Shopping online can be a risky venture, and that’s why many small businesses offer the use of eBay commerce service PayPal to their customers. By acting as an intermediary service, PayPal allows members to make purchases online without having to share financial information with multiple vendors, whose credibility they otherwise might question. Creating a PayPal account can increase the integrity of your website and trust in your small business.
Here’s what you need to know about PayPal:
How it Works
PayPal offers customers multiple ways to make purchases online. They can create a PayPal account where money is withdrawn from a PayPal balance, or they can link their account to a bank account, debit or credit card from which funds are withdrawn. For customers who don’t want to register with PayPal, you can offer the Website Payments Standard solution, which allows customer to make a one-time credit card transaction.
Eddie Davis, senior director of SMB Merchant Services for PayPal, says the service is ideal for small business owners because it’s easy to set up and many consumers consider it a safe and secure payment option. And also, because PayPal is available internationally, it can give small business owners the chance to expand their consumer base, Davis says.
Creating an Account
A small business can set up a PayPal account in three steps, Davis explains. First, you select a payment solution appropriate for your business. There are different options: Website Payments Standard or Express Checkout, for those with a PayPal account. Next, you’ll need to provide some basic background on your business. Finally, you can customize certain options, such as the payment buttons or the customer’s shopping cart.
Leland Brandt, who, with his wife, owns Baby Daze, a seller of organizational tools for new and expectant parents, first set up his PayPal account three years ago. Once confirmed with PayPal, Brandt says, the only regular maintenance was to check the account for deposits.
“Setting up a merchant account is free so business owners don’t pay a dime until they start receiving payments from their customers,” says Davis. Expect charges of $.30 per transaction plus 2.9% of the transaction. Depending on the cost of the goods or services your business offers, the transaction fee may not be appealing, but many business owners appreciate the straightforward fees system.
Brandt says he has come across several payment issues dealing with contested transactions before, but PayPal was very helpful in getting them resolved. He was given a unique ID number through the website and an 800 number to call, where he was connected to customer service representative immediately as opposed to being bounced around in an automated system.
“We like PayPal because it is the only service that doesn't require the user to have an account there,” says Alexander Seinfeld, executive director of the Jewish Spiritual Literacy Inc., a small, nonprofit educational consulting company. Someone can make a one-time credit card payment without a long registration process. This is a draw for customers who appreciate the convenience of not having to establish yet another user ID and password to remember.
Conversion-boosting Tips: How to Get Your Customers Not Only to Shop, But to Stick Around and Check Out
- Get customer feedback: “The psychology of a buying customer is hard to know in the end, so trying to get that kind of information is great,” says Brandt. He recommends pulling the information from customer surveys through your website or in person at an expo. Or have your friends shop around on the website and get their honest feedback about what works and what doesn’t.
- Reassure your customer of the payment method: Seinfeld says it helps to educate the customer that using PayPal is no different than using a credit card for any other online transaction. Link to the PayPal page so that they can check it out for themselves.
- Provide payment options: How people pay online is a personal choice that’s based on their own comfort level. Offer another form of payment option, such as Google Checkout. “It’s the same reason why you accept more than one credit card,” says Brandt. It’s very easy to lose a sale solely because a customer is hesitant to enter their financial information through a payment method with which they’re not familiar.
Related Resource: Payment Processing 101 (PDF) webinar presentation