By Winmark Business Solutions
No one likes waiting in line, and ecommerce is no exception. Express payment options from companies such as PayPal and Google provide online shoppers with what they're looking for—a secure, hassle-free shopping experience. And they provide advantages to many online store merchants, too.
Shoppers like eBay's PayPal (paypal.com) service because it allows them to purchase online without giving out their credit card numbers to individual merchants. PayPal accounts are easy to setup and provide shoppers with a single area to monitor all of their online purchases.
According to a 2005 Forrester survey, 43 percent of U.S. online consumers rely on PayPal's services. Of these shoppers, 80 percent say they are more likely to buy from a merchant that offers PayPal. And these are shoppers that merchants desire: 60 percent of PayPal users are high-net-worth individuals, aged 35-64, and 75 percent are college-educated. These are the types of customers you'd like filling your online shopping carts.
PayPal's overwhelming market share is likely to diminish with the introduction of Google Checkout (checkout.google.com). Like PayPal, Google Checkout offers a process that makes shopping faster, more convenient and more secure for online shoppers. With Google Checkout, shoppers complete transactions by entering their login information, avoiding the hassle of filling out multiple forms.
Like PayPal, Google Checkout improves a shopper's security by concealing the buyer's credit card number and providing reimbursement for unauthorized purchases. Google Checkout also lets shoppers choose whether or not to keep email addresses confidential or turnoff unwanted email from the stores where they shop.
Early adopters of Google Checkout include Dick's Sporting Goods, Buy.com and Starbucks. Google Checkout is used by uBid, but prohibited by eBay.
For sellers, competition between Google and PayPal is a good thing. As an incentive to merchants, Google takes a smaller cut of payments. PayPal starts at $0.30 plus 2.9 percent of the total payment. Google requires $0.20 and 2 percent, respectively. In addition, merchants that use Google AdWords get a break on these fees. For every $1 merchants spend on AdWords, they can process $10 in sales through Google Checkout at no charge.
PayPal and Google Checkout provide some valuable benefits to merchants. Merchants using these systems don't store the credit cards numbers of customers. As a result, there is no risk that credit card information provided to your company will be stolen or misused. Both systems provide a secure turnkey payment system for merchants.
According to various research reports, typical shopping cart abandonment rates can range from 50 to 90 percent. Although the reasons for abandonment vary, common ones include enduring long checkout processes, requiring too much personal information, mandating customers create site-specific logins and expressing concerns about Web site security.
For many online shoppers, payment services like PayPal and Google Checkout do a good job of lessening these concerns. That may be reason enough to consider using them.
About the Author
Winmark Business Solutions (WBS) is a free Web site for small businesses and entrepreneurs containing over 6,000 pages of business-critical information and downloadable tools at www.WBSonline.com. WBS is a division of Winmark Corporation, a multi-brand franchisor with nearly 900 franchise locations in North America. With over 25 years working with small businesses, WBS draws upon years of experience to bring important small business articles, information, tools, forms, checklists, calculators and downloadable forms to the small business owner to help their business grow. WBS contains over 6000 pages of business-critical information all available at www.WBSonline.com.