Payment methods

[Stormcrow]

I've just gone through and read all of the threads in this forum, and there is a great deal of good information and observations. I wish there was more, but I think most knifemakers are focusing on the creative and technical s##es of things, like I typically do when I browse the Knife Network.

But now I'm wanting to start doing relatively low-level production of a sharp-and-pointy product for sale, and I want to do it as a business. Which means that I'm doing research in an area that I've never much looked into.

I'm certain I'll have more questions later on, but I just wanted to throw out a question about how y'all do payments for what you sell.

Cash is obvious, and personal checks or money orders get cleared by the bank before anything is ever shipped, well and good, but what about more modern methods? I'm not quite a Luddite, but I have yet to use Paypal. How does it work? What will it do for me that makes it advantageous? What about getting set up to process credit/debit #####? Everything nowadays can be bought with a swipe of plastic, nearly, so how do you go about getting set up to be on the selling end with Visa, Mastercard, and company?

Thanks guys, and in the meantime I'll keep reading the Small Business for Dummies book I bought this weekend.

[george tichbour]

Bes##es cash, credit ##### are preferred. We have Visa and Mastercard with telephone processing priviledges.

Amex was too expensive so we dropped it, seldom used at any rate.

Paypal has too many lawsuits against it for freezing accounts for us to take a chance on it.

George

[NJStricker]

Paypal is owned by Ebay. Ebay has a history of being anti-gun, and to some extent, anti-knife. They take their cut on each transaction. To some degree the participants are "protected" but it is ultimately up to PayPal to dec##e what merchandise is covered under this protection.

[chiger]

Storm,

PayPal works, if you can live with the down s##es the guys mentioned. The problem is that most E-commerce customers nowadays have paypal accounts and want to use them. If you use paypal they have a couple of different types of accounts, both business and buyer. Some verified and some not. You can tell the customer up front that the transaction will be treated like a check transaction if it's unverified. The simplest user account that allows sending and receiving money, I forget what they call it, but it works fine for me. To me there is no need to go to some high end business account until the business dictates it. There are a couple other companies that do what paypay does...but most of your customers will not use them.

Paypal works a couple of different ways depending on the account you set up. The most common is just operated from the e-mail associated with the account. You prov##e the customer with your email address and they go to their account and transfer funds to that email account. That can all be handled through email or over the phone. You can help the process along by having the paypal link take them to the account login screen at paypal. WARNING!!! When you put you associated email account on the web page, do it as a gif or jpg image. DO NOT just have it as plain text ins##e your html code. The bad guys have web bots whose only purpose for being is to go out and find that stuff. END WARNING!!! The other way is one of the higher end paypal accounts that will prov##e you with a link to handle all that stuff. The customer is automatically taken to sign in and transfer to your account.

As to credit card transactions. Setting up an online card management system on your site is crazy. It exposes you to all kinds of legal issues that you just do not want as a small business owner.

There are several companies that will handle that sort of transaction on line for you. You just link to them so that when the customer clicks that payment method they are taken to a secure site, maintained by professionals. Just be sure to tell them plainly that they will be redirected to a secure site so they don't FREAK OUT and hit cancel because it scares them. The fees for different companies vary. Some charge a flat fee. Some have sign up fees and get a percentage. Some just charge a percentage for each transaction. You'll just have to do some research and see which one works best for you.

The other option is the phone verification system that George mentioned. There are a few of them and they take their cut in exactly the same way as the internet companies do it. Again, you'll just have to do some research and choose which one makes the most sense for you.

Hope that's of some use.

chiger,

[Ed Caffrey]

Very good information presented here! I would add that when cons##ering whether or not I wanted to utilize Paypal, I looked at the purchase habits of past and present clients. Let's face it, for most customers it is "easy" for them to pull out a credit card and make a purchase. Most peoples brains do not register that they are spending money like it does when they are holding cash in their hand, looking at actual money. I had a merchant credit card account for a while, and when the "discout" started eating me alive, I canceled it and d## not take credit #####.....this really hurt my business. Even with all of it's faults, Paypal was a way for me to accept credit ##### as payment, without all the hassles of varying fees, monthly/yearly charges for the service, and cost of equipment.

Prior to starting a paypal account, I tried to educate myself as much as possible about it, and was also worried about all the frozen accounts and other issue people have faced. The solution I came up with is this:

Prior to opening a paypal account, I went to a local bank (one that I had no accounts at) and opened an entirely new account, and got a debit card with the account. Both this account and the debit card are the ones attached to my paypal account. I keep minimal funds in that account, and whenever someone pays me via paypal, I immediately transfer the money into the bank account. As soon as it gets there, I withdraw it, and deposit it into my knife business account, which is at a totally different bank. So far I have been fortunate in that I've had no difficulties. I think if a person thinks it over and is smart about how they handle it, a Paypal account can be a very good thing for their business.

