How to Accept Card Payments Without A Merchant Account

(and without losing an arm and a leg)

 

ã James Rye 2001

 

 

Despite what you may be thinking, there are plenty of secure and legitimate ways of taking credit card payments online.  Many of these solutions require you to get a Merchant Account.  But rest assured, this book isn’t about Merchant Accounts!

 

 

I don’t have a particular axe to grind about the evils of Merchant Accounts, but I don’t have one.  The simple reason was that when I started to trade I was a very, very small trader just seeking to get a bit of money by selling my expertise that I had developed either professionally or as a hobby.  For people like me it was very difficult if not impossible to get a merchant account, mainly because the set-up costs, the processing costs, and the monthly charges would mean that I was likely to end up loosing money rather than making it – and hey, even I’m not that stupid.

 

 

I have moved on since then and now feel more experienced about my online trading, but I still haven’t moved over to a Merchant Account.  The simple reason is that there are plenty of other options available, and at the moment, I still think that the extra expense doesn’t justify the advantages.

 

 

There are approximately 70 solutions for taking card payments WITHOUT having a merchant account.  There are two major difficulties with many of them:

1.     Some are very expensive.  Do you really want to pay them 15% on each transaction?

2.     Many of them are designed to be used by US citizens selling to US citizens.  In other words, if you haven’t got a US Social Security Number, or a US Bank Account, you can’t use them to sell.

 

 

I have carefully selected 5 solutions which I think are the best, bearing in mind:

1.     I don’t like paying more than I have to for services.

2.     I live in the UK and therefore needed to select at least some non-US services, or US services that people from the rest of the world could use.

 

 

The views represented below are my own.  Unlike the material in many eBooks, I am not being paid to recommend particular services.  I have no affiliate arrangements with any of the providers listed.  As a seller I personally use three of the solutions on my sites.  I have also bought goods on sites belonging to other people using four of the solutions described below.  As a buyer or seller I would have no hesitation in using all five solutions if it were appropriate. 

 

With all but one of the solutions you could be selling online within minutes (or hours at the most).

 

 

 

 

Introduction

 

PayPal has over 10 million users and has an Official Directory of over 20,000 websites accepting PayPal.  However, as not all PayPal webmasters elect to enter their sites into the official directory, the real number of using sites is much higher.

 

 

PayPal is an instant and secure online payment service.  With PayPal, individuals and businesses can send and receive payments through the Internet.  This service provides a safer, faster, easier, and cheaper way to move money.

PayPal now constitutes over 10% of all Internet traffic in the financial services category, more than Citibank, Wells Fargo and Bank of America combined.  And PayPal is the preferred payment service for online auctions, and for online community and group websites.

 

 

What PayPal Offers

 

PayPal makes sending money as easy as sending email.  Members can instantly and securely send money to anyone in the U.S. with an email address.  PayPal is also available to people in 38 countries.  You may also use PayPal on your web-enabled mobile phone.  In the future, PayPal will be offered on web-enabled pagers and other handheld devices.

 

 

PayPal also makes collecting money secure and easy.  Webmasters have a choice of collecting money via:

 

*  A single payment button on their website, asking for a specified amount, linking through to a personalised credit card payment screen.

*  A single payment button on their website, asking for an unspecified amount, linking through to a personalised credit card payment screen.

*  A donation button button on their website, asking for an unspecified donation, linking through to a personalised credit card payment screen.

*  A fully functional shopping cart on their site on their website, allowing for mulitple copies of single items and multiple purchases, linking through to a personalised credit card payment screen.

*  Buttons and email reminders for the collection of regular subscriptions of the amount, and on the dates, and to the people that you specify.

*  Invoicing via email with links through to personalised credit card payment screen.

 

The above options allow for the webmaster to specify amounts for shipping and taxes, and also allow the customer to send personal comments with the payment.

 

 

Here’s How It Works

(up and running within 30 minutes)

 

 

Webmaster

 

Suppose you as a webmaster want to sell copies of a new eBook you have written.  You want to be able to receive payments before allowing customers to download the material.

