Alternatives to PayPal
Not all sellers like PayPal. Some dislike the (perceived) high transaction fees; some dislike the way PayPal operates; some simply don't like being locked into yet another service owned by eBay. Fortunately, there are alternatives.
Many sellers now accept payments by BidPay (www.bidpay.com). BidPay shown in Figure 16.3, is an alternative to PayPal that also lets buyers pay via credit card. In fact, BidPay operates a lot like PayPal, with a slightly lower 2.5% transaction rate—plus a slightly higher 50-cent per-transaction fee.
Figure 16.3 An alternative to PayPal—BidPay, by Western Union.
Here's a PayPal alternative that isn't really an alternative. Google Checkout is an online payment service that lets retailers accept credit card payment for their sales, just like PayPal does. It's even lower priced than PayPal, with a transaction fee of 2.0% (versus PayPal's 2.9%) and a per-transaction fee of 20 cents (versus PayPal's 30 cents).
Given these substantially lower rates, you'd think that Google Checkout would be a great alternative for eBay sellers. Alas, eBay won't let you accept Google Checkout for your auction payment. (eBay owns PayPal, remember, and may not be inclined to endorse a competitor.) While this situation may change in the future, right now Google Checkout simply isn't an option for your eBay listings.
Merchant Credit Card Account
If you're a high-volume seller, you may be able to get a lower per-transaction rate than that offered by PayPal by signing up for a merchant credit card account from a traditional banking or financial institution.
However, there are a few issues around establishing this type of traditional merchant credit card account. First, it's more hassle than signing up for PayPal; you may have to submit various business documentation and possibly have your own credit checked. Second, getting everything up and running may also be more involved than simply plugging into the PayPal system. And finally, upfront or monthly fees may be involved.
That said, if you can save half a point or more on every credit card transaction, it may be worthwhile—if your credit card volume is high enough. Most merchant credit card services have rates in the 2% to 2.5% range, which beats PayPal's standard 2.9% rate—but is no better than PayPal's rates for high-volume sellers. Still, many eBay sellers prefer to handle their credit card processing directly, without having to rely on the PayPal service.
If you're interested in establishing a merchant credit card account, here are some services that specialize in providing credit card services to online merchants:
- Cardservice International (www.expandyourbusiness.com)
- Chase Paymentech Solutions (www.paymentech.com)
- Charge.com (www.charge.com)
- CreditCardProcessor.com (www.creditcardprocessor.com)
- Fast Merchant Account (www.fast-merchant-account.com)
- Merchant Accounts Express (www.merchantexpress.com)
- Monster Merchant Account (www.monstermerchantaccount.com)
- ProPay (www.propay.com)
- Total Merchant Services (www.merchant-account-4u.com)
And here's another place to check out—your local wholesale club. That's right, both Costco and Sam's Club offer merchant credit card processing to their business members, at affordable rates.
For example, Costco offers credit card accounts to its Executive members through Nova Information Systems. Costco waives the $25 setup fee and offers a discount rate of just under 2%. (Of course, the Executive membership itself costs $100, so you'll need to factor that in, as well.) See the Costco website (www.costco.com) or call 888-474-0500 for more details.
Oh, and when you inquire, ask about all applicable fees. In particular, check on software integration fees, monthly virtual terminal fees, and the like. You may also have to hit monthly minimums or pay an additional fee. Bottom line—sounds like a good deal, but check the fine print before you sign up!