OTHER PAYMENT OPTIONS

Due to the requirements for establishing a merchant’s account, many small e-commerce operators will need to find another method for accepting credit card payments. If you fall into this category, don’t despair. There are still means by which you can sell your merchandise online. Two of the most widely used methods are online escrow services and email payment services.

Online Escrow Services

In the e-commerce world, trust is viewed as the intermediary element that will determine if businesses and users are willing to embrace the online economy. Online escrow services have been identified as one of the key business infrastructures necessary to help provide that trust and confidence between buyers and sellers.

When credit card fraud occurs, the e-merchant loses his goods, is charged for the costs, and must pay the issuing bank a charge-back fee. On the other hand, online consumers face the risk that they may not receive the goods, the goods that arrived are not as described, or the goods are damaged.

When you contract with an online escrow provider, the escrow service acts as an impartial trusted third party that facilitates buying and selling by providing both the seller and buyer with trust, security, and convenience. These middlemen hold your customer’s payment (whether via check, money order, or credit card) in trust, awaiting confirmation that the goods are as expected. Through the escrow service, the buyer and seller agree in advance as to how the goods and funds will be exchanged, along with a return policy.

Here’s how the typical escrow service works: The buyer pays the total purchase price to an escrow provider, which holds the customer’s money in trust. The seller ships the merchandise directly to the buyer. If the buyer accepts the merchandise, the escrow service pays the seller. Otherwise, the buyer returns the merchandise to the seller (in its original condition) and receives a refund from the escrow service.

It’s that simple — of course the escrow service charges a fee for its services. Some of the escrow services you might want to check out include Escrow.com, Escrow Online (www.escrowonline.org), Canada Escrow Online (www.escrowonline.ca), Secure-Commerce.com (also offers a multi-currency escrow service), and Cash-Escrow (http://secure.cash-escrow.net), which is a European escrow provider.

Be careful, though. In the U.S., the Federal Trade Commission (FTC) has recently begun pursuing fraudulent online escrow services. Premier-Escrow.com is one such service that, according to the FTC, set up a fake escrow firm and then directed buyers and sellers of merchandise to use that firm. And although a website would ship merchandise to the buyer, the site never receive payment from the escrow service and buyers would make payments to the fake service, but never receive their merchandise. The FTC says that it has also shut down two other alleged fraudulent escrow services and that 53 separate actions have been taken by various states concerning the same type of fraud scheme.

Here are some suggestions of steps you can take to protect yourself from being a victim of a fraudulent escrow service:

• Be wary if a buyer is insistent upon using a specific escrow service.
• If you are asked to deal through a service that you are unfamiliar with, call the company — this may help you to determine whether it sounds legitimate.
• Check out the service’s website. Many fake escrow services set up websites that are intended to mirror real escrow services. Are there grammatical errors and/or other simple mistakes? Is there odd wording, especially where the fake escrow service’s name has been substituted in place of the real escrow service?
• Check the Whois registry (www.networksolutions.com/en_US/whois/index.jhtml) to see if the online registry information fits with the corporate information on the site. If there are discrepancies, check them out.
• Check with your local Better Business Bureau.

If you have any doubts about a specific escrow service, don’t do business with that company.

Some other steps you can take to ensure you are using a legitimate service is to check with your bank to see if it offers an online escrow service or can recommend one. Or bypass the escrow services altogether and use Western Union’s BidPay (www.bidpay.com). The buyer purchases a money order online using a credit or debit card, BidPay sends a confirmation email to the seller within minutes with information on when your money order is scheduled to be sent. According to the BidPay website, “there is absolutely no fee for sellers unless you choose a payout option other than a money order (i.e. a cheque in British Pounds).”

Email Payment Services

Email payment services can be used as either your primary, or as a secondary payment processor. The most popular of the email payment services is probably PayPal (at least in the U.S.). PayPal makes sending and collecting money easy. PayPal integrates seamlessly with existing financial networks, allowing anyone to send money from their credit card or bank account. Thus, with PayPal, any website can accept credit card payments from all of its customers. For more information, visit the website at www.paypal.com.

If you live in the U.K. you might want to check out the popular NoChex.com. Anyone with an email address and a U.K. bank debit card can take advantage of this easy-to-use payment service.

For an email payment service with a global perspective check out Xcompte.com. Its services are available in multiple languages and numerous currencies.