 

1.     Go to http://www.paypal.com/

2.     Sign up for an account.  If you live outside the US, sign up for an international account.

3.     Register your email, credit card (for payments to others, refunds etc), and bank details (for payment of collected funds into your account).

4.     PayPal will confirm your details by sending you an email which you need to respond to.  They will confirm your credit card details by debits $1 form your card which later will be returned to you.  Be reassured by these security measures rather than annoyed by them.

5.     Login into your account and select the SELL button.  From this screen you can set up donations and shopping carts, but for this exercise, click on the WebAccept option. (Note that any buttons set up to accept payments for single items and services can later be easily integrated into a shopping cart should you later decide to sell more than one item.)

6.     Complete the details on the WebAccept Screen.

 

Chose the graphic for your site or even nominate your own button for customers to click.

 

 

Chose the registered email address (you can register more than one) which you wish to use to accept payment.  You can then enter details of the items and any appropriate identifying codes.

 

 

 

Finally, determine the address where you want your customers sent to as a result of a successful or unsuccessful payment.  This is a useful feature.  For example, if you were selling a downloadable file, you could automatically send them to the site for download on completion of a successful payment.

 

 

7.     Once all these details have been completed you are then sent to a screen where the appropriate HTML code is available for you to cut and paste into your web page.

8.     PayPal charges a modest 2.6% + $0.30 International Transaction Fee on all transactions involving funds entering or leaving the PayPal system from non-U.S. sources, which is far less expensive than wiring funds!  The PayPal service is free to US personal customers.

 

 

This is only an example of one of the many PayPal options.  There is a free 61 page manual available for download once you have signed up, giving a very clear explanation (with examples) of all the options available for taking payments in a variety of forms.

 

 

Customer

 

Once the customer clicks on the PayPal button on your site, they are taken to a payment screen and asked for their Credit Card details in order to make a payment.  If they are already on of the 10 million PayPal users, there payment is processed immediately from that screen.

 

 

If they are not already a PayPal user, they will be asked to sign up by providing Credit Card, Address, and email details (non-US members sign up for an international account.

 

 

Example Site

 

For an example of a PayPal donation button at work, go to http://www.connections.ndirect.co.uk/wedserm.html

PayPall Assessment

 

Strengths

Weaknesses

1.     It’s size and proven track record. You can feel reasonably confident that it won’t disappear overnight with your payments.

2.     Free fraud insurance. People won’t be able to steal money using your credit card details.

3.     Security.

4.     Costs. Compared to some providers, the charges are very, very reasonable.  If you don’t believe me, spend hours of your time trying to find something cheaper (and let me know if you succeed). There is no set up cost and no ongoing rental.

5.     Incredible flexibility of solutions: single payment of single items, single payment of multiple copies of one item, free shopping cart, donations, subscriptions, email invoicing.

6.     Available in 38 countries.

7.     Customer registration. Once this is completed, your customers can use their PayPal accounts in thousands of places on the Web.

8.     Webmaster registration.  Having signed up once, you can sell from as many websites that you can dream of and create.

9.     Reasonable fees.

1.     Customer has to sign up to PayPal if they are not already a member. (However, it is quick and painless.)

2.     Limited to dollar charging. Non-US customers might resist this (although the credit card companies automatically do the currency conversion for the customer).

 

 

 

 

 

Introduction

 

NOCHEX is the new kid on the block in the UK (2001), but already claims to have successfully transferred millions of pounds of its customer's money, and also claims to be the UK's premiere online payment service. 

 

 

By comparison with PayPal, NOCHEX looks distinctly restricted at this stage:

 

*   It only takes payments from UK Debit Cards.

*   It is therefore restricted to customers who have a UK Bank Account and Debit Card.

 

 

However, it is worth remembering that:

 

*   It plans to go international soon, so it may be worth checking out for the latest updates.

*   It is easier to get a Debit Card in the UK than a Credit Card.

*   Many UK customers will have a resistance to paying in dollars and would therefore prefer the NOCHEX solution.


What NOCHEX Offers

 

NOCHEX is like a UK version of PayPal without the shoppping cart and subscription elements.  Like PayPal it allows you to load money into an account, receive money into an account, and send money from an account.  It is an ideal solution for users who wish to buy and sell using UK Auctions.

