Entrepreneurs-Journey.com

The folks at the AWeber blog have produced a bunch of how-to guides on using the AWeber email autoresponder with popular shopping cart and payment processors, including -

• Paypal [ review ]
• Clickbank
• PayDotCom
• 1ShoppingCart [ review ]
• 2Checkout

You can read all the guides by clicking here.

At a very basic level you can get your online business going just by using an email autoresponder and a payment processor. Combining Paypal with AWeber gives you the tools to capture emails, promote to prospects, sell to clients and take payment - a quick and easy way to get started online and launch a real business.

Not sure how to get started? Try these article for ideas and help:

- How To Use Email Autoresponders For Passive Affiliate Income
- AWeber Review - Email Autoresponder
- How To FINALLY Start Your Online Business

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I’ve written about Paypal plenty of times in previous articles on this blog. I did a review of Paypal, I talked about Paypal vs Paymate, the Australian competitor to Paypal and I reviewed the book, Paypal Wars, which chronicles the rise of the company and the battles it went through against eBay before it was eventually purchased by the online auctions giant.

I like Paypal a lot - I love getting those “money received” emails - who doesn’t. I’m well aware of the controversy the company faced in the past but I still recommend it as a solid online payments solution for any Internet business because I believe the worst is behind them. My Paypal review says just that (with a few more words to back up my argument of course).

Today though, I present an even stronger case for using Paypal - I believe no online merchant can afford not to offer Paypal. If you don’t provide a Paypal payments option you are leaving money on the table. It’s as simple as that.

Here’s why:

• Paypal is the standard. Whether we like it or not, Paypal is the de-facto, it’s what everyone uses, everyone has an account and everyone knows how the system works. Okay, not “everyone” who is online uses Paypal, but chances are if a person has made an online purchase before they know what Paypal is and how it works. The awareness factor is only going to increase as more people become comfortable with online shopping.
• People treat their Paypal accounts like play money. Initially I was frustrated that Paypal kept my money in a “paypal account” and I had to withdraw the money before I could see it in my bank account. This was one of my original complaints in the Paypal Vs Paymate debate. Paymate deposits my money directly into my bank account (minus fees) while Paypal pools my money in a virtual account where it gains no interest and runs the risk of being frozen, as so many Paypal horror story victims recount. I thought this was a bad thing.

  Now I realize this is actually a genius move by Paypal. People leave money in their Paypal account so they can use it to buy things online. That’s why they treat it as “play money”. It’s great psychology - since the money doesn’t show up in a bank account or on a credit card bill once you spend it online it feels like you are not spending real money. You might think I am foolish saying this and you may value your Paypal just as high as any money, but the fact is a lot of online consumers don’t look at their Paypal balance the same way as their bank balance. Your business has to accept Paypal “play money” because it psychologically reduces buying barriers.

• EBay creates Paypal dependent consumers. The most common form of online commerce is eBay. Many thousands of people are first introduced to buying and selling on the Web thanks to the miracle that is EBay, either by selling or buying something at auction or under a “buy it now” purchase. As we all know Paypal is well integrated with eBay and many first time eBay users will very quickly become first time Paypal users as well. It’s very likely they will keep a balance in Paypal purely as “auction money” that they spend at eBay. This process is where they first experience the “play money” psychology and at some point in the future when an eBay user decides to buy outside of eBay, they will feel very comfortable using Paypal, yet they may consider using their credit card not safe. In that case if you don’t have Paypal as an option, you potentially lose the sale.

I Just Bought New Skates

I left Australia for Canada without my inline skates. I love to skate. I planned on buying new skates when I arrived in Canada, and since it is the home of hockey, I believed their would be plenty of shops were I could get a nice pair of new recreational inline skates. Unfortunately after some research it became apparent that there are no inline skate specialty stores in Toronto and because winter is closer than summer most stores had put away their stock of inline skates and ice skates were getting all the attention.

The solution - look online. I’m no stranger to online buying and I quickly found plenty of specialty skate shops in the USA. In particular I was recommend one online shop by a sales attendant in Toronto who said she “always buys her skates from there”. This particular store was first in the search engines for inline skates and had a huge selection - exactly what I was looking for in the offline world in Canada, but unfortunately this store’s physical presence is in California.

I arrived at the Inline Warehouse skate shop and the first thing that greeted me was a huge banner at the top that said “Now Accepts Paypal”. I grinned and instantly felt more comfortable buying from them - I could use my “play money”. This factor was a major consideration for me because, surprising as it sounds, many traditional online stores only offer credit card via a merchant facility or offline payments methods like checks/cheques. Finding a merchant that uses Paypal in my mind is a tick of approval and definitely reduces my resistance to buy from them.

Paypal Must Be An Option At Your Website

The moral of this story is by having Paypal as a payment option and proudly displaying this factor, you will increase your sales. At the very least even if you don’t want to slap a big banner on your website front page saying you take Paypal, make it an option when it comes time to pay. People need to be able to spend their “play money” at your business and if you don’t have this option you are losing potential customers.

