Category: Payment Gateways

Did you know that Paypal lets you send money for free to the receiver?  The 3.5% Service Charge does not apply when you use this feature.
Reasons why you might want to use this feature?

1. You don’t need to send an electronic invoice to someone (a simple PDF invoice will work) – and she is willing to pay you through this method.
2. You are not using a shopping cart.  You are simply sending money.
3. You are sending money to friends and family and they don’t want the 3.5% fee to reduce the money they are receiving from you.

Two requirements in order to be able to do this are:  a)  You both have a Paypal account  b)  The money you are sending must already be in your Paypal account.

STEP One: Login to your Paypal account and click on the Send Money Tab

STEP Two: Make sure you are using the Personal Tab which looks like the screen shot below.

In order to accept payments on your website, you will need 3 things:

1. A Merchant Account – This is usually a separate bank that specializes in handling credit card transactions. This is not the same as your business checking account.  Your bank will usually recommend a company that they prefer to deal with. However, you do not need to go with their recommendation.  Shop around for the best deals because the fees and charges vary.  Caveat:  Some of them will want you to sign a contract with them for two years so read the fine print.
2. A Payment Gateway – this is usually a third party that handles the money transactions.  They usually have software hooks that your website will need to connect  with.  This is a very technical piece.  You will want a skilled programmer to do this.
3. A Shopping Cart – Software that gives your site a functionality as simple as a “Buy It Now” button or a complex shopping cart a la Amazon.com

Payment Gateways

Authorize.Net: This was a standard gateway we have used for Windows-based websites we had built for the 12 years.  A gateway is software that is a set of programming interfaces that a programmer can write hooks that connect it to your web page software.  This type of tight integration is a big deal because you need a shopping cart that behaves well.

An integrated cart means that your customers never notice anything unusual except for them being able to “add to cart” and “continue shopping.”

In a lot of ways, the Amazon.com shopping cart model has created the standard for all shopping carts being used today.

Pros with the Authorize.net gateway	Cons
It integrates well with your website because of the programming hooks provided	Technical to setup.  Usually needs a skilled programmer to do it.
A programmer can really customize your cart the way you want it.	Setup Fee and Monthly cost for the gateway.  This is in addition to the cost of the transactions on your site.
Because of its programmability, you do not really need a shopping cart metaphor to be able to create a money transaction.  You just create a button that gets clicked on which submits the transaction.	Needs Programming.

PayPal Payment Gateway: PayPal is a good all-around e-commerce solution when you think about it.  You have a valid email address, you sign up, hook up your bank account, they validate you – voila.  You’re in business.

Pros	Cons
No monthly fees
No setup fees	Per transaction fees can be high if you have a high volume of transactions.
No additional software that needs to be custom-programmed
Don’t need a website to collect money
Money drops into your PayPal account immediately

Note: Merchant accounts usually have a delay in the transaction processing.  One of our clients used to complain that sometimes it would take 4 days for a transaction to finally hit their bank account.  It seemed particular to online transactions only.  The card swipe terminals they were using however, dropped the money in their bank account immediately.

If you are just starting out in your business – this is a good, no fuss option for you.

Shopping Carts

Shopping Carts and Gateway Software are not the same. A cart is a software metaphor for the carts we use at the department store.  A Gateway is the software elves in the back room doing what they do in order for the payment to get to your bank account.

PayPal Shopping cart – PayPal is not only a Payment Gateway but also a provider of its own shopping cart.  However, there’s a bit of a flaw in its implementation.  It’s great if your customers only need to buy one thing.  However, this can be annoying to a customer trying to purchase more than 1 item because it will take your customer out of your website after each click.  We have people saying, “I don’t like PayPal” because of this feature.

GoDaddy Shopping cart – An external shopping cart that lets you have multiple items and categories.   There are pros and cons of using this type of shopping cart. The pro is that you will not need special programming to use it.  This can save you a lot of money.  The con is that unless your products are self-explanatory, you may not have much of a chance in educating your prospective buyer.  This could have a drastic impact on your conversion ratio.

WP-eCommerce Cart – An excellent WordPress shopping cart plug-in that is gaining world-wide acceptance.  It has a free version that is so robust with features that you may never need to pay for the full version.  The free version integrates so well with the PayPal Gateway, you end up with a very useful combination that does not cost you maintenance fees every month.  The professional version is worth the upgrade cost if you want to support other gateways like Clickbank, and some other technical features that is outside the scope of this discussion.

This is the shopping cart we bundle with our E-Commerce websites.  Take a look at ReverseHealthProblems.com to see working example.