In an age where online transactions account for a large chunk of business, it's important for both the customer and the business to be protected. John Taylor Editor of Website Creator takes a look at a number of secure payment mechanisms and payment gateways that will help you take payments from your customers.
Whichever way you look at it, when a customer pays for a product online they are placing a lot of trust in the online business. As with any commercial transaction, there's a chance that the item may simply not appear; or that a fraudulent payment is made.
Crucial to your cash flow are payment gateways. These work in two ways: first by creating a virtual currency that can be used without the customer exposing their credit card or bank details to non-secure servers or traders, and second by adding an extra level of confidence to the buying and selling process. The ultimate purpose of a gateway is that the user can assume the money’s as good as in the bank, whereas, in reality, that’s only true until something goes wrong.
So how do some of the main gateways compare when it comes to security, compensation and dealing with complaints? Let’s take a quick look at six possible alternatives, and what they have to offer.
PayPal
www.paypal.co.uk
PayPal now has a user base of over five million, although it remains free for buyers and free to set up for sellers. It does, however, have surprisingly few commercial partners outside eBay. PayPal’s Buyer Protection Scheme seems to be better organised than most, and provided all the necessary emails are sent within 45 days, it offers users protection on deals that go bad for up to £500.
Nochex
www.nochex.co.uk
Nochex had the early advantage of being one of the few gateways that accepted UK debit cards, back in the days when credit cards were rarer and PayPal US-only. Since then, Nochex has become a niche supplier to ‘adult’ markets, something many gateways try to avoid. This means that fewer people are aware of its superior fraud cover, which includes no charge back fees and an admirable guarantee to underwrite all money deposited in your account, regardless of whether it is subsequently retracted. Its advantage to sellers lies within its fee structure. To accept payments through Nochex, considering the level of protection offered, is extremely cost effective. It's used in many cases as an alternative to PayPal.
Amazon Payments
www.amazon.co.uk
Arguably, the most secure gateway, as no person-to-person transaction (that’s Amazon ZShops, Auctions, Marketplace or Advantage) can take place without it. Payment transactions are covered by a £2,000 guarantee – one of the largest around, and rubbed in by the fact that non-Amazon transactions are only covered up to a measly £150. The other beauty of Amazon is that the close integration of all parts of the site means that decisions on refunds and compensation can be near-instant.
ePDQ
www.epdq.co.uk
A relatively new player but with a very big owner (Barclays) and a slick, business-like site that does a good job of asking loads of information about your business (including your annual turnover and staff numbers), without revealing anything of its own compensation or fraud protection cover. A permanently-engaged sales hotline suggested that Barclays may have to rethink its ‘sign up before we tell you anything’ approach if it is going to make the same kind of impact with smaller traders as it has with blue chip ones. There also seemed a disappointing lack of commercial partners with whom you could use the scheme, although it is admittedly early days. We’ll keep an eye on this one.
WorldPay
www.worldpay.com
WorldPay already has around 40,000 customers worldwide, and being owned by the Royal of Scotland lends it instant credibility. However, levelling a £10 chargeback every time you’re a victim of bad debt sounds typical of big-bank attitudes to small-user problems. For a little extra, the Customer Guarantee will underwrite all bad debt losses and overall security seemed lock-tight, as you might expect with commercial partners like Vodaphone and Sony. “With WorldPay’s standard service,” explains the blurb, “the use of cardholder authentication schemes, security codes and address checking enables you to check the cardholder’s identity online. This tries to make cardholder-not-present purchases as secure as face-to-face purchases.”.
Western Union
www.westernunion.co.uk
Cited by many forums and auction sites as the biggest problem gateway, in fairness Western Union’s model was designed for a very different purpose – to ‘wire’ money from one trusted party to another. By definition, this means that once the money has been collected it’s gone, with no trace of the person who collected it, no record of any goods to be returned in exchange, and no compensation or fraud protection. Western Union itself warns of the danger in uncompromising terms, with no arbitration service, no compensation and the tersest of instructions as to what do in the event of a fraud.