Further Study

You can find more on taking payments in my podcasts - Taking Payments Online - Part 1 and Part 2. These were created last year and are a bit rough around the edges but they contain a rundown of how I eventually chose what payment providers I went with for my online business.

Enjoy!

Yaro Starak
E-Commerce Evangelist

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I just finished listening to my most recent audio CD from Perry Marshall as part of my membership to his Renaissance Club (Membership is $29.95 a month and you get a bunch of great stuff thrown in when you sign up plus a monthly hardcopy marketing newsletter and audio CDs in the mail - see here for details).

The audio featured an interview with Stephen Arnold, a “Technology Analyst”. This guy is like a treasure trove of news about Internet companies. I don’t know how he keeps up with it all but he sure sounded off some interesting and very current commentary about the big boys - Google, Yahoo! and Microsoft.

He discussed internal situations at all three companies and looked at how Google has a competitive advantage because it’s technology infrastructure is so cheap to create. Yet its technology could potentially be an Achilles heel if something ever goes wrong with it and the Google engineers can’t figure out what’s causing the problem because of how distributed their network is (a clustered infrastructure).

Perry and Stephen covered click fraud, what Google is planning for the future, why Google replicating Microsoft Office is not really “that important” because there are much bigger things at stake based on where Google is heading. They looked at advertising models on the web, how Google’s structure is full of geeks while at the other big web firms the geeks are the minority and the suits are the majority, and a whole host of other technology topics. It was a pretty cool listen for an technology geek like myself.

Google Own Economy

What really grabbed my attention was Stephen’s discussion of the potential future situation where Google operates a successful payments system (Google Wallet - Google’s answer to Paypal), Google Base (an online global marketplace - Google’s answer to Craiglist) and Google AdWords, and how all these systems could integrate together.

He painted a fictional scenario where a seller has an item that has little value in the USA but can garner a $100 price tag from a person in Sweden through Google Base. Upon making the sale Google asks the seller what they want to do with the cash - deposit it into their bank account, transfer the funds to AdWords credit or divide it into multiple purposes.

Google essentially becomes the one stop shop of online commerce even more so than it is now. It controls the financial services (flow of funds) and the marketplace (buyers, sellers, advertisers, publishers). No company in history has ever had that much control. Stephen stated that Google isn’t there yet but if it does happen the situation means one company will be very powerful but, hopefully, everyone wins and the whole process becomes quite seamless. Does power corrupt - we will have to wait and see!

I’m a huge fan of pondering the future of technology so I thoroughly enjoyed this CD. Did any of you other Renaissance Members have a listen to it? (I know there are a few who have joined up via this blog - at least 20).

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You can find a list of other reviews I have completed and links to the products and resources I use to run my online business in the Resources Section of this website.

******

Review of the Paypal Online Payments Processor

Name: Paypal
URL: www.paypal.com
Purpose: Credit card, bank and check/cheque online payments management system to receive and send money through the web.

Let me start by saying that my personal experience to date with Paypal has been 100% satisfactory. I have never had a complaint and besides a sometimes difficult to navigate website the system has always done what I wanted it to do. I’ve processed over $20,000 worth of transactions and never had trouble accessing my money.

An online payment processor is one of the most important parts of an online business. Without the ability to receive money online you can’t really run an Internet business. Sure you could work only with offline payment methods such as money orders, cheques in the mail or cash, but all of these methods are slow and you will definitely be losing potential customers if you don’t offer some form of instant payment method that handles credit cards.

Paypal’s Bad Reputation

When I first hunted for a payments processor, which at the time was for a web hosting business I was planning, I came across Paypal. That was about seven years ago and I’d say my story is a pretty common one since Paypal was one of the first providers of “email currency”, a system where you could send money via email and there were not many options particularly for Australians back then.

As usual I conducted extensive due diligence before deciding to use Paypal. As I read forums and surfed around the web I quickly came to realize that Paypal had a terrible reputation, so bad that some of its detractors had set up a website called PaypalSucks.com, which still functions today.

As someone who has been hit several times by credit card fraud I’m particularly wary of chargebacks from customers who use Paypal to buy things from me with a credit card. To be honest I have very little confidence in Paypal to protect me from chargebacks, but that is more because of the way online transactions work - protecting the buyer, especially when no signature is present (as in all online transactions) - rather than the seller. The best chance I have, and this is where I would expect services like Paypal to protect me, is to stop fraudulent transactions before they occur.

Once the payment is made and the service or product is provided then it’s too late. Chargebacks hurt the bottom line of your business and chances are you won’t be able to beat a chargeback claim as an online merchant with no signature. However if a payment provider can stop a suspect payment using historical data and other fraud detection methods then I will not send the product or provide the service hence eliminating my exposure to loss from chargebacks.

