I recently asked readers for feedback on topics they would like covered on this blog. Most of the feedback was “Continue as you are Ed!”, but one reader posted the following question…
“For on-line businesses that already accept credit and debit cards (and have low commission rates for doing so with their bank) would you recommend that they also accept Paypal?” -Adam
Thanks for the suggestion Adam. I think you’re referring to my advice in Shrink Wrap Your Brain! home-study programme — there’s a section where I recommend PayPal to accept online credit card payments (for information product sales).
Now anyone who currently sells online and already has facilities to accept credit card payments may be thinking the same as Adam. Especially if they charge a lower rate of commission than PayPal. So let me respond to that question here for everyone’s benefit.
Yes, PayPal do charge more commission than alternative credit card processors. So at first glance it would make sense to those instead if you have them. But perhaps not. Here are a few reasons:
1) Speed to set up.
Using PayPal I can create and launch a brand new product in less than 60 minutes. (Really! Shrink Wrap Your Brain! shows you how.) Even if it’s a brand new domain name (web site) I can do it in less than 24 hours — and that includes the time it takes to register the domain and set up the hosting.
Accepting credit cards is really easy with PayPal. You simply generate the button using PayPal’s easy online system, then paste it into your web page. That’s it. Maybe your credit card facilities allow a similar degree of flexibility — but most of the ones I’ve used over the years have been a pain to set up and test.
So unless your credit card system’s really easy, I recommend you use PayPal to launch new information products. Avoid any technical complications and quickly test the market’s response to your product.
Then if it sells well, and if it suits you, then you could change the site to use your own more complex but less-expensive credit card processor.
However, it’s still not clear cut whether you should. The second reason is…
2) Conversion Rates.
PayPal have really tightened up their interface and most people don’t have a problem using PayPal. I’ve no doubt they’ve invested heavily in testing their interface to ensure it is easy and understandable for most people to use.
If you create your own in-house payment system, how much time, effort and money can you put into usability testing to make sure it doesn’t throw up invisible barriers during the ordering process?
In fact PayPal is now so well known — probably down to their close integration with eBay — that many people who use the Internet frequently will be familiar with it. And these days you can pay with your credit card even if you don’t have a PayPal account. So no one is excluded.
But what about also taking orders over the phone as well as (or even instead of) PayPal/ Well that doesn’t suit my business, but certainly, if you have staff who stand by your phones, that could be an option for you.
However, the intense nature of 24-hour specials means that accepting telephone orders can damage their effectiveness. People can phone up after the deadline and try and abuse the strict time limit. Don’t accept phone orders and that problem doesn’t appear.
And when you get high volume sales during the 24-hour period — if you have a large list of prospects and customers and offer a good discount like my usual 65% then it’s likely you will — you would need a lot of staff and incoming lines to handle the sudden flood of telephone orders, especially in the first and last hours of the special.
I’ve found PayPal to increase conversion rates for simple ‘quick’ purchases like information products. So unless you have a simpler system, it’s another tick in the box for PayPal.
3) Load Bearing.
PayPal can handle heavy traffic (lots of simultaneous orders), and they are reliable. It’s not very often their site goes down or is offline.
If you use your own web site to accept credit card payments — how reliable is your web host? What if your ISPs server crashes during your 24-hour special, or your web site simply can’t cope with the heavy traffic?
And is your online payments system secure? Does it show a padlock at the bottom of the screen so people know they are placing an order securely? PayPal removes all of these concerns. How much is that worth to you?
4) Postage labels.
PayPal provide a facility that let’s you print postage labels with the correct stampage. So in a sense they have a simple order management system which you can use that to ‘mark off’ physical orders when they have been processed. Great for small businesses that don’t have fancy mail order management systems or e-commerce web sites.
5) Refunds.
PayPal also have a facility to automatically issue refunds with just 2 clicks of the mouse. Hopefully you won’t ever need to use it, but it’s another great time-saving feature if you do. It also makes testing your buttons very easy. (I explained how to do that in another blog post a short while back.)
6) Lifestyle design.
My Ultimate Business Blogging course went on 24-hour special while I was in London the other week.
You may have read on my blog recently how the web site (landing page) that sold that product automatically changed to show the full price of £62.50 instead of the £21.88 price, at the exact time the 24-hour special ended. I was on a train at the time — without a laptop. Now that’s what I call total marketing automation!
Actually it was really easy to do, again mostly thanks to PayPal and the way their BuyNow buttons work as a ‘self-contained solution’.
The implication is that my product launches via 24-hour specials can happen anytime, regardless of wherever I am in the world, and without requiring anybody to be on standy by to change prices at the exact time.
Could you do that with your own online payment facilities? Yes, I’m sure a web developer could do the same thing for you with your own system, but probably not without a lot of custom coding, time and expense.
In a nutshell, PayPal greatly simplifies information product launches. It can even be used to split-test different prices very easily. (A VERY powerful tactic — more about that in my ‘Landing Page Power’ home study programme when it launches early next year.)
Are there any alternatives to PayPal, but with the same benefits described above?
Absolutely. Check out Kunaki. You create your DVD in the way I recommend, and use software they provide to upload the contents of that DVD to their web site.
Once uploaded, anyone can order your DVD and have it shipped directly to them — with very professional packaging and disc label, all manufactured by Kunaki, and for a very low price. They also swipe credit cards, so they not only replace PayPal but also deal with product fulfilment. I’ve got big plans for using Kunaki in future, (especially thanks to Steven Lohrenz, but more about that some other time.)
And there are more alternatives to PayPal but with the same benefits. I’ll talk about them here soon.
How easily and quickly can you launch a web page and accept payments with your credit card service?
If it’s complex, takes a lot of setting up, and you have to pay a web developer to do it for you (before you even know if your product will sell or not)… I recommend PayPal, and yes, even if that means paying slightly more commission.
-Ed.
PS. And if this post didn’t make any sense, then you need to Shrink Wrap Your Brain! That video based home-study programme shows you how to create a landing page — comes with a template you can use and edit very simply, and it shows you how to create PayPal buttons that allow you to do all the cool stuff explained above.
