Why Should you Accept Credit Card for Your Business?
Tuesday, November 9th, 2010
If you are running an e-commerce website selling merchandise or service, you might be asking yourself: should I get a credit card merchant account? I asked myself the same question for a few years before I “took the plunge” too.
Of course as you know, there are popular online payment methods such as Paypal, Google Checkout, or Amazon Payment which accept credit cards from the customers. So if you use these payment methods, you can say that you accept credit card payment, indirectly. These online payment services all charge similar fees of around $0.30 per transaction plus a percentage of about 2.5-3% of the transaction amount. So why would you need to accept credit card directly?
Obviously, accepting credit card directly gives your customers more options. After customer adds item(s) to cart, he/she is lead to a page to pay. On that page, he/she will see an additional option of paying by a credit card. If you were the customer, which method would you prefer to use? Before we even start to guess, I’ll show you an order log from one of our websites http://www.goldduo.com:
The order log shows 40 most recent consecutive orders from the site with payment methods. You can see that we accept Paypal, Google Checkout, and direct credit card (gateway_cc in the log).
Among the 40 orders, 13 transactions were paid by Paypal, 5 by Google Checkout, and the rest by direct credit card – a whopping 55% of the customers chose to pay by direct credit card! Our experience showed that by accepting credit card payment directly, our sales increased by about 100%. OF course this percentage is a little different than the percentage of transactions paid by credit card because some customers might have been “forced” to choose between Paypal and Google Checkout, while others might simply leave if they really do not want to use Paypal or Google Checkout.
This is just about the most powerful proof you can get. So are you still asking the question – do I need a merchant account? Yes – Get your merchant account here. If you are really curious about the reasons of this, see my guesses below.
Why would some people prefer using direct credit card? Here are my guesses:
1, A lot of credit card gives 1% some even up to 5% cash back or some type of equivalent such as airline mileage.
2, Going through Paypal or Google Checkout means your personal information goes through an additional party. If you are going to pay by credit card anyway, why should you go through an additional 3rd party? This is true especially if the customer does not already have a Paypal or Google Checkout account. Don’t we all have enough of “accounts” already?
3, More (privacy) sensitive internet users can be concerned that Google or Paypal is collecting their preferences and personal data.
4, Some of them might have had bad experience with Paypal or Google Checkout.
Credit card merchant account fees are similar to Paypal and Google checkout fees. You can get better rate when your sales volume is larger.
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