Archive for the ‘Accept Credit Cards’ Category

The Risks of Using Paypal

Monday, December 21st, 2009

Apparent Software has an interesting horror story that demonstrates some of the pitfalls in using services such as PayPal for accepting payments.

We chose PayPal as our payment processor for several reasons but the main were low fees, the fact that we already knew how to integrate it to the sales backend and that it should be easy to pay them and to affiliates. We used our regular PayPal account, which we used for regular sales. We didn’t expect what happened next.

The launch was successful and we were pleased with how the sales progressed in the first days. Three days into the sale I’ve got a phone call from PayPal and the person on the other side asked me about nature of the spike in account activity. I explained that we had a 2 week sale, a special promotion and it looked like the call went fine.

…

I log into my PayPal account and what do I see? “For my protection” they have limited the ability of my account to withdraw or send money but most severely, they also disallowed the account to receive payments!

The increased activity from their successful marketing campaign was enough for Paypal to suspend their account and even prevent accepting payments. Ouch.

The post includes a later update from a Paypal service rep (no doubt in response to the reaction their story has received) – but it still goes to show you just how important a reliable payment system is. Apparent Software and their partners were not only immediately cut off from further sales from prospective customers, but were done so in such a way that made them look unprofessional to their customers.

At Prestige Payment Systems, we work with multiple credit card processors to ensure that even if your business is too high risk for one processor, we have a partner that is always ready keep your business in business. We also have a trained staff of client managers ready and able to help get you up and running – saving you the cost and frustration of the ‘runaround’ emails and uninformed service reps like those mentioned in their blog post.

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Posted in Accept Credit Cards, Online Credit Card Processing | 1 Comment »

Psychological Benefits of Accepting Credit Cards

Friday, November 13th, 2009

The SmartMoney.com has a great article on the psychological pitfalls New York taxi cabs succumbed to when forced to start accepting credit cards. The author describes the anger over the ‘5% heist’ – referring to the credit card processing fees deducted from the cab fare – and even relays stories of how some taxi cabs would initially claim the processing terminals ‘weren’t working’ yet in an effort to avoid having to accept credit cards.

But as most companies beginning to accept credit cards usually find out – the mere act of accepting credit cards often have a far bigger impact on the bottom line than the credit card processing fees they lose in the trade off.

… one thing is clear two years later: The drivers who complained so vehemently about the credit-card machines are now making more money because of them. New York City’s Taxi and Limousine Commission reports that revenues are up 13% from the end of last year, despite a recession which is hitting the taxi industry hard in other cities. Tips, meanwhile, have risen to an average of 22% on credit-card transactions, up from around 10% under the old, cash-only system.

The author then goes on to describe some of the psychological effects in play here – with our natural inclination to be loss averse while minimizing potential upsides. In simpler terms, taxis focused on the 5% processing fees while ignoring the added benefits that accepting credit cards bring.

So, the drivers — like lab subjects or stock traders — were focused on what they’d be losing. But could they have seen the potential upside? If you assume that an all-cash system and a cash-and-credit-card system are identical (aside from that pesky 5% fee), you’d be right to see no upside. But does anyone still think that people treat paper and plastic the same, when it comes to money?

Aside from practical considerations, such as that people who don’t carry much cash are now more likely to take cabs in New York City, there’s the well-established fact that credit cards encourage people to be looser with their money than when they pay with tactile, sticky bills. In just one study out of MIT, in which NBA tickets were auctioned off to MBA students, researchers found that the students were willing to pay more than twice as much when able to pay with credit card instead of cash.

If you’re currently operating a cash-based business – give head on over to Prestige Payment Systems for great rates on credit card processing and merchant account services.

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Posted in Accept Credit Cards, Psychology | 2 Comments »