PayPal and the alternatives

How much will I gain if I add another merchant?

[dwhite]

Are there any stats on sellers who have replaced PayPal with an alternative merchant?

I've done some research at WebmasterWorld, and this person doubled his sales by switching to an alternative merchant:
[webmasterworld.com...]

But on the other hand, I've heard the reverse, where PayPal can gain on alternatives. For example, see Brett's post at:
[webmasterworld.com...]

I suppose, in the end, it depends on the cost of the product.

At the moment, my business is only small, and the product (10 pounds each) doesn't sell very well (only one unit per month). I would be grateful for any advice from those who sell a product similarly priced, and who have experience changing/adding another credit card merchant.

Finally, if I do change/add another merchant, should I use it to completely replace PayPal on my site, or is it advisable to have both? What would be the advantages with having PayPal and a merchant together (as opposed to just the merchant)?

[Ankheg]

I sell products and services in the 20 USD and less area. I started with just PayPal, then added 2CheckOut. In the two months since adding 2CO, I haven't had a single customer pay with them.

I still believe it's a good idea to offer people a choice, though, which is why I'll soon be adding PaySystems and ProPay...

Don't get rid of PayPal, whatever you do. For existing members, it's the easiest way, bar none, to pay someone. The problems arise with new, and non members. :)

[Perplexed]

I think the important consideration here is "Who are your customers?" If they are likely to be people who regularly use ebay etc and are likely to have a paypal account already then it is a "must" to use paypal..... If they are likely to be people who would not necessarily already belong to paypal then an alternative is crucial.

Safest bet must be to have both, and possibly put a little explanation on the page saying why you are offering both.

[Perplexed]

I suggested in the last post that dwhite could use both and put an explanation, I have been giving this some more thought. I stand by the suggestion but I think the wording of the explanation would need some careful thought. For instance....

( paypal logo )The easiest methoud for current paypal members.

( paysystems logo ) the easiest methoud for non paypal members.

Could cause some agro from one or both parties. I am not sure that they would have any legal reason to complain ( though it is possible ) but it is worth thinking about.

[kwngian]

I find PAYPAL lead time for withdrawal painfully slow, 5-7 days to get your money.

Any faster alternatives?

How trustworthy is PAYPAL? I remember reading some negative report about them... can't really recall.

Thanks

[Perplexed]

There are whole forums devoted to paypal bashing and they are obviously full of complaints... but then they would be wouldn't they. I have also read thousands of good reports about them. many of them on this site.

[shmekkyl]

Limiting your customers to PayPal on an e-commerce site could raise your abandonments. If a customer doesn't have PayPal and is forced to go through and sign up, it is more time then a lot of customers are willing to take.

The problem with a 3rd party merchant account such as 2checkout, is that when people get their statements, 2checkout shows up as the biller. This hurts you for two reasons. First, the customer will not see your name again on their statement (hurts brand recognition). Second, a lot of times people forget what they bought from 2checkout and might file a chargeback, at which point you get hit with chargeback fees.

I always use seperate merchant accounts for every store I open and have been happy with the results.

[dwhite]

Thanks all for your feedback. Either way then, I'll stick with PayPal, as people seem to be getting more and more used to it. (I might add another merchant later though).

Ankheg: I'd be interested to know how well you get on with adding Propay and PaySystems to your shop.

To be honest, it'll be a relief when everyone uses and accepts PayPal. Monopolies aren't always a good thing, but it's so convenient and cheap compared to the others :)

[Jenstar]

I find PAYPAL lead time for withdrawal painfully slow, 5-7 days to get your money.

You can get a PayPal debit MasterCard, and you can withdraw cash from an ATM, or use it like a MasterCard.

[Jenstar]

The problem with a 3rd party merchant account such as 2checkout, is that when people get their statements, 2checkout shows up as the biller.

Actually 2Checkout shows up on a customer's credit card statement as 2CO.COM*YOURNAME - I use my URL for my name.

2Checkout also has a process for customers to followup on charges on their credit card, incase they have forgotten what the purchase is, using the information from their statement.

I also believe PayPal allows your company name to show up on a customer's credit card statement, but I think it limits you to 7 or 9 letters.

There are whole forums devoted to paypal bashing and they are obviously full of complaints...

Something to keep in mind is that the dissatisfied customers are always much noisier than the happy ones. Why would someone go to the trouble of making a PayPalRocks.com site, LOL. But if you ask around, you would probably find most users are perfectly happy with PayPal.

[Ankheg]

I've just added paysystems (they're having a free sign-up deal for existing 2CO customers, so, yay) for the services I offer; It wasn't hard. I hope to get it added to OSCommerce today, when I get a chance. I don't know whether anyone'll actually use them, but... Choice is good, and for free, you can't really go wrong. :)

[amznVibe]

I am not sure what y'all are talking about on a couple of PayPal issues. I have setup at least a dozen smaller sites with their free cart and subscription service and for the price (free) it can't be beat.

First, you can withdraw your money from paypal instantly using their debit (checking mastercard) and not only do they not charge you, they give you 1.5% back. There is no waiting period and they have better online records than any bank I have used.

Secondly, there is no "long signup process" for non-paypal members. The only difference is you type in your email address and desired password to pay when paying the vendor, along with the credit card info as normal in any payment system. The person paying you does not have to list a checking account etc if they do not want a full blown paypal account. It's a simple one page form.

Any smaller site that only has a couple dozen or less static items to sell really needs to look at paypal before they mess with any kind of software cart system, plus the repeating cost of a (fully compatible) SSL certificate.

