RESOURCE GUIDE: Alternate Payment Systems

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  “Find out what your customers are asking for,” advises Joan Broughton, vice president, content and education for the Shop.org division of the National Retail Federation. “Then ask the providers who else is using their technology. Contact those merchants to see what their experience has been with it.”

• Focus on providers that either have a lot of positive and extensive press already or are actively working to promote their services to consumers. It is not your responsibility as a merchant to publicize an APS or how it operates; it's the provider's responsibility, says CyberSource spokesperson Bruce Frymire.

  “Merchants have a certain amount of real estate available to them on their Websites and a certain amount of time in front of the consumer,” Frymire says. “If it were their responsibility to educate customers on the various payment methods, it would direct attention away from where it should be, which is on making the sale.”

• If you have a lot of international customers, it may make sense to accept wire transfers, as well as PayPal, which is worldwide.

• “One claim many of these services make is that your cost will be lower than that of credit-card transactions,” notes CyberSource's Burke. “Read the fine print to make sure this is the case. Also, make sure you will get your money as quickly as you would with a credit-card payment.”

Having your own merchant account, as with a credit card set-up, increases the flow of funds to your bank. While the account provider will hold your funds to prevent chargebacks, it's usually only for about 48 hours. With an APS provider, however, you may need to wait for a week before you receive your funds.

	“How many payment methods are enough?”

According to research conducted by CyberSource Corp., a systems integrator that provides electronic-payment and risk-management services

• 59% of its clients support one or two alternative payment system options;
• 30% support three or four options; and
• 1% support five or more options.

What is the ideal number to have? There is no easy answer.

“If have too many options, it can become very costly,” says Joel Van Arsdale, senior consultant/director of research for First Annapolis Consulting, a payment products consulting firm. “In addition, it can become confusing for the customer.”

Pascal Burg, a director with Edgar, Dunn & Co., a financial services consulting firm, agrees. “You don't want to confuse customers at the checkout stage, so you don't want to offer too many. In addition to credit cards, you probably only want to accept two or three more services.”

But CyberSource senior product manager Jeffrey Burke says that according to the company's research, merchant that offered at least three alternative payment methods had a 14% higher sales conversion rate than those that offered only one or two. — WA

	A sampling of APS providers

It is virtually impossible to decisively categorize APS providers, because some of them offer a wide range of services that cut across a number of categories. In addition, some of the services seem to straddle two or more categories.

It is also difficult to organize providers by size, because that changes monthly. Some of these providers may not even be in existence anymore in a month. Others may have merged with larger providers. Still others may increase market share quickly in the near future (as Google Checkout is expected to do).

As such, providers here are listed alphabetically.

ACIES
www.aciesinc.com

AUTHORIZE.NET
www.authorize.net/echecknet

BILL ME LATER
www.bill-me-later.com

CERTEGY
www.certegy.com

CHECKFREE
www.checkfree.com

FASTLANE SECURE PAYMENTS
www.fastlanecpn.com/us/

GOOGLE CHECKOUT
checkout.google.com

IMPACT PAYSYSTEM
www.impactpaysystem.com

MOBILE-LIME
www.mobilelime.com

NATIONWIDE PAYMENT SOLUTIONS
www.getnationwide.com

PAYPAL
www.paypal.com

PAYPASS (division of MasterCard)
www.paypass.com

PEPPERCOIN
www.peppercoin.com

QPASS
www.qpass.com

RBA INTERNATIONAL
www.rbaintl.com

SECURE-EBILL
www.secure-ebill.com

SPEEDPASS
www.speedpass.com

SPEEDPAY (Western Union)
www.speedpay.com

Telecheck
www.telecheck.com

TEMPO PAYMENTS (formerly Debitman)
www.tempopay.com

TIO NETWORKS
www.tionetworks.com

TRIVNET
www.trivnet.com

VALISTA
www.valista.com

VIVOTECH
www.vivotech.com

	“Why we added two APSs”

Computer and electronics merchant TigerDirect.com accepts payment via Secure-eBill as well as by PayPal. “We introduced two alternative payment systems for a number of reasons,” says vice president of sales Patrick Fiorentino.

“First, customers are looking for alternative ways to make payments. There is a big trend toward people wanting to remain third-party to their payment information. They don't want to give credit-card information or do direct transfers to vendors. They want to go through a third-party that they believe will hold that information secure.

“Second, customers want to pay in a number of ways. If you don't offer these permutations, they won't do business with you.

“Third, we prefer customers to go this direction because of the financial benefit we receive by using these services, compared to credit-card charges.

“Fourth, our risk-analysis department consists of 40 people who spend their time reviewing and analyzing credit-card payments to determine whether to accept them or not. However, credit cards represent only 14% of our total transactions.

“When we introduced PayPal two years ago, we wondered how many people would actually use it. We were surprised to find that that business doubled year over year. And since introducing Secure-eBill, we have seen the numbers go up every month.”