5 replies to this topic

[rudolfl]

Hi, all

This probably was asked before, but I did not find the thread.

Is there any statistical data that shows if people prefer to use PayPal or Credit Card to purchase online?

I currently only accept Credit Cards via payment gateway. Few customers were asking about PayPal and that got me thinking.

Materials on WWW suggest that for small volume of transactions, PayPal is more economical, but on higher volume, credit card is better.
Also, PayPal is somewhat hostile toward sellers. If customers initiates a dispute, PayPal firstly takes money off seller, then takes its time to look through complaint.

Anyway, any suggestions? Should I introduce PayPal?

Any ideas and suggestions are greatly appreciated.

Thanks,
Rudolf

[MrPhil]

Well, the vast majority of people are using credit cards either way. It's just a matter of whether you look trustworthy to them for directly taking their credit card information, or whether they want to bother with setting up a PayPal account (some PP plans can accept CCs without a PP account??). PayPal is a well known and widely trusted name, and might gain you some sales (PP's protection of buyers). If you take credit cards directly, through a payment gateway, you will be required to meet PCI-DSS standards anyway, so the security question is mostly moot. I suppose some people looking to gyp you by filing bogus claims might prefer PayPal if they think PP will tend to take their side. For the small number who don't have credit cards and want to use debit cards (?), checking accounts, eChecks (?), etc., PayPal could slightly increase your sales. Just be careful not to ship before the check or whatever clears.

For small volumes, the free setup/no fixed fees/no PCI-DSS audit fees of PayPal outweighs the higher per-transaction costs. When you get big enough, it will tip the other way and become cheaper to go with a payment gateway/merchant account (directly accept credit cards). If you're already successfully running with payment gateway/merchant account, I doubt that the probable small number of additional sales (unless you cater to an unusual market lacking credit cards) would outweigh the added hassle and cost of PayPal. Keep in mind that if many customers use PayPal instead, your investment in PCI-DSS compliance and the payment gateway monthly fees will now be spread over fewer transactions, possibly making it uneconomical to accept credit cards. At that point, you would probably drop one or the other payment method.

The final decision is going to have to be based on your target customers, their normal online credit card use, and your reputation for fairness in disputes.

If you haven't done so already, you might survey those potential/actual customers asking for PayPal, and find out why they would rather pay that way than directly with a credit card.

Edited by MrPhil, 24 May 2013 - 05:41 PM.

[14steve14]

MrPhil, on 24 May 2013 - 05:39 PM, said:

If you haven't done so already, you might survey those potential/actual customers asking for PayPal, and find out why they would rather pay that way than directly with a credit card.

This is what I would do. try to find out why these people want you to offer paypal and what they think the advantage will be.

I use only paypal and tend to find that very few people pay using money in a paypal account and most pay with a debit or credit card. This would surely mean that as long as your payment processor is recognised, there should be nearly no difference.

From my own buying perspective on the internet, I am always more wary of those sites that keep me on the site to make a payment, rather than transfer me to a payment processor. I dont know why.

[rudolfl]

I use payment gateway that keeps customer on site (eWay).
One theory I heard is that people will more likely use PayPal because that does not feel like "real money", especially if they have some funds in their PayPal account.
As for surveying customers -- it will be biased, as most of the customers on my mailing list already used credit card to pay.
I guess, it will also depend on the customer type who use the site. Mine are ladies, many of which are older ones.

Rudolf

[Mort-lemur]

On my sites I give customers the choice - because I have got them as far as checkout and dont want to lose them because they dont like a particular payment system.

I offer:

Paypal
Cards via Barclays EPDQ
Phone with Card Payment
Bank Transfer payment
Cheque

I have also incorporated a Paypal Gift Voucher box as it is far simpler and dare I say works better than some of the OSC voucher contributions.

I find that there is about a 50-50 split between customers using paypal and customers paying via EPDQ

Thanks

[MrPhil]

rudolfl, on 25 May 2013 - 07:39 AM, said:

people will more likely use PayPal because that does not feel like "real money"

That's an interesting viewpoint that I haven't seen before. I suppose it could work the other way, too -- once they receive the package they have buyer's remorse in that they just now realize that they've spent "real money", and either return it or put in a claim of "not received".

Mort-lemur, on 18 June 2013 - 06:52 PM, said:

On my sites I give customers the choice - because I have got them as far as checkout and dont want to lose them because they dont like a particular payment system.

Just be careful, as I said before, about incurring large fixed monthly costs and fees that are amortized over a smaller number of transactions. That could make a payment method become a money-loser. Say you have a thousand credit card transactions a month -- the PCI-DSS audit costs, the SSL certificate, the payment gateway base monthly fee, etc. are spread over 1000 purchases. Now offer PayPal, and the number of credit card transactions drop to 10 per month -- you may now be losing money on those transactions!