[Fighting Falcon]

Its seems that people have a love/hate relationship with paypal. As a shopping cart software provider we decided the best way forward is to separate paypal payments from other credit card payments...so those that already have a paypal account can use it and those who have never heard of it or simply just hate it can use one of the other credit card companies. Paypal certainly is different enough to be treated as a separate payment method on its own.

[shmekkyl]

Secondly, there is no "long signup process" for non-paypal members. The only difference is you type in your email address and desired password to pay when paying the vendor, along with the credit card info as normal in any payment system.

Any extra process can lead to abandoned cart rates. If the customer can enter all the information on one form, rather than 2, conversions will improve.

I'm not saying PayPal will kill conversions, but I am saying that having a seperate merchant account with an option for a customer to use paypal if they wish, should show at least a minor decrease in abandonments.

[Jenstar]

Any extra process can lead to abandoned cart rates.

This is true - for customers who are current PayPal users, using PayPal is a breeze. But for those who haven't used PayPal before (and might not have even heard of it before) having any extra steps (i.e. having to decide whether to just pay or become a PayPal member) can cause abandoned orders.

I use PayPal on one site, and rarely have anyone ask for a non-PayPal payment option - but then all the purchasers are people who almost always have a PayPal account already. And some of those customers simply want to pay out of their PayPal balance rather than using a credit card.

Don't forget to think about your users. The scenario I describe above is a niche market where most purchasers already have a PayPal account, so it works easily. But if your site caters to internet newbies, using a non-PayPal solution would likely make more sense from the visitor's point of view.

[shmekkyl]

Having both on there would be an ideal solution. People who prefer to use PayPal can easily do so. Everyone else can skip right over that part.

[amznVibe]

Considering amazon.com is about to offer a similar system to paypal [webmasterworld.com] and they have almost 30 million customers with cards on-file right now (as well as a fairly trusted name) I plan to put them as an alternative checkout right next to the PayPal click for smaller sites.

I still don't see why a smaller site would go to the hassle of having their own card services, suffering higher processing rates and annual ssl costs (as well as hassles with financial password management etc). You either have products that movtivate a person beyond their tiny minority of hangups over PayPal or you have products that the customer wasn't really interested in the first place.

I guess other folks have different experiences but I get REALLY nervous entering my credit card into into a smaller sites on their own merchant system. I go so far as to look at their SSL & domain registration etc. but I doubt I am the typical consumer in that regard. I'd personally use a site that involves a known 3rd party like PayPal or Amazon anyday over a "black-box" merchant checkout solution.

[shmekkyl]

Good point. However, I currently have a PayPal account that I only use to accept money and don't like to use to pay out (for my own personal accounting purposes). I do not have an Amazon account.

Now, with that being said, if I went to a site that only accepted the 2, before buying, I would look for another that accepted regular credit cards. If and only if I couldnt find the product for a similar price with better payment terms, I would still buy from the original site. But the fact of the matter is that you now have me off of the site, looking for competition, which I may find a better deal or a site I would prefer to shop from.

This is all a numbers game. Anything you can do to close an additional percentage of customers is a good thing.

I have worked on over 150 e-commerce stores and sit on the board of directors of an association of store owners and am a moderator and senior member on a forum of about 3,500 stores. I would say that 99.9% of all of them use their own merchant accounts. Many also have the PayPal option (but like I said - its a good thing to have both), but I would say that a mere 0.01% of those 4,000+ stores use only PayPal, and I wonder how their sales are. I am by no means flaunting my experience, but I wanted to back up my statements with some statistics.

[Jenstar]

One positive thing Amazon has going for them in introducing their own payment service, is so many people know the Amazon name. In particular, many internet newbies who have spent limited time online have heard of the Amazon name, and will have a certain amount of "word of mouth" trust in the Amazon name.

PayPal is certainly mainstream in the online world, but not many newbies have heard of it, and likely none have heard of 2Checkout etc. When someone new to online payments has a choice, I would be willing to bet that many of them choose Amazon, simply based on the name recognition alone.

Chances are, I wouldn't use a payment service like Amazon (unless my customers demanded it), but I would be willing to bet that someone like my mom, who is definitely an internet newbie, would choose Amazon everytime - and that is even after I made her get a PayPal account when she was bidding on something on eBay ;)

[Perplexed]

I guess we will have to wait and see how the Amazon thing pans out but my big feeling at the moment is that people are now getting used to using their credit card online. If Amazon makes you join it first before you can use it then I dont think most people will bother ( barring those with a vested interest like ebay users with paypal )

Why would anyone go to the bother of doing two actions ( joining paypal and then paying for the goods ) when you can do it more simply on a merchant account.

The vast majority of people who buy goods or pay for services ( membership etc ) will have little knowledge of third party SSL layers etc. Paysystems, worldpay et-al have plenty of users ( or so I believe )

[nubbin]

Hi,

Thought you might be interested in my experience of Paypal which was good to start with but is now giving me serious cause for concern.

I have a web based business selling antique maps and prints. We sell hundreds of items a month and we have used Paypal to accept credit card payments for over 2 years. We noticed a big rise in sales once Paypal got popular.

However, Paypal leaves you very exposed to fraudulent chargebacks, especially if you are not based in the USA. We have had several bad experiences recently of customers telling Paypal they did not receive our goods and claiming their money back - even though they had emailed us to say they were very pleased with the items. I think some dishonest people have spotted this loophole. I guess a lot of US businesses also face a similar risk as the conditions for Paypal offering seller protection are very stringent (e.g. customer address needs to be verified by Paypal) and unlikely to be satisfied in many transactions

Has anyone else had this problem and worked out how to deal with it?