 

 

However, it is easily adaptable to enable you to take other website payments.

 

 

Here’s How It Works

 

1.     To open an account you need to provide a name, address, email address, and debit card details.  As part of the security process, a small random amount of money is then deposited into your bank account (at NOCEHX’s expense). To complete the registration process, you need to tell NOCHEX how much was deposited (and you keep the money).  This confirms that the debit card details are linked to the bank account that you have access to. Be reassured by these security measures rather than annoyed by them.

2.     Once registered with an account you can email anyone from within the NOCHEX site requesting money (effectively an invoice for any services or goods supplied).  You simply complete the form below. (Although not discussed in detail above, a similar option is available from within PayPal.)

3.     Your customer then receives an email from NOCHEX, with your optional message (presumably you would want to describe what the requested payment is for), and a live link to a page where the payment can be made.  As with PayPal, if they are not yet users of NOCHEX, they are invited to register for the first time.  If you prefer you can use this facility to generate HTML for the live payment link to include in your own email.  NOCHEX can also be integrated into any existing shopping cart.

4.     If the customer doesn’t pay there are facilities for you to send reminders.

5.     The costs are straightforward.  It doesn’t cost anything to send or receive money.  However, it does cost £0.99 to upload into, or download money from your NOCHEX account.  So, for example, if 10 people send you money it could only cost you £0.99, not £9.90 to withdraw it all.
As NOCHEX only charge 99 pence per withdrawal, simply make 1 withdrawal and not 10. It makes sense to make a few large withdrawals rather than lots of small withdrawals as they charge 99 pence regardless of the amount you withdraw. Any charges are clearly displayed on the screen and the users are required to confirm acceptance of these before the transaction takes place.

 

Security

 

Despite having the feel of being PayPal’s little brother, there is nothing amateurish about NOCHEX and I have been very impressed with its security.  I receive confirmation emails of every transaction that takes place, and everytime I try to login to NOCHEX and make a mistake with my password, I receive a reassuring email alerting me to the fact that someone has tried to unsuccesfully login to my account.  Everytime money is transferred the user is alerted to the fact that their internet details have been logged and that their ISP will be contacted in the event of any suspected fraud.

 

 

Example Site

 

I use NOCHEX on sites where most of the paying cusotmers are likely to come from the UK and where there may be a resistance to paying in dollars.  I try to get the best of both worlds by inviting customers to indicate a preference for using their credit cards and paying in dollars, or using their debit cards and paying in pounds sterling.  Once I receive this preference on their order form, I then invoice them using either PayPal of NOCHEX as appropriate.  For an example of this, visit http://www.englishplacenames.co.uk/

 

 

NOCHEX Assessment

 

Strengths

Weaknesses

1.     Good Security.

2.     Email invoicing.

3.     Sending reminders is easy.

4.     Payment in pounds sterling (advantage on UK sites).

5.     Debit cards more easily available than credit cards.

6.     Customer registration. Once this is completed, your customers can use their NOCHEX accounts to send and receive money.

7.     Webmaster registration.  Having signed up once, you can sell from as many websites that you can dream of and create.

8.     Integration into existing shopping cart.

9.     Very Reasonable Fees

1.     Limited to UK debit cards.

2.     Registration process involves checking bank account for a deposit.

3.     At present, limited facilities in comparison to PayPal.

 

 

 

 

 

Introduction

 

Like PayPal, Clickbank is widely accepted on the web.  For some users (outside the US) it has a similar potential problem to PayPal in only offering sales in US dollars.  However, ClickBank has one major potential disadvantage and two huge advantages and these clearly distinguish it from the previous two options.

 

 

What ClickBank Offers

 

As you would expect, ClickBank offers a secure service that can easily be set up once you are registered.  You basically set up a link on your site that feeds through to a payment screen on ClickBank’s secure server where credit card details are taken.

 

 

The one potential disadvantage to the primary ClickBank package is that you can only use it to sell digital goods or services.  If you need to sell physcial goods that are shipped, you need to adopt secondary ClickBank solution.  Thus the primary package is ideal for selling eBooks or Counselling, but cannot be used for selling Books, CDs, Clothing etc.

