Question
During the last month, I've been restructuring my book selling hobby to be a more successful business. One of the choices that I have been struggling with is deciding whether or not to accept credit card payments via PayPal. I have a business PayPal account, but currently have my eBay email account associated with a personal PayPal account. I have been offering small discounts to buyers who pay without a credit card. This policy has been frustrating to naive eBay buyers and, consequently, to me. My current plan is to eventually have a non-eBay websites through which I can sell and charge what I want and charge a premium for eBay sales.
Although the stock in my eBay store has diminished from hundreds of books to scores to a present count of under 20, I've been surprised that I continue to receive sales. I received an order today for $4.75 (including shipping). As has been frustratingly common, this buyer did not read my instructions and attempted to pay the (automatically-generated) PayPal invoice with a credit card. I ended up spending the better part of a half-hour sending messages to this buyer through PayPal and eBay to save 25% of my potential profit from this sale: the $0.46 PayPal fee. I would no longer be surprised if the buyer never responds and a get another "negative" feedback a month from now.
I was discarding old email messages and felt prompted to start this thread when I found an email from BillPoint (June, 2002) that may be of interest to readers of this forum.
Avoid Hidden Charges - use eBay Payments!
If you think it's cheaper to use PayPal - read this important information about confusing claims of discounted fees. Safeguard sales AND profits with eBay Payments!
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Spotlights on: c4kids - eBay Payments Featured Seller!
"eBay Payments is less expensive, easier, faster and protected. What more could a person want?"
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eBay Payments was "cheaper and faster". Most of the postcards sell for under $15.00, so the associated fee is only $.35. With other online payment services, it would cost twice as much they found. c4kids contends that sales went up 20-30% when they started taking credit cards. Dan buys on eBay and always looks for merchants that accept credit cards. It's easier and safer for the buyer, he says.
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eBay Payments saves you money - on small AND large transactions:
If you sell items for under $15.00 - the eBay Payments fee is only 35 cents. On a $14.95 transaction compare our fee with PayPal's and you'll find you pay twice as much with PayPal. While there is no significant difference in fees on larger credit card transactions, eBay Payments can save you a bundle with electronic checks. On a $100 transaction with a Merchant Account, eBay Payments charges you $1.60 in fees while PayPal charges $2.50.
Alas, BillPoint and PayPal have been assimilated by eBay, and the advantages of low cost credit card processing for small transactions as described above are no longer available. Or are they? Thoughts?
By the way, I recommend you read Dee W. Hock's Birth of the Chaordic Age (ISBN: 1576750744). Hock was the co-founder of Visa International. His often-dramatic memoir is filled with wisdom gleaned through living with integrity amid others who often behaved psychopathically. Hock shares the historic and visionary origins of the modern credit card as a way to "exchange value." His spiritual insights on how people can work together are antithetical to much of what we often see happening in our local communities, nations, and not surprisingly, at eBay. My copy, by the way, is not for sale.
Answer
I also enjoyed the all-too-rare Billpoint payment, because the rate was cheaper on low-dollar items. They just couldn't make any inroads into PayPal's popularity. At that time, I think maybe 40% to 50% of my customers paid with PayPal. I still had more people sending checks and money orders than paying with Billpoint. BP was not just not very popular with buyers.
When eBay bought PayPal, the number of customers paying with PayPal soared. Now, between 80% to 85% of my customers pay with PayPal. It's been that way for a long time now.
I have never placed any restrictions on the types of payments I will accept through PayPal. I can see why that would create problems. People either won't read your restrictions, won't understand it, or won't care and try to coerce you into accepting the CC payment.
If you state it clearly in your auctions that you will not accept CCs through PayPal and do not show any CC logos, then any negative feedback you receive is most unfair. But you can't prevent it.
I recommend that you start accepting CCs through PayPal to save yourself the hassles.
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Hell will freeze over before I give PayPal access to ANY kind of bank account and certainly NEVER my SS number. I do not now, or will ever trust those SOBs, even with ebay holding their leash.
As long as you do not sell common junk where there is too much competition, there should not be too much of a problem getting bidders for Non-CC paypal accounts. Tell them so send an E-Check if they are THAT much in a f*cking hurry to get their cr*p.
And if they really NEED to use their CC's - tell them to use BidPay.
You can also use a PROPAY merchant account, which is more money than PayPal, but worth the peace of mind.
Remember that PP intends to eventually ban Credit Card use altogether, as it has a lifetime limit on CC purchases. They want everyone to pay via bank funds, so they can skirt CC company fees.
By your post it sounds like you are SELLING books. SO if it works, DONT FIX IT.
If you are selling CHEAP books you are prolly better off with stores, or Amazon.
FOr higher quality stuff, try Alibris, where the bite is stiff, but you can get much higher prices than on ebay to compensate.
