Payment Collection From A Cart Platform Or Marketplace Overview
Accepting payment for your products is obviously a top priority for your business. In general, you want to make it as easy as possible for your customers to transfer funds to you. The basic options available to you are checks/money orders, credit cards, Paypal, and 3rd party processing. Each is explained below in more detail.
For each type of payment, be sure to read and think about the various kinds of fraud. If you are aware of the tips and tricks, you can avoid getting burned by fraudulent buyers.
Accepting Credit Cards For Drop Ship Transactions
Credit cards are an essential element to a successful online business. To accept credit cards, you need a “Merchant Account” with a credit card processor. There are many companies out there that can provide you with the ability to process credit cards. Many are resellers of a few central merchant account providers, such as Authorize.net, Cardservices International, FirstData (Linkpoint), and others.
IMPORTANT: When choosing your merchant account provider, look at the rates you will be charged for accepting payment. Typically there is a monthly fee for your “Gateway”, which is the website you use to process transactions and run reports. In addition to this fee, there is a per transaction cost and percentage of the amount charged. You can usually find a rate in the range of $.25-.35 per transaction and about 2.5-3% of the transaction.
These transaction fees may not be appealing, but they are a necessary part of the process to make it easy for your customers to pay you.
When researching your options, it is also important to consider where you will be generating your sales. If you are using Inventory Stores for you website, there are 14 different payment processors that you can choose from. For any of those, you can easily process sales from your store with the push of a button.
TIP: Be sure to find a provider that is compatible with wherever your orders will be coming from. When you begin generating enough orders, you will want the process to be as quick and painless as possible. Our recommended merchant account provider is Ecommerce Exchange, because of their reliable service and competitive rates. We have also worked directly with the head of their management team and IT department for years, and we are happy to work with them directly as needed to get you setup and operating ASAP.
When you charge a credit card, the company accepts the payments and deposits funds directly to your bank account within a couple of days. The fees are taken out of the amount before you receive the funds, so when it hits your bank account, the cash is yours.
IMPORTANT: Be very, very aware of fraud. There are many fraudulent buyers out there with stolen credit cards that would love to steal from you. And listen carefully…it is YOU they are stealing from, not the owner of the credit card. To learn how to not get scammed, read on…
After you accept a credit card payment, a buyer may potentially request a “chargeback” from the credit card company, claiming that either their card was stolen or that they never received the product. The company will then contact you to see if you have valid records for the transaction, and if you fulfilled on your commitment to your buyer. To ensure you keep your funds, you will need to produce an invoice showing that the product was shipped to the billing address for the buyer’s card. Failure to provide this documentation will result in the withdrawal of the funds from your account.
This may sound scary, but it is actually quite easy if you follow a few simple steps. The simplest step is to only ship products to the address for the credit card used for payment. This ensures that you are never at risk. When you process a credit card, you are given a series of letters, knows as AVS (Address Verification System). This information tells you if the name, billing address, and zip code that you have actually match the credit card records. If it does, and this is the address you are shipping to, you are all set!
This poses an obvious problem in the case of gift purchases and other circumstances. It is always important to start cautiously until you understand the process. When in doubt, communicate with the buyer directly to ensure they are not using a stolen credit card, and learn to spot the buyers that are obviously fraudulent. Fraudulent users will typically not respond to questions regarding the card and are not usually reachable, so if you are in doubt, be sure to check!
For example, if you get a large order with a credit card from a domestic address with an over night shipping request to an international location, watch out! Fraudulent users prey on new sellers and make offers that sound too good to be true, which of course they are. Don’t get excited about a big sale and forget to ensure that it is actually legitimate and that you will get to keep your funds.
Accepting Paypal For Drop Ship Product Orders
Paypal is very similar to credit card processing and functions in a similar fashion. You set up your account, and then buyers can send you funds via email and through their Paypal accounts. Paypal is a very low cost way to get started accepting online payments. If you are using Inventory Store and our Hosted Website Package for your website, your checkout process comes complete with multiple Paypal payment options, meaning you can easily accept payment right away. Also, most of the integrated platforms which integrate with our drop ship automation services like 3dCart, Big Commerce, Shopify, Magento, Open Cart, VirtueMart, Loaded Commerce, Volusion, eBay ProStores, Yahoo Stores, and others often have Paypal gateways already installed for a possible payment solution. You would just need to enter your Paypal ID or basic account details and you can launch your site live and start processing orders and receiving payments from your drop ship customers.
Paypal requires similar efforts to credit cards to ensure you do not get robbed of your money. Be sure you have actually received the funds before shipping your products. Fraudulent users can use fake emails and other techniques to try to fool you into thinking they have paid you….so ALWAYS check your merchant account directly…and do not base any decisions off of just something you get in an email or from a client call.
Its worth saying again: To avoid scams, be sure to check your Paypal account directly to monitor the transferring of all payments, rather than relying on emails.
Accepting Checks and Money Orders
Some buyers are scared of online payments, so having the option to pay by check or money order is usually a good idea. In this process, it is up to the buyer to send you payment, so you can simply hold onto the order until you receive the funds and they are in your bank account.
Be sure to make it easy for the buyer to know how and where to send you the payment.
For personal checks, it is VERY IMPORTANT that you are sure the funds have cleared and are actually in your bank account before shipping the drop ship products. Its important to note, this usually takes a few days from when you deposit the check. Many fraudulent users will send bad checks hoping that you will ship the drop ship product before receiving funds.
Accepting 3rd Party Payment Processors On Drop Ship Orders
Many marketplaces, malls, and services will allow the transaction to occur within their service. Examples of these include Amazon Marketplace, PriceGrabber, eBay, and other 3rd party sites.
In these transactions, you will list your products for sale and they will handle the entire buying process. You will typically receive an order for which funds have already been collected. You can simply ship the order and collect your funds directly from the 3rd party. In many cases, such as your drop ship orders listed on Amazon, the funds will be transferred to your bank account automatically.
3rd party services are very convenient, but they usually have a very high commission on the sales and funds they process, so be sure to price your products accordingly. Also, review their policies for how long it may take before funds are released. Some marketplaces, especially for new members, may hold your funds for more than a week, to make sure there are no service or delivery issues with your orders.
Look…we get it. You are excited. You want to just use your InventorySource.com automated tools to launch your business today and start selling drop ship items and collecting payments. You don’t want to read more policy documents or details or fine print. However, at the end of the day you are in business to make money. Right? No matter how many drop ship orders you get…if you have ANY issues with your payment processing and deposit collection, then you are going to have any funds for profit or even for covering your supplier orders. So, get comfortable, grab some coffee, and put down that exciting guide on meta tags or logo designs, and just make sure you understand the in’s and out’s of your merchant account system.
TIP: It is generally a good idea to check with all of your payment providers to learn what tools and tips they may have about avoiding fraud, as they might have some additional tools or features or policies to note before you run into any issues.