Understanding E-commerce, Merchant Accounts and Shopping Carts
You think that it would be pretty easy to have somebody that wants to buy something from your website, to have that purchase go through, and have the money get deposited into your bank account. But there are actually several more steps involved, that's why it can get confusing.
First of all, you need a Shopping Cart.
A website and a shopping cart are separate and should be separate, but shouldn't be complicated to integrate the two.
A lot of times, there are a lot of shopping cart companies out there that have a lot of strengths and good shopping cart but they also try and convince you to manage your website from within the shopping cart. That doesn't work so well, especially if you want a custom or real professional website.
Moving on, a shopping cart allows a customer that is on your website to select a part of the service that they want and add it to their shopping cart. They can then proceed to purchase that by entering their credit card information.
The next step is the gateway.
Once they have entered their credit card information, it’s a gateway that takes that credit card information and processes it to see if there's authorization to proceed with that transaction. Once that is authorized, the gateway will then process that credit card, pull the funds and send it to the merchant account. Now, the merchant account is where the funds will reside for a short time and you can set it up to automatically transfer the funds from that merchant account to your bank account or your credit union or your check account - whatever for your business.
So those are the steps.
It's a little bit more involved than you might have thought originally just to make a simple sale on your website.
The simplest way that I recommend in getting started is the way that I used when I got started which is Paypal.
The reason why Paypal is such a good place to start is because it takes care of three things in one. Paypal is the shopping cart; it’s also the gateway and the merchant account. You can set up an account with Paypal.
We'll go over some other reasons and advantages of Paypal especially early on.
It makes it pretty simple to where you can add e-commerce to your website without having to do three separate steps because it takes care of them all and it’s pretty simple and straight forward.
When you want to go more advanced, I'll show you some reasons for my recommendations here.
I recommend using Procart.org where you can find information about shopping cart. It is by far and above, the best shopping cart for your website. I'll cover reasons for that.
I also recommend Beanstream.com for the gateway in merchant account. They take care of both these things combined and there are a lot of reasons for that. Where going to that right now.
First of all, when you look at custom website design, let’s look at the top row there for custom website design, you can do that with Paypal, you can also do that with Procart. With Virtuemart, another partner shopping cart out there, it makes it really hard to do custom website design - you can, but it just makes things really hard as any cart is the same. And when you use Shoppify, you also can't do custom wbsite design. Shoppify is another partner shopping cart.
If you want to have one shopping cart from multiple websites, meaning you might have several different marketing channels or you actually got several different businesses online, in lot of cases you have to purchase or set up multiple shopping carts for those multiple websites. In the case of Paypal or Procart, you don’t! You can set up one shopping cart and use that for multiple websites. That makes it amazing. With Virtuemart, ZenCart and Shoppify, you have to set up a new one for each website and that can get quite expensive.
SSL certificate is very, very important when you have e-commerce because people are going to enter their credit card information. You want to make sure that’s very secure. A good SSL certificate is quite expensive and you pay for it in an annual basis. With Paypal, those come included you don't have to worry about paying for that. For Procart.org, that comes included. Virtuemart and ZenCart are not, so it’s certainly a disadvantage. There, you have to pay for setup, real pain, and then two you should have to pay for that year after year. Shoppify does have that included in them.
If you want to build email products and have people purchase a product directly from their email the only one that you can do that with is procart.org. That’s one great advantage of Procart.
Another one is, you want it to be really easy to add new products to your website to build this all. With Paypal, it takes you five minutes or may be between 3 and 5 minutes - if you have done adding a few products before maybe it will only take 3 minutes. With Procart, I would say between 1 to 3 minutes, it’s even quicker to add a product. For adding bulk products, you know you could, that’s how much it will take from start to finish adding one product. If you’re adding a big list of products, you can actually upload a lot of it. You can do that in Paypal and Procart, so it’s very, very easy even if you got large masses of products. With Virtuemart and ZenCart it is pretty complicated. Shoppify, I put yes there but it’s not quite as easy as Procart. I’d probably say it’s a step above Paypal and the easiness there.
The ability to modify products actually is not very easy in Paypal. It’s like you have to recreate a new product in Paypal. It’s probably the easiest way to do so it takes time. With Procart.org, you just want to lower the price or something it’s really easy to do and it takes you two seconds. It’s pretty difficult with Virtuemart, ZenCart. With Shoppify it’s actually pretty easy.
SEO Friendly - this is a big issue. With Paypal, it does not really hurt the SEO at all, it does not really help. I put a yes there because your website will stay SEO friendly using Paypal. Let’s skip over Procart for a second. Virtuemart and ZenCart are terrible; they make it really hard to do the onsite optimization for your website. Shoppify is even worse than that, it’s really, really hard. You don’t even own your website there; you’re just renting your website space with Shoppify. Going back to Procart.org, it allows us to do some phenomenal things. Google absolutely loves our websites when we use Procart.org for the shopping cart.
Ownership of Websites - if you use Paypal or Procart.org, Virtuemart or ZenCart all four of those allow you to still own your website and have full control over it, back it up when you want. There are some advantages to Shoppify but a great disadvantage to Shoppify is you can’t own your website. You never really own it, so that is why with big businesses, typically, you never see them using Shoppify.
There are a lot of advanced features that each business needs and Paypal is always good to have as an option. For advanced features you’re going to need a more advanced shopping cart and Paypal is kind of one that’s going to be crossed out at that list.
