what data there is showing how important it is to customers to have a consistent brand look during checkout.
    • the best strategy is give customer as many payment options as possible. paypal, google checkout, creditcard, moneybookers, even egold.
    • I haven't had any problems with paypal. I have heard the horror stories and I use several different pay processors. I feel that their anti-mlm/network marketing stance is really oppressive. But I do my best to protect my PayPal account because it is so fast in paying. I also like the debit card that comes with the merchant account. That has been truly helpful. So I'll be keeping PayPal but I keep my eye out for other solutions.
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