 

 

If you need to sell physical goods for shipping, ClickBank offer a more expensive merchant account, but two restrictions apply:

If you live in the UK (without a US presence) and want to sell lingerie from your site, ClickBank cannot help you.  Neither of their two options apply. 

Despite the above, ClickBank does have two features which would make it very attractive for some merchants:

The Fees for ClickBank are: a one-time $49.95 activation fee, and a $1 + 7.5% fee per sale.  There is no monthly fee.  This may seem more expensive than the previous two options discussed, but remember there is no ‘membership barrier’, so your sales’ volume may be greater.  And the only other real way to get the removal of this barrier is to have a merchant account – for which set-up fees are likely to be considerably more.  7.5% may seem a lot, but in the UK, at least, for small volume merchants, you are likely to have to pay 3%-4% to your merchant account provider plus 3%-4% to your e-commerce provider.

 

Here’s How the Selling Set-up Works

You need to set-up a sales’ link page and a thank you page.

 

Making a Sales’ Link

 

To make a sale, you must put a special sales link on your sales page.  The customer will need to click on this link when it is time for them to pay.  This link will take the customer to a ClickBank pricetag window.  The sales link needs to point to the following address:

http://www.clickbank.net/sell.cgi?nickname/linknumber/linktitle

 

Here's how to make it work...

·        Replace nickname with your ClickBank nickname.

·        Replace linknumber with the number of the link you are selling. When you set up your ClickBank account, each of your links is assigned a number (1 to 50).  If you are setting up your site for the first time, the linknumber is 1.

·        Replace linktitle with any title you would like to give your link.

Here are some examples of typical sales links:

·        http://www.clickbank.net/sell.cgi?johnsmith/1/John's_Poetry

·        http://www.clickbank.net/sell.cgi?johnsmith/2/John's_Artwork

·        http://www.clickbank.net/sell.cgi?johnsmith/3/John's_Essays

 

Make a Thank You Page

 

To make a sale you need two web pages: a "sales page" and a "thank-you page".  These pages must be at your own web site -- ClickBank does not host web pages.

Your thank-you page is the page that we send the customer to after they pay.  The customer will only reach this page if their credit card is valid.  On this page you need to:

A.    Thank the customer for making a purchase.

B.    Display your email address so that you can assist the customer if they have any questions about what they bought. Do not simply make a clickable email image or button. You need to actually display your email address visibly so that the customer can see it.

C.    Remind the customer that their credit card bill will show a charge by:
"CLICKBANK / KEYNETICS".

D.    Collect additional information from the customer, if you need it to complete the sale.

E.     Make an "exit link".  Once the customer sees your thank-you page make sure they have at least one link to follow.

 

Fulfilling the Order

 

When the customer reaches your thank-you page, they will have already paid.

·        If you are selling access to text, a picture, or a password, include it on your thank-you page.

·        If you are selling access to another web page for download, include a link to it on your thank-you page.

·        If you are selling access to a file for download, include a link to it on your thank-you page.  Also include explicit instructions for how to view or extract the file.  For example, most people do not know what to do with a zip file.

·        If you are selling a file that you plan to email to the customer later, then you are making the customer wait unnecessarily.  Put a copy of the file at your web site, and put a direct link to the file on your thank-you page.

·        If you are accepting a donation, simply say thanks.

 

ClickBank Assessment

 

Strengths

Weaknesses

1.     Good security.

2.     No ‘membership barrier’.

3.     Strong affiliate program to help increase sales.

1.     Limited to dollar ordering which may have resistance outside the US.

2.     Primary solution limited to digital goods or services (and merchant account not available to customers with a non-US presence).

3.     Fees may seem expensive to some.  Although there are no monthly fees, the initial set-up fee makes selling more of a financial risk.

 

Please note that for US residents wishing to sell ‘tangibles’ CCNow and ProPay may provide a more cost effective solution than the ClickBank Merchant Account.

 

 

 

i-EscrowEurope

 

Like NOCHEX, i-EscrowEurope was designed with a non-US market in mind, although Escrow.com offers a similar service in the US.

