How to Increase Sales with Online Payment Options

This article is a reprint of Wise Bread's contribution to OPEN Forum from American Express -- where small business owners can get advice from experts and share tips with each other.

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Most business are used to offering just a few payments options: Cash is always acceptable. Checks are usually good. Credit cards are more common than they used to be, and are just about the only option if you want to accept payments by phone. But not all businesses have added an online payment option. With more and more of the purchasing process taking place online, though, it's becoming an important consideration.

Online payment options can make a difference in the number of sales you can make, according to Fred Neff, the president of the Internet Merchants Association:

The more payment options a customer has, the more likely they will complete their purchase. Many members of the Internet Merchant Association use alternative online payment methods such as Google Checkout and Amazon Payments in addition to the more mainstream choices like PayPal and online merchant accounts. Giving the buyers a choice makes it easier for them to pay.

Adopting An Online Payment Option

The number of customers who research their purchases online is continuing to increase. Offering an online payment option is a matter of making a purchase more convenient for your customers: if they're already browsing your site, you're more likely to convert their interest into a sale if you have an easy to use solution already in place on your site. There are a variety of different payment processors, such as PayPal and Google Checkout, that have become just as recognizable as the credit cards your customers may use to make a purchase.

Depending on which payment processing tool you choose, it can be easy to add to your website. Most offer a snippet of HTML code that you or your web designer can simply paste into the code that makes up your website. Alternatively, there are many shopping cart packages now available. Depending on how your website is built, you can integrate shopping cart software that handles everything from listing new products to managing the payment process for your customers. Cathy Aggelopoulos, the owner of Snorkeling Online, started out with a website that was geared towards offering information, rather than helping customers to buy:

Being a retail store with an online informational website, we felt that we needed to take the next step. We added a shopping cart that offered payment options that were familiar and trusted by the consumer and found that our presence online was important to our business. Of our total sales, 85% are now completed on our websites with online payment methods.

The technical requirements vary depending on what tool you choose and how your website was originally built. Because of the security concerns, some older websites may need updating in order to work well with a newer tool. No matter what type of business you operate, however, online payment is an option. Many payment processors offer you the ability to charge for services online just as easy as for products. Some are built with shipping products in mind — for instance, PayPal offers you the ability to print out shipping labels automatically. There is no universal best choice for a payment process, however. It's important to look at what your business needs and choose from there.

The most important considerations when choosing an online payment processor or a shopping cart are security and cost. While features are a good guide, a more secure payment processor with fewer features is always a better choice than a less secure tool with more features, since both you and your customers' finances are at stake.

The Concerns for Online Payments

The cost for using a payment processor is typically a percentage of the total purchase, just as a credit card processor takes a fee from the money you earn. That cut of your income can be a key drawback to accepting payments online. While it is comparable to credit card payments, some business' margins are built around cash or checks. Your prices do need to be set to allow for those fees if you plan to make sales online. The only alternative is to not offer your customers the ability to buy online; instead, require them to come into your store for any purchases. If most of your business is local, that may not be out of the question. However, for most businesses, operating online is becoming necessary.

The security for any system used to handle money is crucial. You need to review the security offered to you as a seller and to your customer as a buyer. Both you and your customer must be comfortable trusting your payment processor's security. Even if the fees are higher, it can be useful to use a well-known payment processor so that your customers are more comfortable sharing sensitive information like their credit card account number. Use of a trusted payment processor can even make your website look more reliable.

Michael Jansma is the president of GemAffair, a jewelry store operating online. He had a particularly positive customer response when he added online payments to the site:

Adding online payments was like turning on the lights. All of sudden customers trusted us more. They not only purchased from us more often, but made larger purchases. We have also found that once a purchase was made with us and it was successful (and safe), they would return more often and conversions rates on those returning visitors was significantly higher. We did find for a while that people would call and verify that we were a real business and then they would make the purchase online.

Some businesses do choose to create their own shopping carts from scratch or ask customers to handle purchasing via email. While such approaches can work for some companies, they can also lead to a customer experience that leads customers to do business with someone else down the road. Such methods are often more vulnerable to attack. Established online payment processors already have experience in not only securing payments but handling problems that may occur.