It’s important to offer your potential customer as many payment options as possible to increase your chance of getting bids. Buyers like convenience and they like to have a variety of choices in regard to payment. Many buyers will want to use a credit card, while others will be wary about entering their credit card number online. One of the best ways for you to accept credit cards as payment is to sign up for a Paypal account.
What is Paypal and why is it so important?
Paypal is Ebay’s online payment system that allows buyers to pay for their auction purchases electronically. Buyers love this option because they can pay for their items immediately after the auction ends which means they’ll receive their items more quickly. Paypal allows the buyer to pay by bank transfer or by credit card via their site. The seller is charged a small fixed fee and and a variable percentage fee for each Paypal transaction paid for by credit card. If you visit auction forums, you’re sure to find more than a few uncomplimentary comments about Paypal. Much of the dissatisfaction stems from the fact that Paypal was once a completely free service with no transaction fees of any kind. Unfortunately, times have changed and Paypal needed to charge fees of some type in order to remain profitable. I believe the very small transaction fees that Paypal charges the seller are insignificant compared to the convenience this system offers. With Paypal, you can get paid immediately after the auction ends and have the buyer’s purchase out in the next morning’s mail. No more waiting for snail mail to bring that promised check. If you want to maximize your auction returns, I would seriously consider taking Paypal. There are many buyers out there who won’t pay by any other means and it can mean lost sales for you.
What about accepting personal checks? I’m sure you worry about them being returned for insufficient funds. From my own experience, the number of bad checks issued on Ebay appears to be relatively small. I experienced an entire year of high volume auction selling and during that time received only two bad checks, one of which was paid by the customer after I contacted her. Of course the rate of bad checks will vary with the type of item you sell. I primarily sold books where it would seem there would be fewer flagrantly dishonest people. People who read alot tend to be fairly honest. If you sell in some of the more dubious categories, your bad check ratio could be higher. One way to avoid the consequences of a bad check is to hold all checks until they are cleared by the bank. I’ve never done this due to the low incidence of bad checks and the fact that I like to ship items out as quickly as possible. Another way to prescreen for potential problems, it to check a buyer’s feedback score to see if there are any past problems with nonpayment..
Should you accept cash from buyers? I would discourage buyers from sending cash in any form since the buyer may hold you responsible if the cash is lost in the mail which could result in negative feedback. It would be a good idea to clarify your position on accepting cash in your auction listing to avoid confusion.
Do you need to have an independent merchant account? Some sellers have their own merchant account set up to accept credit cards for auctions. If you accept Paypal as a payment option, it’s probably not necessary to have a merchant account since the majority of buyers who want to pay with credit card will have a Paypal account. On my own auctions, I have always accepted Paypal and have never found the need to have an independent merchant account. Plus, the fees associated with a merchant account can really add to your overhead.