So, those are the reason why I recommend Paypal from the beginning.
I’ll go on to some fees as well because here we’re just talking about it from a shopping cart stand point of view.
We’ll go back to the previous slide.
Paypal also includes the gateway and the merchant account and so we will look at some other reasons why Paypal is good from the beginning as well. If you look at this screen right here you'll see that most merchant will have a setup fee. Paypal, Google Checkout, Intuit - they do not have setup fees so it’s kind of a nice feature there. Most of the others, it’s a pretty common to have a hundred dollars setup fee.
Now, I am with Beanstream. I have been to all of these, their strength follows there's definitely weaknesses. Authorize.net was the second to last one that I went with and I was surprised I thought that’s going to be my resting place, my final merchant account. It’s because they’re so big and they’re so well known. I had terrible time with them. Their accounting is terrible, their reporting is terrible, their fees are terrible, outrageous. It was really hard for me to keep track of things and do bookkeeping. So I switch over and went to Beanstream. I’ve been very, very happy with them. One secret that I’ll tell you, is because my business is not a brand new business, we’ve been around for a while and have good revenue they really wanted my business and so they waived that set-up fee for me. So always ask, it doesn’t hurt to ask on that. Typically, there’s a hundred dollars set-up fee that is waived out for me.
On the monthly fees, here’s another good thing about Paypal and Google Checkout, there’s no monthly fees. You don’t have to pay for monthly fees. There are advanced levels of the Paypal and Google Checkout. I don’t know, I can’t really think of reasons why you’d want to use those if you want an advanced shopping cart. In that case you want to move on to something like Procart. For all intents of purposes here, there are no monthly fees. The reason I went with Intuit is I wanted a virtual terminal and it worked but the fees are pretty expensive and all the other features, as far as using it as a shopping cart, were not really good.
The other thing I’ve mentioned, comparing Paypal and Google Checkout, Paypal is way more popular. It’s not just in my experience, there’s not as many people that actually have a Google Checkout account. But depending on your marketplace, maybe there are a lot more people than I’ve seen it out there. But certainly not in mine, Paypal is definitely a lot more popular. First Data is a little bit expensive and I only had a few different features. If I wanted to have more features built than the normal things they will add an additional $10 each month for each traditional feature. At Beanstream, what I pay now is just $25 a month and that includes everything. There are even a lot of features that I don’t use that are included that if I wanted to use I won’t have to pay any additional cost.
If you look at the Transaction fees starting out that fee at Paypal or Google Checkout, that’s not too bad. It’s just per transaction because there is no set-up fee or monthly cost – that’s pretty nice. At Intuit that’s pretty high. I thought that when I went over to First Data and Autorize.net that would be the advantage of paying those monthly fees and the setup fees is because my rates would go down. They didn’t, they actually went up. I debated with them and tried a whole bunch of different things. Anyway, in my personal experience, those were the rates that I was getting there. I can’t believe it at Authorize.net. Beanstream is phenomenal; you can see the rates there between 2.1% and 2.4% - pretty awesome.
Another thing is, from Merchant Account to Bank Account, how long does it take for money to get from your Merchant Account to your Bank Account? With Paypal and Google Checkout, it’s pretty quick, about two or three turnaround time. Intuit took a bit longer; I don’t know why it just took longer. First Data is about the same. Authorize.net was even worse. It was surprising and was really confusing because I have made three sales in one day, then a week later I get paid for two of them. And I wouldn’t know which two it was, it was really confusing. The reporting was pretty bad so it was really rough. With Beanstream, it’s actually simple and straightforward. It takes 2 days for that money to get deposited to my Bank/Checking Account.
As far as that fifth row – Easy to Understand – in terms of understanding the data that you are looking at, understanding where the fees are coming from, and the reporting of that Paypal is very simple, very straightforward, and very easy to understand, the same as Google Checkout. Intuit is a little bit difficult and so I put them as hard, First Data is same – it’s hard. Authorize .net is impossible, I don’t why they are so big. I went with First Data because they were recommended to me by my credit union but I went to Authorize. Net after that because they are the a big player and I thought they are the best and I expected them to have the best part – from there it was terrible. And so after that, I just did a lot of research and found recommendations from Beanstream from a lot of different sources that’s why I went to them. It’s very easy, that was one of the things I looked into. I want to make sure that I’ll have all these benefits.
As far as Simple Accounting, that was a big thing I was looking for as well and that’s why I selected Beanstream - very simple and easy to understand. As are Paypal and Google Checkout, they are pretty easy to understand but as far as some of the Advanced Features and things like that they couldn’t obviously do them. There are people they might not want to have, they don’t have a Paypal account, they don’t want a Paypal account and if that’s all you offer in your website to purchase products through Paypal that might turn some people off. So, what I currently do is through Procart they can make a purchase and they have the option to wether check out as normal or actually checkout through Paypal. Procart allows you to do that. Most of my purchases come through at Beanstream when they make a purchase through Procart. But some, I’d say 10-20 percent, of the time that purchase come through Paypal because it is a convenient option for some people.
Hopefully, these have been helpful. The biggest key here is understanding this diagram and when you understand the kind of process you got to go through it makes it a little bit simpler.
Hopefully this video is helpful. Certainly, if you have any more questions just email me and I’ll help you out.
ProCart.org is without question our recommendation when in need of an advanced shopping cart.
Click here to visit this Amazing Copy and Paste Shopping Cart.