“Western Union’s business is to transfer funds from a sender to a receiver. We caution people who use our services against sending money to people they don’t know. It is the sender’s responsibility to know the party to which the funds are being sent."
netCash
www.netcash.is
The fact that netCash are providing a micro payments service is nothing new. However what they have developed and launched in terms of payment avenues and security are nothing short of revolutionary.
As with PayPal and Nochex, netCash can be used as a means of paying for your auction wins on eBay. The company homepage, at www.netcash.is, includes a detailed tutorial on how to go about it (and we'll be looking at this in the next issue of eBay Advisor).
At its core, netCash is a means of sending and receiving money without having a debit/credit card or even a bank account! Unlike PayPal, there are very few fees in this process - to receive a payment will cost nothing (in comparison with a PDQ whereby the bank will take a commission, or PayPal which charges per payment received as well as a commission on your final value fees through eBay) but to convert the payment to physical cash will cost 50p.
One area in which many secure payment gateways fail in the eyes of the retailer is chargebacks. With Barclays charging £10 as well as the value of the chargeback for money you're perfectly entitled to; this can be a major problem for businesses.
netCash should not suffer from that problem. There's no credit card involved - it's dealing solely with web accessed digital currency branded as netCash from a leading registered UK bank that anyone, regardless of age or circumstances can use. The netCash member must have at least the amount necessary in order to complete a transaction You can convert cash into digital currency ‘netCash’ in less than 48 hours.
From the sellers point of view, this means that the buyer really is who they say they are; and they're using money which they are entitled to use. From the buyers point of view, you can be certain that any payments made are for the amount you specified and that no further payment can be taken without your authorisation.
Security is paramount for netCash. The company have employed 128-bit true encryption on the site itself; and this is verified by VeriSign through a link on the site itself. If you lose your login details there's a verification procedure that can take several days. It's therefore advisable (as with any financial details) to ensure that your login details are memorable. If you write the details down, keep them safe and secure at all times!
From eBay Advisor's point of view this can only be a good thing. To be given access to your money easily would provide a means for others to access your money; and ultimately that would miss the point somewhat.
At the netCash end, the company has designed the system with an intricate architecture to ensure that your money is always safe.
From the user's point of view, the bank account is ring fenced from the company and hence in a worse case scenario the money can be accessed.
To redeem your netCash, bank details need to be provided to the company. While some have their reservations about this; the details required are no more than you'd find on a cheque and they don't allow anybody access to your account.
They do however allow payments to be made to your account. The bank details provided to netCash are sent manually to their bank; the process can take about five working days (due to the current banking regulations) but only needs to be done once. The result of this is that netCash are, to the best of their abilities, avoiding the use of netCash in the purchase of unethical products.
When you wish to redeem netCash, to withdraw the payment as cleared funds to your bank account takes a maximum of 48 hours. This via the BACS system - no different to how you are paid for your day job. The cost for this is 50p; regardless of the amount you transfer to your bank account, turning digital currency back into physical cash.
netCash are intending to grow rapidly. They are in the midst of discussions that will see the payment mechanism used by a number of blue chip companies. Consider making payment for mobile phone top ups; using your mobile phone and that's a small scale example of what will shortly be possible.
None of this requires a credit card - or credit of any sort. To make the payment, your netCash account needs to be in credit. To credit the account with real cash costs 2% of the amount plus 50p on any amount.
In comparison with the costs of PayPal, Nochex and the other payment mechanisms covered within this feature netCash is extremely competitive. It's got a dedicated and enthusiastic team that's growing behind it; with faith in their product.
If you contact the company, you'll speak to a real person who will deal with your issues quickly and without fuss. Given how difficult it can be at the best of times to contact larger companies we can but hope that netCash continue in this vein.
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