I will be releasing a digital product soon and I'm not sure if I'll be losing out on a lot of customers by only supporting PayPal (and maybe Google Checkout). I didn't dive into the CC support by PayPal because they take a cut of the sale and I think in general people are weary about handing over their CC details to a company that is not well known. So with that said I have 3 questions: How much revenue do you lose for not having a pay by CC method? How often are people paying with a CC on your site vs using PayPal? If you accept checks and money orders and sell digital products how often is this method of sales taking place compared to PayPal/CC/etc? Lastly, are there other free popular alternatives to performing safe online transfers? I want to cover as many people as possible. Each lost sale due to not supporting a payment method is not good.
Well, it is not a simple answer to this question because customers do not generally tell you that they will not pay from you because you do not accept credit card as a payment method. However, I have been accepting credit card payments from the first day of business and mid last year I started accepting Paypal methods and I see that about 10 to 15% of sales were from people paying through Paypal, the bulk of which are credit card payments. I have since removed Paypal as a payment method since it is too complicating a process. I guess in the end, it depends who your clients are. If you are targetting the business and corporate users, you be better off accepting credit card payments. Most corporate do not use Paypal as a payment option. Although Paypal is quite popular, it does not have a huge market share compared to credit card payments. Not all countries support Paypal and not everyone accepts it, apart from people at DP and those in the know. Besides, not everyone have lingering funds at Paypal, if they are like me, they will withdraw the bulk of it as and when possible. I would then fund my account through a credit card. In the end, it is your decision. But personally, you could probably add the two options, there is no cost to you if you do not make any sales through it. Paypal is a For-Profit company and they need to make money in order to survive and as such, they need to charge a fee. They are in fact the business which charges the lowest fees for credit card payments around. Think about this way, the charges that the credit card processors charges you are done only as a percentage of sales. It means that if there is no sale, you do not need to pay anything. It is more a referral fee so to speak. Basically, you pay the 2 to 10% and you are able to reap the rest of the 90 to 98% of the income which may not come to you in the first place.
Since we implemented google checkout on our site here are our approximate payment method stats: Credit Card: 85% Google Checkout: 10% Paypal: 5% Before Google Checkout: Credit Card: 92% Paypal: 8% I think that if you only accept paypal, you loose a measurable percentage of your potential users. Conversely if you accept only credit cards you loose some sales to people wanting to pay with paypal. it is best to offer multiple methods if you can implement it and it makes sense for your situation.
Also take a look at your market. Will your market use / have a need for Paypal? If you are directing your software to under 30, chances would be great probably that they will have a Paypal account. Plus depending on where you live, you might be eligible to accept credit cards as well via Paypay and use their API on your website. Check your Paypal's website for more information.
Also, just to add, if you are selling on ebay, paypal is a must. Very few buyers want to pay with anything other than paypal.
Thanks for the input everyone. One question though. If I have PayPal handle credit card transactions does the person who put in their CC need to have a PayPal account or is it treated 100% separate from PayPal? By the way, the market I'm targeting is very broad. Ages would be 15-60+, from total internet newbie to quite seasoned.
It depends. If you use the standard Email Send method, the other person need to have a paypal account. If you use the Buy Now button then you have the option to allow them to pay via Credit Card. I believe they will get an account if they did not already have one.
Hmm, that seems better than nothing but not ideal (if PayPal forces a registration on the CC paying user). I suppose I'll look around for other alternatives.
You could consider adding 2Checkout.com as one of your payment processor, they do credit cards payment processing.
Do you know any Credit Card Processors that give such merchant accounts (2 to 10% Fee) but no monthly fee and upfront setup cost? I am interested to know. I too want to process credit card directly on my site rather than forcing my users to register on paypal.
I am doing software so http://www.regsoft.com , http://www.plimus.com are what I use. There is also http://www.ccnow.com if you are selling something physical. They are pretty low cost.
I would definitely add credit cards. Independent of consumer verses business customers you will loose sales. Depending on your customer locations, you might want to also evaluate payment options beyond credit cards. For instance, I use SWREG.org and they offer wire transfer, check, ACH, BACS-UK, Electronic Funds Transfer in various currencies for European customers. Jessy
I'd say it totally depends on the nature of your business. Selling a product might require multiple payment methods to be made available if you want to increase sales, while selling a service does not necessarily need that attitude. I mean if you keep yourself busy, you might get away with only using a limited number of payment processors. Afterall, you only got 24 hours a day, and you need to sleep, too. So if you only support Paypal customers, then someone else will take the e-gold ones. And you will still earn your part, won't you..
It's been a few years now, but in 2002 I opened a business selling PC games and developed an ecommerce store (wizardsandwars.com). I started out like you, using paypal only, and was able to build the business up to a few sales per day. Unfortuantly, we also stated getting complains from customers about having to use paypal. They didn't like the fact that they had to go to a third part site, and they had heard bad things about paypal in general. So we added a second payment method to the store (2checkout, antoher 3rd party processor. I wouldn't recommend them now, but that's a different story) to give them an alternative payment option. My sales doubled overnight. I went from 2-3 sales per day to 4-6 slaes per day. I know that doens't seem like alot, but it made a huge difference in my bottom line, especially considering I was doing no additional advertising. After heavy analysis, I determined that the sales were coming from customers I was already attracting to the site, but before having an alternative ot paypal, they were abandoning the checkout on the payment page. When our volume got to around $3000 a month, customers were using 2checkout about 85% of the time, and paypal only 15%. Then we started looking into merchant accounts, and found that we were paying about $100 more a month in processing fees than we would if we had a merchant account/payment gateway. So we got one, and our signup/purchase ratio climbed even higher. By the time I sold the business, I was processing about $4000 per month, and about 99% of all sales were using the merchant account/payment gatway checkout instead of using paypal. I think the lesson I learned is to try to offer people an option. You don't want to lose the people that prefer to use paypal, but you also dont want to lose the people that don't want to use paypal. For start-ups, before your business really gets rolling, and before you start getting alot of sales, paypal is a quick, easy way to get set up and begin accepting payments. But once you start doing any kind of volume, it's in your best interest to add an alternative.