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 Analysis: The New PayPal

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raj_mmm9



Number of posts : 1850
Age : 54
Registration date : 2008-03-08

PostSubject: Analysis: The New PayPal   Fri 21 Mar - 1:09

To more than 50 million users, PayPal used to signify a peer-to-peer payment exchange that relied largely on email notifications. Not anymore. While PayPal still stands as one of the most recognized brands in the ecommerce world, itís no longer a single payment system: It's a suite of different payment options that can assist merchants to start accepting payments online or enhance their existing payment functions.

What are they? How do they differ from each other? Which ones should you use, if any? Let's take a look.

1. Website Payments Standard uses PayPalís own website to process payments for you. Customers temporarily leave your store and pay on the PayPal website, with or without a credit card (e.g. they might use their PayPal account, which contains funds deposited from their checking account). Customers are taken back to your website at the end of the transaction.

2. Website Payments Pro combines two payment systems:
* Direct Payments, whereby customers pay at your store via credit card, without knowing that PayPal is involved. No PayPal branding appears on the payment page. This is an alternative to establishing a merchant account and payment gateway relationship yourself: PayPal will be both your merchant account provider and payment gateway.
* Express Checkout, essentially PayPal's answer to Google Checkout -- although PayPal developed the concept first. Users can opt not to register or login at your store; instead, they complete their purchases at PayPal, where the same login information can be used for any store that supports Express Checkout.

3. PayFlow Payment Gateway presents two choices that incorporate the PayFlow payment systems from VeriSign, which PayPal purchased in November 2005:
* PayFlow Pro is a standard payment gateway, which translates into a credit card form shown to customers during checkout. Customers donít leave your store during the transaction. A component must be installed on the web server hosting your store. You will need an Internet merchant account through your bank or other merchant account provider.
* Payflow Link directs customers out of your store to the Payflow Link page, where they pay for the order. This system is typically used when you donít have a shopping cart, and you are simply in need of a payment page to collect payment for a product or service.

Are you confused? I was. Website Payments Pro (WPP) Direct Payments and PayFlow Pro both allow credit card payments, on a merchantís own website, without any PayPal branding. What's the difference? Why does PayPal offer both? Here we go:

- For your customers: there is no difference.
- For you: itís speed of setup, cost, and reporting features.

If you are a new or very small business, go with Website Payments Pro as getting setup is likely faster and easier since you donít need to obtain an Internet merchant account.

Cost-wise, WPP is cheaper until the number of daily transactions becomes substantial. Specifically, PayFlow Pro costs $40 more per month than Website Payments Pro and has a setup fee of $249, but a much lower cost per transaction ($0.10 versus $0.30 for WPP). The credit card processing rates that you can obtain through your bank (if you are an established business) might also be lower than the rates charged by Website Payments Pro, which vary between 2.2% and 2.9% depending on volume and other qualifications.

Do the math and Ė depending on the average order amount on your web store Ė youíll find that PayFlow Pro becomes cheaper when the number of transaction hits a certain threshold, which is normally a few hundred orders a day.

There are also differences in functionality. In my experience, large stores that process hundreds of orders a day typically use PayFlow Pro. It provides more advanced reporting and transaction reconciliation features, for example, on top of the lower cost per transaction.

How about Express Checkout? Once it has been integrated into a shopping cart, it can be used with any gateway supported by the cart, not just PayPalís. So you could be using Authorize.Net and Express Checkout on the same store, for instance. If you opt to use Website Payments Pro (Direct Payments), Express Checkout is enabled automatically (a PayPal requirement that your shopping cart provider had to comply with).

And PayFlow Link? Itís for merchants that typically don't have much experience with ecommerce and want a solution to cut and paste HTML into their website to allow the purchase of a few products or services. In other words, if you are using a shopping cart, you will not use Payflow Link. So donít worry about it.
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