I’ve written extensively about why I’ve recommended Paymate.com.au, an Aussie Paypal-style service, over Paypal in the past, and most of my justification was based on Paymate’s superior fraud prevention. I’ve since changed my mind during the last two years because Paypal has performed well for me and their fees are a good 30% or so cheaper than Paymate and now offer Australian-centric services. I still offer both services to my customers but prefer when they choose Paypal because it’s cheaper for me.

I’ve read the book Paypal Wars which gives a good explanation for why Paypal has such a bad reputation. In a nutshell there were times in the company’s past where it was the target of all kinds of criminal action and it suffered millions of dollars worth of losses. As part of the retaliation against these criminals many honest customers were affected, losing access to their accounts and later resulting in the class action lawsuit which cost Paypal $9.25 million dollars.

Paypal also suffered because of it’s tremendous growth rate. The managers of Paypal are largely to blame since they were focused on customer acquisition above all else during the growth phase of the business. This resulted in a company that simply could not handle the amount of customers it had to deal with and hence the poor customer service reputation.

Despite all the negative history Paypal managed to grow and maintain it’s de facto standard as the leader in online payments. The grumblings from users seems to have reduced in the last few years and my feeling is that the company turned a corner and now has systems in place to deal with fraud and customer support that are far superior to what they had in the late nineties and early two thousands. Paypal has matured through it’s growing pains, and while no doubt there are still issues, the bad stories just aren’t quite as frequent as they used to be (of course this could be because the publicity has been spun in a more positive light, but lets not be skeptical).

The Bad

The fact is there are some pretty bad horror stories of people booted from Paypal for no good reason, having their funds locked away (sometimes thousands of dollars lost) and many tales of poor customer service. I read many negative stories while researching Paypal and became very paranoid. In the end though, I still signed up to be a Paypal user because it had become the standard method of sending money online, which is tantamount to how strong their business model was despite all the negative stories floating around - you couldn’t afford not to use them. I had to offer this method of payment to my customers because I wanted to keep resistance to buy as low as possible, even if it meant risking being the next victim of a Paypal horror story.

Seven years later and happily I have no horror stories to tell. However since this is a review and I always like to discuss both the good and the bad I will tell you what I do and don’t like about Paypal in terms of my experience with it.

The customer service isn’t great. The website attempts it’s hardest to give you answers so you don’t have to query Paypal customer support via email, or heaven forbid, via the phone. Once I have tried to ask a question of their phone support but I gave up, it was just too time consuming. The email support is okay, but often has trouble answering your specific question and tends to send you preformatted template responses, which, if you are lucky, answer about half your question. Mind you the last time I required support was about two years ago and the service has likely improved. It had greatly improved over the previous two years when I last tried customer service so I think they were on the way up and may even be reasonable today.

The website is simply-complicated. Yes the design is simple, which I like, but often you can’t find the answer you want. If all you want to do is use the core functions then the Paypal website is a breeze. In my case I receive credit card payments regularly and spend money from my Paypal balance on auction items and other online purchases. Paypal is perfect for this. The more complicated your needs the more difficulty you are going to experience.

Sometimes the basic functions you would expect are not available or difficult to find. I’ve had trouble for example forcing a payment to come from my credit card and not my Paypal balance. Sometimes what you think would be an intuitive option just isn’t available and you don’t know if it’s because you couldn’t find it or because it doesn’t exist or has been deliberately made not available.

The Good

The multiple currencies system, which finally started servicing Australia recently, is fantastic and I love the way I can transfer balances in and out of different major currencies easily (you can do currency trading just within Paypal, although the rates aren’t great for short term profiteering).

The cut and paste shopping cart functions are ideal for me since I prefer to use very simple plain text “buy now” links. Once again the more complicated your online shopping cart needs the steeper the learning curve you will face integrating it with Paypal.

Paypal recently launched a merchant account service called Payments Pro that functions as a completely seamless online shopping system for your website. Provided you have the shopping cart software you can use Paypal as the gateway and payment processor and it’s completely private label, which means you can brand it as your own. I have not needed to use this service as yet so I cannot make a comment on how good it is.

Conclusion

All-in-all, for what Paypal does - primarily to allow you to send money through email and take credit card payments online - it does well. It makes what could be a terribly complex function, one full of potential security and privacy issues, and turns it into something as simple as sending email. For that they deserve kudos and I’m extremely happy with the core function and recommend it to everyone.

Yes there are customer service issues. Yes Paypal has a fairly rocky history. Yes you open yourself up to potential losses from chargebacks. The fact remains that Paypal is the largest online payments provider and you really can’t afford to not offer this method to your customers.

I recommend making other payment options available to your customers since it’s never good to rely only on one provider. I also recommend you regularly withdraw funds from your Paypal account and put that money to work for you. There is no interest in a Paypal account and you never know when you could be the next victim of a horror story or fraud attack so keep your money where you know it’s safe - in the bank or in investments.

Yaro Starak
Paypal Merchant

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