Payment Methods : Which e-commerce payment methods do you offer?

By MonsterCommerce Staff | September 20, 2004


In the world of e-commerce, you have many options for accepting payment from your customers. Which is the best? Let’s compare some popular payment types.

Credit Cards

Accepting credit card payments is important for any e-commerce site. If you are selling retail, you will not be able to successfully avoid accepting credit cards. Most consumers will purchase using a credit card for online purchases as opposed to cash or check. Consumers feel more secure, and your company has more credibility if you are able to process the ‘Big 3’ cards: Visa, MasterCard and American Express. To do this, you will need a merchant account..

Expect to pay between 25 and 50 cents for every transaction. And the credit card companies will collect between 2% and 3.5% of the transaction from you.


In addition to a merchant account, you may also consider using PayPal to accept payments. This is an online service that allows you to send money across the Internet using either your credit card or bank account for funding. PayPal charges a percentage of your transactions, but it does not charge any monthly fees.

If you don’t have a merchant account, PayPal can be an effective alternative in order to allow your customers to use a credit card. However, to use PayPal you must sign up for an account, which most customers will not already maintain. This additional step will cost you sales. We suggest offering PayPal in addition to credit card transactions via a merchant account.

If you sell on E-bay and do most of your advertising there, PayPal will be important to your customers because it is commonly used on E-bay.


E-checks provide a handy way to receive payment from customers with no credit card. The downside of accepting an e-check is that the amount of information that your customer must put into the site is greater than when they are simply using a credit card. Because they will need to input a routing and account number, among other things, there will be more room for error, confusion, and the possibility of a lost sale.

Wire Transfer

This option is great for large transactions. A wire may cost your customer about $20 to send and will probably cost you around $10 to accept. In a wire transfer, the money is going to show up quickly in your account. There will be no chance for a chargeback, a card to decline, or a check to bounce. Most people will only feel comfortable sending you a wire transfer after they speak with you on the phone. With the fees involved, this payment method is really only good for large transactions. However, if you sell wholesale and have customers making transactions over $1000 it will save you a good deal of money as opposed to a credit card payment.


We do not recommend accepting or shipping out anything C.O.D. unless you have worked with the customer before; there is a good chance you will end up eating the shipping costs and having to re-stock the product when no payment was offered upon delivery. If you do ship C.O.D., be absolutely positive the driver will only accept a cashier’s check or money order. If they take a check, you may as well have given your product away. All your customer must do is issue a stop payment before the check makes it back to you for cashing.


Finding the payment method(s) that are best for you depend on many factors. Consider the type of product you are selling, your average ticket, and what type of customers you expect to have. Whatever method you choose, there will always be expenses involved in accepting payment.


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