Show Me the Money: Setting Up Payment Methods

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Posted by Sally Curran January 24, 2009 at 21:42:17:

In reply:
Setting Up Shop: A Checklist for New E-tailers posted by Jennifer Schiff January 24, 2009 at 18:18:32:

Original text: E-commerce has come a long way, baby, over the past 10 years or so, with prospective online business owners having more options than ever before when it comes to where and how to ..

Time and time again, studies show that offering alternative payment methods increase sales (see related articles). After all, the more payment options an e-tailer offers, the more likely it is that shoppers will find a method that makes them comfortable with making a purchase online. And not everyone wants to share a credit card number on the Internet, even on a secure site.

As a shopper, you've likely used several of the more popular payment methods yourself, but when setting up a Web shop, exactly what do you need to do to provide a choice of payment methods to your customers? We outline the steps you need to take to incorporate three popular alternative payment options — Bill Me Later , Google Checkout and PayPal — into your e-business.

Bill Me Later

Bill Me Later is an alternative form of payment that according to Vince Talbert, Bill Me Later's vice president of marketing, has 3 million users on 700 sites and 300 call centers across the world. He said his company offers a lower cost (than credit cards) and assumes the risk of fraud for both merchants and consumers (thereby guaranteeing merchants get paid).

Bill Me Later requires a merchant account, which is simply a line of credit a bank extends to a business so that it can accept payment by major credit card. If an online merchant decides to incorporate Bill Me Later into his site, Talbert said it's a fairly straightforward process. Simply contact Bill Me Later; a representative will lead you through the task required to fold the requisite data into the existing merchant account.

To get it up and running on a site, Talbert noted, is a two-fold process: One, there is some basic HTML work; and two, you'll need to complete some merchant processor database work. For instance, Bill Me Later provides sample code, including promotional messaging and a checkout screen that e-tailers use at their site. The Bill Me Later authorization response is designed to work just like a card authorization response to make it easy for merchants to store it in their systems. Merchants need to store the code for the response in their fulfillment/order management system so they can generate settlement requests just like they do for credit card processing.

Talbert said that the advantage Bill Me Later offers over its competition is that it is just as simple, if not more so, than a Visa or MasterCard transaction on both the front and back end. Consumers enter just a small amount of identifying data (a birth date and the last four digits of your Social Security number), and according to Talbert, authorization usually occurs within three seconds.

Google Checkout

Google Checkout allows merchants to charge customers' credit cards, track orders through the fulfillment process and receive order payments in a bank account.

Unlike Bill Me Later, according to a Google spokesperson, Google Checkout does not require a merchant bank account. There are a range of integration options that correlate to various business needs, the spokesperson said, and you can integrate Google Checkout via Buy Now buttons, off-the-shelf shopping carts or the Google Checkout API (application program interface).

To integrate Google Checkout into a site, you must first obtain a merchant ID through the a simple Google Checkout sign-up process. You then simply copy and paste some HTML into your site. To avail yourself of more advanced features, such as different tax rates and the application of digital signatures, you must use either the provided HTML API or the XML API. For a bare-bones sort of application, you can also paste Buy Now buttons onto your site. After clicking Buy Now, a buyer signs into Google Checkout to confirm payment and shipping information. The merchant then processes the order through the Google Checkout Merchant Center.

The Google spokesperson said that Google Checkout's advantage is that it "enhances the effectiveness of [the] search and ads products...Checkout helps drive leads with the AdWords badge [and] increase conversions." Google also offers fraud protection that ensures sellers get paid for all orders that meet certain requirements. The spokesperson also said that Aeropostale, a clothing retailer, found that more that 90 percent of buyers who use Google Checkout on its site are new or have increased their purchasing.


One big advantage to using PayPal is its sheer number of users. According to J. Stephen Pope, a writer for the site Top7Business , there are 85 million PayPal accounts, with one in every three American online shoppers having a PayPal account. Another advantage is its flexibility. For example, payments can be made in six currencies.

Depending on the exact version of PayPal you integrate into your site, you may or may not need a merchant account. In fact, some versions of PayPal actually serve as merchant accounts. Check out PayPal's Merchant Services page for details.

As mentioned, PayPal offers many options of its well-known service. To integrate the Express Checkout, for example, you can use the PayPal API. There's even an integration wizard that will help you generate the appropriate code. PayPal notes that the "simplest, most straightforward" route to adding PayPal to a site is the Web site Payments Standard, a collection of HTML-based payment options. There are a few PayPal options that offer advanced features and therefore are a bit complicated; if you feel you're about to get in over your head, PayPal lists third parties that may be able to help. Take a look at both these and PayPal's menu of offerings on PayPal's Integration Center .

PayPal Set Up Easy, Affordable

Libby Hanna, who runs Simple Office Services, LLC, integrated PayPal's shopping cart into a client's site, Beaver Brook Transmissions . The site's proprietor actually has a merchant account even though PayPal does not require one, but Hanna said she decided to go with PayPal because of its simplicity and ease of use, as well as data security.

The first step in this case was to create a PayPal account. Next, she entered the details of each product into PayPal's site and copied and pasted the code that is generated into the code for the page. PayPal also provided the View Cart button code.

Hanna recommend the service. "PayPal PayPal is an excellent value," she said, "for a small merchant who doesn't want to pay the monthly fees of a merchant account."


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