Ecommerce
Solutions Compared
There are dozens, perhaps hundreds of
businesses and organizations eager to assist you sell your
product online. Basically, they fall into four categories:
credit card transactions, digital cash transactions, electronic
fund transfers and telephone billing systems. No solution is
perfect and each comes with its own set of pros and cons. The
right choice for you depends upon your specific business
requirements.
1. Merchant
Internet Accounts.
If you have a merchant status, you will
need to consider the following factors:
Pros:
- Consumers are familiar with credit
cards
- With credit card transactions,
consumers don’t have to download and install special
plugins.
- Credit card sales lends itself to
impulse buying.
- You have the customers' contact
information for follow up sales and marketing purposes.
(This is a pro for the merchant but a con from the point of
view of many customers, who prefer anonymity.)
Cons:
- Consumers still have concerns
regarding providing financial information online.
- Not everyone has a credit card.
- This method does not lend itself
well to the purchase of down loadable soft goods, such as
software, art, graphics, etc. Vendors wanting to sell down
loadable soft goods will will need to find a way to ensure
the product is paid for, once downloaded.
- You will have to deal with
chargebacks.
If you can’t or won’t get a merchant
account through your regular banking institution, you still have
the broker option open to you. Brokers can often arrange
merchant accounts for businesses who are deemed high risk. Setup
fees and discount fees apply.
Click
here to check out merchant accounts.
2. Electronic
Cash Transactions - (Payment Services)
Electronic money is an arrangement whereby
the customer pays for the merchandise using, well, electronic
money. Examples of this are the well known Paypal, Clickbank,
Propay, etc. As consumers become more comfortable providing
credit card information over the Net, these methods are less
utilized.
The Pros
- No credit card transactions are
required.
- No concerns re chargebacks.
- Lends itself well to micropayments.
Cons
- Many people are unfamiliar with the
concept and shy away from unknown entities.
- The process is perceived as "a
hassle" to some shoppers who prefer to simply give
credit card information.
- Both merchant and customer must be
participating in the same scheme before this method of ecom
can be used.
- Eliminates the possibility of
impulse buying, unless both customer and merchant are
already in same scheme.
- May not be available globally.
Click
here for payment service providers
3. Electronic
Fund Transfers
Funds are transferred electronically from
the customers bank account to yours. (This is a highly
simplified explanation, and is accurate in the most general sort
of way. However, the bottom line is that the customer buys, and
at some point the funds are removed from his or her account and
ultimately deposited into yours.)
The best known method is the issuing of
electronic checks
Customers pay for merchandise by
writing an electronic check that is transmitted by email, fax or
phone. The "check" is a message that contains all of
the information that is found on an ordinary check, but it is signed
digitally, or indorsed. The digital signature is
encoded by encrypting with the customer’s secret key. Upon
receipt, the merchant or "payee" may further indorse
by encoding with a private key. When the cheque is processed,
the resulting message is encoded with the bank’s secret key,
thus providing proof of payment.
Pros
- No credit card worries
- Available to persons who don’t
have credit cards
Cons
- A very new technology that some
perceive as being less secure than other forms of ecommerce.
- Many customers aren’t set up to
issue electronic cheques; time required to make the
arrangements eliminates impulse buying.
- May not be available to
international consumers.
4. Telephone
Billing Systems
A very new approach, telephone
transactions allow the customer to purchase an item or service,
and the amount is billed to his or her telephone bill. To date,
this is being used for the sale of soft items such as downloads,
time measured services (i.e. time spent at a Web site) or for
making charitable donations online. eCharge
Corporation is a pioneer in the use of this technology.
Pros
- Eliminates worries about credit
cards (for both consumer and merchant)
- Safeguards soft merchandise – no
possibility of theft or pirating.
- Available to customers without
credit cards
- Coverage includes the US and points
in Europe. Canadian coverage is expected soon.
Cons
- Customer is required to download and
install a plugin.
- Currently only available for soft
merchandise but can do some limited transactions for hard
goods.
- Not currently available for Mac
users.
- Currently available for sales using
telephone modems, and will not work for transactions over
cable modems and ISDN lines.
5. One-Stop Shops
More recently, with the huge interest
shown in ecommerce, a multitude of services and products have
become available. It's now a possibility to find a service that
will broker your Internet Merchant Account, as well as providing
web site storage, a template for designing your site, shopping
cart software, a form generator, a secure line for safe online
ordering, and more. IBM, ICAT and Vantage are examples of
businesses offering these all-encompassing services. They are
excellent starting points for the entrepreneur who wants to
delve into ecommerce. |
