Accepting Credit Cardsvia PayPal

There was a time that if you wanted to accept credit card payment for your auction items, you had to be a real retailer, complete with merchant account and bank-supplied charge card terminal. This limited the number of sellers who could accept credit card payment, which probably cut down on potential bidders, because many buyers like the convenience and relative safety of paying by credit card.

Note

PayPal accepts payments by American Express, Discover, MasterCard, and Visa. Although it's primarily a U.S.-based service, it also accepts payments to or from 55 other countries.

Today, however, just about any seller, no matter how small, can accept credit card payments. All you have to do is sign up to use an online payment service, such as eBay's PayPal. When a buyer uses his or her credit card to pay via PayPal, PayPal charges the credit card and then notifies you (via email) that you've been paid. Upon this notification, you ship the item and then access your account on the PayPal site and instruct PayPal to either cut you a check or transfer the funds into your bank account.

Signing Up for PayPal

Before you can use PayPal as a seller, you must sign up for PayPal membership. You do this by going to the PayPal website (www.paypal.com), shown in Figure 19.1, and clicking the Sign Up Now button or Sign Up link.

Figure 19.1. The PayPal home page.

You can choose from three types of PayPal accounts:

• A Personal account is great for eBay buyers, but not quite enough for sellers. You can send money free, but can receive only noncredit card payments (for no charge, though). Also, sellers with Personal accounts aren't allowed to display the PayPal logo in their auction listings.

  Note

  

  While I recommend you sign up for a PayPal account beforehand, you don't have to. You can simply choose PayPal as an accepted payment method when you're creating your eBay auction listing, and when a buyer chooses to pay via PayPal, you'll be prompted at that time to sign up for your PayPal account.

  
  

• A Premier account is the best way to go for most eBay sellers. You can still send money free, and you can now accept both credit card and noncredit card payments (for a fee).

• A Business account is necessary if you're receiving a high volume of payments. With this type of account, you can do business under a corporate or group name, and use multiple logins.

There is no charge for becoming a PayPal memberalthough there are fees for actually using the service. (The exception is the Personal account, which charges no fees for anythingbut doesn't let you accept credit card payments.)

"Mike Sez"

I recommend you sign up initially for a Premier account. If your sales volume gets high enough, PayPal will automatically switch you to a Business membership.

Paying for PayPal

The fee you pay to PayPal is separate from any other fees you pay to eBay. The way PayPal works is that the buyer doesn't pay any fees; it's the seller who is assessed a fee based on the amount of money transferred.

This last point is important. PayPal charges fees based on the total amount of money paid, not on the selling price of the item. That means that if a $10 item has a $5 shipping and handling cost, the buyer pays PayPal a total of $15and PayPal bases its fee on that $15 payment.

PayPal's fees range from 1.9% to 2.9%, depending on your monthly sales volume. Table 19.1 presents PayPal's fee schedule as of February 2006:

Table 19.1. PayPal Transaction Fees (U.S.)

Monthly Sales	Transaction Fee
$0$3,000.00	2.9%
$3,000.01$10,000.00	2.5%
$10,000.01$100,000.00	2.2%
>$100,000.00	1.9%

You're also charged a flat $0.30 per transaction, regardless of your sales volume. All fees are deducted from your account with every transaction.

Note

To qualify for the 2.5% or lower rate, you have to have a PayPal Business account.

Choosing PayPal in Your New Auction Listing

The easiest way to accept PayPal payments in your eBay auctions is to choose the PayPal option when you're creating an item listing. This is as simple as checking the PayPal box and entering your PayPal ID on the Describe Your Item page.

When you choose this option, a PayPal payments section is added to your item listing. PayPal will also appear as a payment option on your post-auction item listing page and in eBay's end-of-auction email to the winning bidder.

Collecting PayPal Payments

When a buyer makes a PayPal payment, those funds are immediately transferred to the seller's PayPal account, and an email notification of the payment is sent to the seller. In most cases, this email will include all the information the seller needs to link it to a specific auction and ship the item to the seller.

When you sign into the PayPal site, you're taken to the My Account tab, and the Overview tab within that. As you can see in Figure 19.2, this displays an overview of your recent PayPal activity, including payments made by buyers into your account. Click any item to view more detail about the activity.

Figure 19.2. An overview of your PayPal activity.

In most cases, the buyers' payments come into your account free and clear, ready to be withdrawn from your checking account. The exception to this is an eCheck payment, in which a buyer pays PayPal from his or her personal checking account. Because PayPal has to wait until the "electronic check" clears to receive its funds, you can't be paid until then, either. PayPal will send you an email when an electronic payment clears.

Withdrawing PayPal Funds

You can let your funds build up in your PayPal account, or you can choose (at any time) to withdraw all or part of your funds. You have the option of okaying an electronic withdrawal directly to your checking account (no charge; takes three to four business days) or requesting a check for the requested amount ($1.50 charge; takes one to two weeks). Just click the Withdraw tab (from the Overview tab) and click the appropriate text link.

"Mike Sez"

I prefer to empty my PayPal account to zero at the end of each day, via an electronic transfer to my checking account. I find this the fastest, no-hassle way to receive PayPal funds due.