The methods of Payment that I accept are cash, checks and Money Orders (both must clear prior to goods being shipped), and Paypal. I make it a point to inform clients that I can accept credit ##### ONLY through paypal. Concerning the fees.... by law you are not allowed the add the fees to the price of an item. HOWEVER, the same law states that it is permissible to charge an administrative/processing fee for customers who utilize credit #####....... I'll leave it at that.

[DiamondG Knives]

As Ed says, working the paypal system to your advantage can be a easy way to start up. Its funny, my banker and lifelong fishing buddy told me almost exacly the same thing that Ed does! If the bank you are using gets stung, they not paypal can freeze other assets in other accounts. He suggested opening a checking account with a debit just as Ed stated. At another bank of course.

Good Luck and God Bless
Mike

[Les George]

What about payment at shows? In particular credit ##### at show....

[AcridSaint]

Ed had good advice for folks accepting paypal payments, get the money out as soon as you get it. Paypal has been known to just take money back out of your account in a dispute, so if there is any problem you could end up on the short end of the stick. If you have no money in your PP account, you can go through proper resolution without worrying about having to fight to get money back that you should have never lost.

[AcridSaint]

Les - if you get a cellular internet card or have a phone that can be connected to a laptop you should be able to process payments at shows through an online merchant account or through paypal, even if they don't have internet access available to you. It's not as quick and easy as a swipe, but it will work and can be cheaper (and easier to get setup with).

[J.Arthur Loose]

I have the Visa / Mastercard phone-entry system. The credit card company really wanted me to use a computer system, but they also d##n't have software for Mac. I had to convince them that I attend shows all the time to get the phone-entry system. I've had about 5 requests for Am-Ex in about 8 years, so I'm not paying for it.

I was going to suggest what Ed d## as far as Paypal goes.

As far as web sales payment goes, I insist that my customers call me rather than use some kind of shopping cart. It's more personal and puts folks at ease when they talk to the artisan. Bes##es, I NEVER use those shopping cart credit card entry online things myself...

[Stormcrow]

Thanks guys, a lot of good information here. Which, of course, leads to new questions. :-)

1. I'm still a bit vague on Paypal. The way I take it, both the customer and the business have Paypal accounts set up which they can deposit or withdraw money from. The customer can make a purchase with Paypal that will immediately put the money in the seller's account, and then they can add more money to their own account when they want to make another purchase. Paypal takes their percentage of the transaction. How accurate a description is that?

2. Does having a Paypal account eliminate the need to have an online credit card service? That would mean that a buyer who wants to buy with just a debit card would not be able to unless they set up a Paypal account, right? If you get an online credit card service, is there really much point to using Paypal?

Ok, we'll go with that for now. Y'all have been a bunch of help!

[NJStricker]

PayPal actually works several ways for payments. First, you can deposit money into a PayPal account, and pay for a transaction with the money in the PayPal account. Second, you can link your PayPal account to a bank account, and effectively give PayPal authorization to withdraw the money from the bank account whenever you make a purchase. Third, you can link your PayPal account to a credit card, in which case a charge is made against the card by PayPal when you make a purchase.

On the receiving end, the money you receive for merchandise sold gets deposited into your PayPal account. There are also a couple of different options there. If you use PayPal infrequently, as in an occasional Ebay sale, you can pay a fee and PayPal will mail you a check for an amount you want from your account. Alternatively, you can link your PayPal account to a bank account (as Ed has done) and withdraw money from your PayPal account to the bank account. At that point you can withdraw the money from the bank account, because as was noted above, PayPal could potentially take that money back if there is a dispute.

Note that there are different "levels" of PayPal accounts, the simplest of which is free, and the more sophisticated ones I believe there is an annual fee (from what I remember, it's been several years since I set my account up, things may have changed.) Anyway, with some of the basic accounts there is a limit to how much you can withdraw from your PayPal account each month (around $500 IIRC). So, if you are selling $1200 knives, you have to withdraw amounts over 3 months to get your money out. If you move up to a business account (which has higher fees) then I think the amount you may withdraw each month goes up.

[AUBE]

I recommend following Ed's advice with setting up your Paypal account. I've been using Paypal for hundreds of transactions for several years with no major problems but it's better to be safe than sorry. Others have had problems with Paypal, and you can see these problems by searching the net...but keep in mind Paypal is a huge company that does many, many transactions and only a very small amount of transactions have problems. Naturally people are more vocal about the bad transactions than the good.

As for the actual transaction methods I haven't tried them all but how I do my own is I linked to my bank accounts debit card/account. When I make a payment to someone the payment goes through immediately. If I have funds in my Paypal account the payment is deducted from there, if not it is taken from my bank account. When I receive payments it goes to my Paypal account, which I then transfer to my bank account...and withdraw soon after.

Using a Premier/Business account can actually be cheaper for you if you accept credit #####. Plus as mentioned before with a personal account you are limited to how much money you can withdraw each month...and how many credit card transactions you can accept. Here's Paypals page on the matter https://www.paypal.com/us/cgi-bin/we...y-fees-outs##e

With the way my business is set up I couldn't survive without Paypal. I now receive more Paypal payments than other methods combined.