I have been working with a client who wants to be able to sell her products online and in order to do so, I have done a bunch of research which I thought I would share with you.
Her main criteria is that when her customers make a purchase from her website, she does not want them to “leave” her site. An example of this is using paypal. When you select your item to purchase, you are then re-directed to the store’s paypal account, where you need to either submit your cc info or login to your paypal account directly.
So in order to set up her store so that her customers don’t leave her site, we need to find an alternative to the standard paypal account. There are many other solutions available for example: authorize.net, paypal proflow, eWay, iDeal, First Data ect… However, I soon learned that although these solutions offer a payment GATEWAY, you still need a merchant account.
A payment Gateway is the secure method in which a buyers credit card is processed. The Merchant Account is where the funds from credit card are delivered. Because you will have to set up an online merchant account (likely with your bank), each sale that you make is reduced by the fees from the gateway and the merchant account (bank account)
In order to reduce these double fees I have determined that Paypal’s s Website Payments Pro is the best solution for my client. She will be paying $0 set up fee (other fees I have been quoted are $100- $250)
She will be paying a $30/month flat fee (other’s are anywhere between $25-$59) and a low transaction fee of 1.9%-2.9% (other transaction fees I have been quoted range from $.10 – $.25)
The only downfall of using Payment’s Pro is if she needs to transfer funds from her paypal account directly into her bank account. There is usually a transfer fee. If however, she is able to use her paypal income to purchase supplies, shipping or materials then she will not need to transfer funds into her bank account, she can make those payments directly thru her paypal account and not incur a fee.
I hope this gives a bit more insight on how e-commerce works and would love to hear your comments… What gateway do you use? What are some of the fees your bank charges for your merchant account?
Archive for December, 2008
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DEC