Answer
Originally Posted by Turtle
Alas, BillPoint and PayPal have been assimilated by eBay, and the advantages of low cost credit card processing for small transactions as described above are no longer available. Or are they? Thoughts?
I've read more of Steven Windwalker's Selling Used Books Online (ISBN: 0971577838) since I posted my previous message. The information in Windwalker's book is about two to three years old, but contains some suggestions on how to process credit card payments. In addition to PayPal and ProPay, Windwalker lists Intuit's branded QuickBooks Merchant Account Service http://www.quickbooks.com/services/mas/more.html as a viable option. At the time of writing (early 2002), this service was provided through Chase for $9.95 (per month?) plus $0.20 + 2.35% per transaction. Today, the service is provided through IMS (Innovative Merchant Solutions) for $16.95 per month plus $0.23 + 2.39% per transaction ($59.95 startup fee and QuickBooks purchase may be required). A discount rate of 1.85% is provided for card-swiped transactions (card reader purchase required); a premium rate of 2.99% is charged for non-qualifying transactions. I would guess that Internet purchases would be in the non-qualifying category. The $0.07 savings on each transaction would offset the monthly fee if you have more than 242 transactions per month or about 8 per day.
Has anyone investigated other options? I know that Costco Members ($45 per year) can use NOVA Information Systems to process Visa and MasterCard transactions (American Express, Discover, and debit card processing are available and fees may vary) http://costco.com/Service/FeaturePag...uctNo=10166089 They list a $4.95 per month fee and $25.00 application fee which are waived for Executive Gold Star Members ($100 per year). Per transaction fees are $0.27 + 1.99% for mail order and phone orders. Card-swiped transactions are $0.20 + 1.65%. Internet processing (viaKLIX) is available http://www.novainfo.com/products/software.asp but pricing details are not published as far as I know. I'll have to call to inquire.
Is there anything better out there? I want to have some ideas of where to go in the event that my sales volume increases ten-fold.
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> accept credit card payments via PayPal
There is no alternative for accepting real-time card-not-present online payments with better rates at this time. I have a Paypal and merchant account. Merchant account costs me more each month in fees than Paypal because not all transactions credit card transactions are processed at the lowest advertised rates. Then you get Discover and AmEx involved and your rates are even worse with them. You also pay monthly services such as statement fee, batch submission fee, internet payment gateway, which all add up.
At least with Paypal, it is a straight forward billing process. And since Discover and AmEx also fall under the same processing rates, I much prefer buyers to pay using Paypal on or off eBay. But whatever the buyer decides is fine with me - I always price things with worst case scenario in mind. If you are flexible with what payment methods buyers can use, that can be the difference between a sale or the buyer going to another seller.
As a baby step, accepting CC funded transactions via Paypal would be a wise move.
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Originally Posted by tekgems
As a baby step, accepting CC funded transactions via Paypal would be a wise move.
Thanks, I agree! I will start there. I know that PayPal has had a terrible record with mistreating their customer accounts as snakey mentions, so I'm hoping that there will be a viable alternative in the near future.
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One of the nice features of ProPay is no monthly fee.
Use it once a year, use it 6 times a day.
No monthly fee.
THAT, to me, was a major factor in choosing it.
OTOH, the initial monthly dollar-limit for transactions (I believe was $2,000 or and $500 per transaction) initially caused a few headaches for me, but I'm all set now.
If you don't plan on selling to one individual, an item MORE THAN $500, or selling MORE THAN $2,000/month, then I'd HIGHLY recommend ProPay. A tad more expensive than PayPal.
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Originally Posted by snakey
Remember that PP intends to eventually ban Credit Card use altogether, as it has a lifetime limit on CC purchases. They want everyone to pay via bank funds, so they can skirt CC company fees.
Snakey,
Could you please point me to the place in Paypal's user agreement or site that leads you to believe the above? I'm not picking nits- I believe you're probably right, but I'd like to read it for myself. Thanks.
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> I know that PayPal has had a terrible record with mistreating
> their customer accounts as snakey mentions,
Terrible? I wouldn't describe it as such. If you look at the total volume of transactions Paypal has conducted over the years and the number of issues surrounding those transactions, I think it is not as "terrible" as some may think. Paypal has had its share of issues, but reading horror stories on forum boards is not a good measure of a company's track record.
If you're looking for an alternative like merchant accounts, you may be disappointed at the level of service depending on who you go with.
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I've never trudged through all of PayPal's TOS, but 'common knowledge' has long been that PP has a lifetime cap on CC purchases, I believe it is something like $2000. Perhaps more.
If you think about it, it HAS to be.
The credit card companies themselves charge about 3%.
And PP was LOSING millions. But with a long term plan.....
There is no way PP can in the future expect to rake in the big bucks using CC's.
So they will play bait and switch.
As soon as PP becomes firmly entrenched as THE Ebay payment method, they will slowly start turning off CC access, so people will be forced to use their bank accounts.
And they will happily send out their new DEBIT cards....