Payment Options Abound in Ecommerce

by Sara Collins of NerdWallet

If your business has an online store, you need to know the ins and outs of ecommerce and your options. Simply put, ecommerce is the way your website is able to accept payment over a secure connection. It’s how you make money when someone isn’t directly handing you cash or a check, and frankly, it’s the way most of the world does business these days. Think about how you typically pay when you buy a gift for someone or make travel arrangements? Everything is (almost always) online.

And because everything is online, options are almost limitless as far as what system to use to process online payments. You need to choose the option that is best for your business needs, which may not be the same option a colleague uses. Recommendations aren’t a bad thing; however, the most important ecommerce selection tool is an understanding of what you need and finding a system that works for you.

Questions you should consider
First things first: What are you selling and who are you selling to? Also, what type of payment do you want to accept? Credit card rates can be different within ecommerce options, so you may opt not to accept all credit cards.

How to accept payments
There are a lot of different methods for processing online payments. You can use services like PayPal, Google Checkout, or Amazon Payments, and the setup process is user-friendly, even if you are not tech savvy. You can also process payments through your site and then immediately send to your bank, but to do this, you must register an Internet Merchant Account. The setup process for this is a little more complicated and involved than using something like PayPal. To establish an IMA, you must contact your bank before doing anything else. They will require you to accept payments via your website through a secure payment service. If you do not know how to do this, your banker should be able to guide you through this process.

There is also an option called a payment gateway, which allows information such as a credit card number, to pass securely between the buyer and seller. The “gateway” acts as a middleman between the two to ensure an honest and safe transaction.


Amazon’s easy-to-use checkout page is familiar to most online shoppers.

There are many websites you can choose from that are already very popular due to user-friendliness and/or name recognition, such as Amazon, Google Apps, and PayPal as mentioned above. However, a lot of different payment processing companies are popping up in direct competition with bigger companies that have brand reputation. For example, Dwolla is a direct competitor to PayPal. The company was said to have been processing more than $1 million per day by May 2012. That number has certainly gone up since last year.


Most payment platforms features a mobile app for shopping on the go – good news for sellers and consumers.

Dwolla charges 25 cents per transaction, while PayPal charges an average of 3.4% of sales to customers. Amazon, meanwhile, charges sellers a $0.99 per item fee, plus a referral fee – a percentage of the item’s price that ranges from 6% to 15%, depending on item’s category. Google Checkout charges a fee per transaction, and this rate varies depending on the seller’s total monthly sales amount.


Ecommerce is the way we shop now. People are still going to the mall and stores around their homes, but virtually everyone has realized it is much more convenient to buy online. There are limitless resources for figuring out which options are best for your website’s needs. Considering what type of payments you want to accept, and how much you’re willing to spend on a payment solution, is a great place to start.


Sara Collins is a writer for NerdWallet, a site dedicated to helping consumers find the best coupons online.



One Comment

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