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Using a Third Party Credit Card Company

So what about the business of collecting payments? It sounds like quite a headache to collect and process credit cards and returns.

What if I told you that you can leave the financial transactions to someone else? Yes, this entire process can also be automated. I can almost hear you sighing with relief.

As a creative person, you aren't trained and may not particularly enjoy bookkeeping. For one, you may not know where to start or how to get a merchant's account. And you might have unresolved questions about credit card fraud and how you could protect your business from it.

Because technology has grown at such a warped speed, there are perfect solutions for you. To date, there are two third party credit card companies that I know of called Clickbank and Paypal that will take care of all your financial transactions.

Of course, there are other credit card processing companies on the web, but the two I mentioned are by far the largest and most well known.

It's natural for people to be cautious about using their credit cards online because of the fear of Internet fraud. They don't know how honest you are, and can't trust you simply because you have an online business. By using third party services, their risk of fraud is eliminated because they are using a service that they trust.

On the same token, your risk is very low because you will never handle fraudulent credit card numbers. And if you have international customers, you won't have to turn them away because the third party companies will process foreign credit cards for you.

And if you offer a money back guarantee, the refund process is relatively painless too. All you have to do is to forward the original confirmation email to the company, and they will reconcile the transactions.

Pros and Cons of Using Pay Pal

Pay Pal is a fairly well known in the Internet world, and is used quite frequently in ebay transactions. Their processing fee is up to 2.9% + 30 cents per order.

Chances are you probably have seen this credit card company on other sites.

There may be some countries that are not on their list of approved countries, therefore customers from those companies will not be able to pay through this method. You will need a contingency plan in order to accommodate your international customers.

Pros and Cons of Using Clickbank

Clickbank is most known for it's specialty in selling digital products. It has an added benefit in that you can set up affiliates through their programs. The processing fee is based on a percentage of sales and it is more expensive than Pay Pal.

It's free to join the company's affiliate program, and with each new affiliate referral, you can get a $5 bonus. However to sell digital products, you will need to set up a one time account set up fee of $49.95.

By having a Clickbank account, you have the ability to buy other e-books at the affiliate site. This may be useful if you want to sell a complimentary product to your mailing list.

Some money is held back to address refunds. A minimum of $20 is sent out to customers, and checks are sent out every two weeks. Checks $5000 and over are sent through registered mail.

All your records are stored on a secure site and is accessible to you.

As any system is not perfect, you may experience some problems with these third party credit card companies.

Sometimes, for whatever reason, the companies rejects the authorization of a card. My friend Ray had a customer who spent 30 minutes trying to buy his product through Clickbank but was unsuccessful. The customer couldn't understand why he was locked out because he insisted that there were sufficient funds on his credit card.

So in a case like this, you might have to resort to accepting money order or bank draft. If you are dealing with international customers you will unfortunately have to wait 21 days (or more depending on your bank) for the money order to clear. In the fast world of the Internet this may be unacceptable for your customers.

And whatever you decide to do, I would refrain from accepting personal checks. There's too much risk involved. You don't know who is sending you the check and it can easily bounce. A bounced check will just leave you infuriated and helpless.

If you're comfortable with having financial information in two companies, there is absolutely no rule that says you can't use both credit card companies.

A good solution is to advertise Clickbank as your main credit card company and have Pay pal as a back up service. This way you won't lose a sale if the customer is having problems paying through one company.

You're probably wondering if these companies are really safe. All credit card companies are vulnerable to theft. There is additional software available that will prevent people from stealing either your e-book or your sales commissions. If you do a seach on google, I am fairly confident that you purchase the software.

But you know what? If someone is adamant in stealing from you, they will find ways to do it. However, having said that, I will tell you that there is a very small chance that you will be a victim of theft on a large scale.

I just wanted to make you aware of everything, because when you're armed with information, you will have a fair chance in growing and profiting from your Internet business.

There will no doubt be some customers who want to order your e-book via telephone. I suggest that you refrain from giving out your phone number altogether. As a sole proprietor you may not be equipped to give telephone support.

First of all, if you answer phone calls all day, you will just be tied down to a job. True the boss will be you, but you will not have time to do the things that you love.

Second, depending on the volume, you will have to hire workers to take down your e-book orders, and in the end, paying out employee salaries will hurt your profits.

Also, you will have to go to the bank and apply for merchant's accounts, and that's a whole new area that will no doubt keep you up at night.

By Chantal Lima