My May, 2009 Montana InBusinessMonthly column
The typical “brick and mortar” store has a POS (Point of Sale) system, usually known as a cash register. I’ve noticed a few around town that are still all mechanical, but most are electronic in some fashion, and many look just like a PC with a touch screen with a cash drawer underneath.
But lots of small businesses exist only on the Web, and so the brick and mortar of the store is really a Web site, seen on the screen of someone else’s PC. And the business’ cash register is purely cyberspace as well: it’s a bunch of “Buy now” or “Add to shopping cart” buttons that are clicked and take a buyer through the process.
If you have a small, Web-based business, being able to take payments, donations and sell items online is absolutely required. Few people are going to dig around for their checkbook and an envelope or pick up the phone after arriving on a Web site that doesn’t offer instant, secure transactions. But it’s much easier to take payments on a Web site than it once was.
Online transactions must happen a million times a second – there were almost $150 billion worth of online retail transactions last year. While there are hundreds of transaction processors out there (the businesses that provide secure payment processing), some names may sound familiar.
If you’ve won a bid on eBay, then you’ve used PayPal to pay for it. Google and Amazon.com are other recognizable names that have jumped into the online payment processing business. Google Checkout has become very popular in the last few years, and Amazon started its payment system last year to compete with PayPal and Google.
If you’ve got a small, Web-based business, using a company to process card payments for you is the quick and cheap way to go. You have to pay processing fees, just like a brick-and-mortar store does with a card swipe machine, but you don’t have to go to the complexity or expense of setting up your own secure system.
Google, PayPal and Amazon take care of all the details. They deal with their own Web site security, card verification, card fraud, chargebacks, bank transfers and the rest. In return, you pay the processing fees, but you don’t have to deal with much except for e-mailing receipts to customers and transferring money to your bank account.
The other option for Web-based businesses – full e-commerce systems such as the “shopping carts” you’ll see on all online stores – are versatile, but they have a steep learning curve for the store owner, while Google and Amazon offer the ability to sell with almost the same number of features.
Google, PayPal and Amazon payment systems work by opening an account at those sites, then verifying your identity (with e-mails and sometimes with an automated phone call) and verifying a bank account (with a small deposit that you confirm), all which can take a few days. You will also need online access to your business bank account to quickly check for verification deposits and cleared payments, but many people and businesses already do much of their banking online.
The next step is selecting what your payment buttons will look like. Different services offer business buttons with drop-down options for different products, or – if you’re a nonprofit – “donate” buttons. Online help will assist with understanding all your options.
Then you cut and paste that code into a page of your Web site. That code displays the payment buttons and links, and when clicked, takes a buyer from your Web site to your account page at PayPal, Google or Amazon. Some services allow you to dress up your account page, and will return a customer to your Web site after they pay.
On the nonprofit side, services such as Just Give and Network for Good, among others – nonprofits themselves – offer the same types of services for nonprofits. Searching for secure transaction services for nonprofits will give you lots of results.
Being able to use any of these payment systems on your Web site depends on how you administer your Web site. If you have a free blog or a free Web site, there’s a good chance you can’t add the necessary programming code for security reasons determined by the Web host. It doesn’t have much to do with the chance of the payment system being hacked; it has to do with the Web host themselves allowing people to potentially do bad things by adding programming code over which they don’t have control.
If you have control over your Web site hosting, then you should be able to add the button and checkout code by following instructions. If you can’t add the code for buttons, you can still add a basic Web link to your payment processor. It won’t be as fancy as a “Buy now” button, but it will work.
Some services also allow you to send e-mail invoices to customers with a clickable link that goes to your account page at the payment processor. That’s a good way to expand your use of online payments services. But if you use e-mail invoices, be sure and advise customers to never click on such a link in an e-mail unless they can confirm you sent it, as e-mails with clickable links can be scams.
When making a decision on what service to use, look into the processing fees and user agreements, as with all such services. Some require a monthly fee no matter how many transactions you do, while some transaction fee “deals” are only good for a certain amount of time. And see what other users say. “Google” around and you’ll find stories about problems with all payment services: accounts being closed for alleged fraud and problems businesses have with getting paid.
If you have both a Web site and a brick-and-mortar store, and want to be able to take payments on your Web site, check with your current bank. They may have a preferred system or service provider that is a combination of a hardware card “swiper” in the store and an online system.
If you find you need a full e-commerce system with a full-feature shopping cart, Google, PayPal and Amazon have “plug ins” available for the more complex e-commerce software systems, even including services for shipping your products.
But the simplest services from Google Checkout, PayPal and Checkout by Amazon might be enough for your small – or not so small – Web-based business, and those services make themselves easy to set up and use.