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Why PayPal?

Without online bill paying services, in order for a business to accept credit cards it would first have to obtain a merchant account. In order to utilize this merchant account online, the merchant would then have to set up a secure server, obtain a secure certificate, and set-up a shopping cart & checkout system.  Even with turnkey solutions, this proposition doesn't come cheap or hassle-free.

Most online payment services charge the seller, and most fees are based on the purchase price of the item being sold.  Fees typically range from 1.75% - 3% of the total transaction price plus a fixed cost for the transaction. Then there are "hidden fees" such as statement fees, monthly minimum fees, "non-qualified fees," etc. God forbid you're a site that doesn't sell many goods -- you may end up paying more in fees than you make on selling your items!

Companies like PayPal can help marketers by reducing unwanted costs and freeing up funds to spend on promotions instead. With online bill payment services, there are no monthly merchant charges -- the merchant is merely charged a percentage fee and a set transaction fee per sale. All transactions happen electronically, from the funds being charged to the purchaser's credit card to the depositing of the funds into the merchant's online bill payment account to fund transfer requests (to
transfer funds from bill payment account to bank account).

PayPal Sets the Standards

PayPal is by far the biggest success story of the bunch. Its current 17 million member base, including 3 million business accounts, is growing by an average of 28,000 new accounts per day. In the second quarter of this year PayPal handled a payment volume of $1.61 billion. PayPal has even taken online transactions one step further, by now offering organizations the ability to eliminate all the up-front costs of ecommerce through its PayPal shopping cart system.

PayPal's shopping cart system enables organizations to start selling products, services or taking donations with very little effort. Like other shopping cart systems, transactions are secure. When you have received payment for a sale, PayPal sends instant notifications via email. 

To take advantage of PayPal's shopping cart, the first step is to sign up for a free PayPal business member account.  Because PayPal handled bill payments electronically, be advised that you will need to provide a bank account number for funds to be transferred into. Once your account is set-up and your bank account verified, you set-up your shopping cart. The system allows for sales of single or multiple items, but if you feel you don't need an entire shopping cart system you may also create "Buy" buttons and links. PayPal then generates HTML code for you to incorporate the shopping cart or Buy Button into your website. Your shopping cart is activated immediately.

Fees & Reporting

PayPal's fee schedule for business members has two different  rates depending on the amount of business you are doing. The Standard Rate is 2.9% of the transaction price + a $0.30 per transaction fee. The Merchant Rate is 2.2% + $0.30. Three options exist to qualify for a Merchant Rate:

1. being a PayPal member for at least 90 days and have received $3,000 in PayPal payments over the previous 90 days (an average of $1,000/month)
2. being a proven long-standing, high-volume eBay seller (eBay user ID and password must be provided on the Merchant Rate application)
3. having received a competitive offer from an established merchant account provider

PayPal also offers its own debit card, and if a customer pays using a PayPal debit card, PayPal will deduct 1.5% from your rate.

PayPal provides downloadable full transaction reports into any spreadsheet, Quicken, and Quickbooks.

PayPal Shops

PayPal has also created its own shopping site, "PayPal Shops," through which you can increase your store's exposure to the rest of the PayPal community and increase your chances of sales.  By virtue of accepting PayPal payments, you can be included into PayPal Shops. Shop listings are ranked and displayed on-screen by sales volume.

As a marketer, online bill payment services now provide ways to handle credit card transactions, e-commerce enable your site, and sell product. They're a good and growing option to know about.

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