I had a bit of a surprise a few weeks ago when a potential client nixed the option to offer the ability for people to pay for their products and services on their website. The reason for this is that they were trying to keep costs down. I can understand this, everyone wants to keep costs down. But I couldn’t help but wonder if not providing this option for their customers was in their best interest.
What came to my mind is that in today’s world the majority of people want and use the convenience of paying online for just about everything. By not offering this opportunity to their customers, they were actually cutting into their own business throats. Whether you’re selling a physical product or a service, people need a way to pay for what you’re selling.
Five Good Reasons to Offer Online Payment Ability on Your Website
- It’s quick and easy for both the customer and the business.
- In the case of download products such as ebooks and music, the customer gets their product immediately which puts a smile on their face.
- The business gets their money right away and if it’s a physical product, this speeds shipping by not having to wait for payment by check.
- The business gets the benefit of spontaneous income. Brick and mortar stores put all those goodies by the check-out lines which gives shoppers the opportunity to make a last minute impulse purchases. This must work or stores would have stopped doing this long ago.
- If you don’t give your customers what they want, they’re gonna go elsewhere.
But What About the PROCESSING FEES?
We can’t get away from the fact that the credit card companies and places like PayPal do have to make money, too. When it comes to online payments, they grab their fees before you get your money. It’s a fact of life and part of doing business. At this writing, I believe PayPal charges 3.5% per transaction. If you don’t utilize PayPal services, you don’t have to pay the fees so you save money there. But, if you re-read the five reasons above that I gave — this is where cutting your own throat comes into play.
Let’s say you have a $100.00 product that someone purchases from your website. 3.5% is $3.50 leaving you with $96.50. That’s pretty darn close to a hundred bucks! Had that person not purchased from your website simply because they couldn’t pay online for it, you’d have zero dollars and probably a lost-forever customer.
What you’re paying fees for is an invaluable service. PayPal and other payment processing companies handle all the legalities when it comes to the requirements for offering an online payment option. You don’t have to worry about and pay for and SSL certificate and it’s annual renewal fees. Depending on the level of the certificate your website would require — holding your own SSL certificate can be costly. They expire and have to be renewed annually or regularly at some time interval. There are usually installation costs as well. Compare those fees to what you’d fork over to PayPal in fees and you might find it’s cheaper to let PayPal do the work!
I was originally hesitant to add online payments to my own site but once I did, my business income went up. Giving people this simple convenience has worked to my benefit and the increased business more than covers the cost of my processing fees.
AVOIDING the Processing Fees
Some people think the solution is to pass the cost along to the customer and charge the $3.50 processing fee as an additional cost in the check-out process in order to recoup the fee. Nice thought and it’s common practice to pass costs along to the customer but unfortunately, this is illegal. If you sell anything (online or off) you cannot add the processing fee to the final cost during the payment process. In order to pass the fees along to the customer what you’d have to do is charge $103.50 for your $100.00 product. In essence, you simply raise the cost of the product.
But what about people who still prefer to send you a paper check? There are still a few of those out there, older people for example and those who aren’t trusting of the online buying experience. They’re few and far between, but they’re also still your potential customers. By adding the fee into the cost, you’re then charging paper payers the processing fee as well. I personally don’t find this to be a viable option for my business.
What you can do legally is to offer a discount to those who pay by check or money order. Ok, so let’s say you give them the 3.5% discount that you’d be charged if they paid online. You still only get $96.50 for your product so you haven’t gained a thing by doing this.
PayPal’s 3.5% fee isn’t a whole lot for smaller payments but it can be quite a chunk out of a large payment, such as a website retainer fee in my case. When I do a website contract, I do require retainer fees to be paid by check or money order. I don’t lose any money in fees and the client gets to put their entire retainer fee towards their website cost.
I don’t care for any of the avoidance methods outlined above. I feel better about me and my business by not raising my prices or offering discounts to cash clients to avoid paying processing fees. I consider processing fees to be just a part of doing business. When it comes to tax time, I get the total I’ve paid and include this in the documents I give to my accountant who prepares my taxes. Processing fees are a tax deduction so in the end I wind up recouping some of my losses.
My Suggestion to Website Owners
Don’t avoid offering the option to pay online for your products or services as a way to cut your website development cost. Don’t consider it as a loss of income, in the big picture — it’s really not. Find a way to make this work for you. Whether you use my solution or find one of your own, I believe it will do your business good to include this option on your website.