The best and most profitable specialist content websites
are like a traditional trade magazine. They generate
multiple revenue streams from advertising, affiliate deals,
sales of products and merchandise, subscriptions and
organizing events.
For a publisher to be able to achieve the goal of multiple
revenue streams, it will have to integrate payment
processing into its site. This will enable the site to sell
products and services (such as downloadable reports and
software, branded merchandise, software, etc), charge
subscription fees for access to premium content and promote
and sell events (seminars, webinars, courses, etc.). This
can be a torturous process unless you know what you are
doing.
This is a quick guide to getting started, based on my
experience of launching sites all over the world, including
the U.S. and the U.K.
Ways of Taking Money
The first task you will need to undertake is setting up the
means to process the payments. There are essentially three
ways to do this:
• An online payment provider such as PayPal or Google
Checkout
• A payment service provider (PSP) such as WorldPay,
Patrasys or NetBanx
• A combination of a payment gateway and a merchant service
account
I will quickly go through the pros and cons of all three.
Online Payment Provider
PayPal is the world's biggest online payment provider. Most
people on the Internet have either used PayPal or are
familiar with the service it offers. PayPal enables an
individual to receive a payment from a customer by credit
card. PayPal manages the transaction from the time a credit
card number is entered into a website to the time the money
is deposited in your bank account.
Pros
• Simple and cheap to set up
• High acceptance rate of new clients
• Global
• Improving all the time; customers without a PayPal
account can still pay you through PayPal
Cons
• A nasty habit of freezing clients' accounts, and it can
be tricky to get them reactivated
• Very poor customer service
• Perception that PayPal is a service associated with
'cheap' websites; this is changing as PayPal launches new
services and has started to appear on bigger e-commerce
websites
Google Checkout is an alternative, but it is years behind
PayPal. It is worth keeping an eye on.
Payment Service Providers
PSPs are similar to PayPal. They manage the whole
transaction from the credit card being inputted into a site
to the funds being deposited in your bank account. The
biggest PSP is WorldPay (www.worldpay.com). Others include
SecPay (www.secpay.com), Netbanx (www.netbanx.com) and
Patrasys (www.patrasys.com).
Pros
• Single provider takes care of the end-to-end transaction
process
• High acceptance rate of new clients
• Generally good customer service
Cons
• Very expensive set-up and transaction fees
• Difficult set-up and integration
• Often hold funds for up to 60 days, which can kill cash
flow for a small business
Payment Gateway with Merchant Service Account
All major banks have a merchant service division which is
responsible for enabling clients to process credit cards.
These are called merchant service providers. If you go to
your bank and say that you want to start accepting credit
cards on your website, they will point you in the right
direction. Once you have a merchant service account, you
need to have a payment gateway. This is a service that
enables the transaction to take place on your site. It
checks that the credit card is valid, checks for fraud and
verifies all the personal details. Most banks try to sell
website owners both their merchant service account and
their gateway product. In my experience, bank-provided
gateways are clunky, hard to integrate and very expensive.
There are far better services in the market. In the U.K., I
use Protx (www.protx.com) and in the U.S., Authorize.net
(www.authorize.net).
Pros
• Cheapest transaction rates
• Rapid transfer of funds into your account
• Good customer support from most banks
Cons
• It can be very hard for new businesses with no trading
record to get a merchant account.
• There can be problems getting a gateway and merchant
service account to work together.
• Banks can be reluctant to allow annual subscriptions.
My Recommendation
If you are starting a new business with no trading record,
my recommendation is to use PayPal to get started. Once you
have a trading record, go to your bank and apply for a
merchant services account. If you get one, then switch to
processing payments through this account and a cheap
gateway service.
----------------------------------------------------
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