 

 

The solution is simple, the security is strong, and the fees are modest.

 

 

One potential drawback to i-EscrowEurope for some sellers is that it can only be used to sell tanglible goods.  It cannot be used to pay for subscriptions, time sensitive documents, or services.  The problems seems to be with verification. i‑EscrowEurope needs to be able to independently verify that goods have been delivered.  So, you could use this option to sell lingerie, but not counselling.

 

 

 

What i-EscrowEurope Offers

 

i-EscrowEurope is basically a system for minimising risk to both the seller and the buyer.  It acts as a secure intermediary, holding money until goods have been delivered, and ony releasing the money once the customer is satisfied.

 

 

i-EscrowEurope permits trading in the following countries:

 

Despite this range of countries, it should be noted that i-EscrowEurope only allows payments to be made in pounds sterling or EUROs.  However, the growth in acceptance of the EURO will make it a less restricting solution than it otherwise might have been.

 

How i-EscrowEurope Works

 

1.     You register for a free account.

2.     The buyer pays i-EscrowEurope using a credit card, personal cheque, business cheque, postal order, cashier's cheque or money transfer.

3.     i-EscrowEurope holds the money in a secure trust account and notifys the seller.

4.     After receiving the merchandise, the buyer notifies i-EscrowEurope that he or she is happy with the merchandise.

5.     i-EscrowEurope pays the seller.

If the buyer is dissatified the goods can be returned.  If the seller is happy that they have been returned in orginal condition, the buyer will be refunded (minus a service fee).

The fees are comparatively modest and set out in the chart below.  Cash is considered to be anything other than a Credit Card or Switch Card. Postal order payment is not permitted.

Transaction Amount

i-EscrowEurope Fee (Credit)

i-EscrowEurope Fee (Cash)

Up to £100.00

£ 1.85

£ 1.85

£100.01 - £5,000

4%

2%

£5,000.01 - £10,000

Not Currently Accepted

2%

£10,000.01 - £30,000.00

Not Currently Accepted

1%

 

One slight novelty of the system is that the buyer and seller can determine who will pay the fee.  So, for example:

*  The seller could accept the fee and charge it against tax as a legitimate business expense (the norm for most businesses accepting card payments).

*  The seller could insist that the fee paid by the buyer (quite common when Escrow is used for auction payments on the Net.

*  Both buyer and seller could agree to split the fee at the beginning of the transaction when terms were being discussed.

 

i-EscrowEurope Assessment

 

Strengths

Weaknesses

1.     Good security.

2.     Modest fees and flexibility over allocation of responsibility for fees.

3.     (Pounds Sterling or Euro transactions.)

1.     (Pounds Sterling or Euro transactions.)

2.     Limited to the sale of tangible goods.

3.     Membership Barrier.

4.     No integration into shopping carts.

 

 

 

 

 

Introduction

 

NetBanx has been around since 1996 and can justly claim to be the longest standing UK provider of card payment solutions.  Despite a few minor difficulties, it also frequently comes out as one of the cheapest UK providers when solution comparision charts are made in e-commerce articles.  (However, it appears to be the most expensive solution of the ones we have considered in this ebook.)

 

 

What NetBanx Offers

 

Web surfers can pay for goods (tangibles) or services (intangibles) whilst on-line using credit or debit cards. NetBanx clears card transactions in seconds and cardholder accounts are directly debited.  NetBanx is often described as the Internet equivalent of the card swipe machines used by retailers when processing payment by credit or debit cards.

 

 

Like ClickBank, NetBanx offers some of the attractions of having a merchant account (real time processing of cards, no sign-up ‘membership barrier’), without requiring you to have a merchant account.  The downside is that you pay a bit more for the privilege.  If you have a UK merchant account you can still use NetBanx and their fees will be reduced accordingly (although you will still have to pay fees to your merchant account provider).

 

 

You can either integrate NetBanx into your shopping cart checkout, or direct your customers to a secure payment screen for an individual item.  Card details are taken and on authorisation, the transaction is completed.

 

 

In one sense, NetBanx is like a UK version of ClickPay with the added ability to take payments for ‘tangibles’.  Its primary transactions are in pounds sterling, although other currencies can be catered for (individual negotiation of extra charges with NetBanx sales team).

 

 

NetBanx offers four levels of service:

 

1.     Entry Level.  One product at a fixed price. Ideal for subscription services.

2.     Intermediate Level.  Choice of up to ten prices one selectable, e.g. a subscription available monthly, weekly, annually represents three prices.

3.     Supported Ordering Platform.  NetBanx has been integrated with popular software packages such as Actinic, e-shop, iCat, Intershop, Cat@log, Shop@ssistant and our own NetStart. These provide order collation and pricing facilities, which integrate with the NetBanx payment system.

4.     Bespoke.  Fully customised integration to suit your specific requirements.

 

 

Set-up charges

 

Processing charges

 

 

These are set according to the volume of sales, and whether or not the seller has a Merchant Account.  For a small scale retailer without a Merchant Account, the transaction charges are in the region of 8% with a minimum monthly payment of £10.  Even at this level, the charges are very favourable compared to some other packages.

 

 

Set Up & Maintain

 

Where NetBanx differs from all the other solutions discussed in this eBook is that the set-up process is more lengthy. Forms have to be filled in, accounts approved, then you are given the option of modifying their payment templates for approval and publishing.  This will take days/weeks rather than hours.

 

 

The template modification does mean that anyone with some knowledge of HTML (beyond the pasting a snippet stage) can achieve full integration of style into their exisitng pages.  You don’t only design the selling page, but the payment page as well.

 

 

There is also an issue which can emerge in the longer term over maintainance and pricing control.  With all the other solutions offered in this eBook, if you wish to change your prices in a hurry (perhaps increase them in response to growing demand, or decrease them in response to a seasonal offer) you can do so easily.  You go to your solution provider, enter the new details, and copy the new HTML snippet to paste onto your pages.  Or in the case of i-EscrowEurope, simple change the price you are charging on your selling page.

 

 

However, NetBanx doesn’t have this flexibility unless you opt for the Ordering Supported platform, where you simply change the prices in your shopping cart software.  If you select either of the first two options you have to inform NetBanx of the price changes and then they will modify the pages on their secure servers, and then charge you for the change (depending on the work involved).  As a webmsater you don’t always have the immediate control that other solutions offer.

 

 

Example Site

 

For an example of a NetBanx entry level payment site, go to

https://www.netbanx.com/cgi-bin/ndirect/precode.pl

 

 

 

NetBanx Assessment

 

Strengths

Weaknesses

1.     Good security.

2.     No ‘membership barrier’.

3.     Debit and Credit cards accepted.

4.     Allows the selling of ‘tangibles’ and ‘intangibles’.

5.     Real time processing of payments.

6.     Payments can be made in a variety of currencies.

7.     Cheaper than many of its rivals.

8.     Full integration into shopping carts and full integration of style possible.

1.     Set up can take time.

2.     Changes can take time and sometimes cost (depending on your package) therefore making it difficult for the seller to respond to market circumstances.

 

 

 

The Key Questions

 

 

Perhaps the key questions you need to now ask are?

 

1.     Is my product a ‘tangible’ or an ‘intangible’?

2.     How many products do I have to sell?

3.     Where am I expecting to make most sales (Europe, USA, Rest of World) and does this have any real bearing on the currency most people would be willing to use to pay?

4.     How many items do I expect to sell a week?  And what is the average cost of each sale likely to be?

5.     Do I really need any of the following built into the option I chose, or could I get the same features via another route:

a.     Shopping cart?

b.     Donation facility?

c.     Subscription facility?

d.     Email invoicing facilty?

6.     Do I want my customers to buy without having to cross the ‘membership barrier’?

7.     Do I need to be able to modify my prices quickly?

 

 

Whatever you decide to try, enjoy your trading!

 

 

 

 

James Rye

8 Grafton Road

King’s Lynn

Norfolk

PE30 3HA

 

Tel:               +(44) (0)7050 601065

Fax:              +(44) (0)7050 601067      

Email:          

 

ã James Rye 2001