PayPal made the news in Australia recently when eBay announced a dramatic change to the rules for online payments. If the ACCC doesn’t rule otherwise, it looks like PayPal will be the only payment provider for eBay in Australia.
Is this eBay and PayPal testing the waters for a similar approach in the US and other markets? Looks like it to me.
To sell from your own website, you still have a choice. Paymate and PayPal are competitors in Australia that allow businesses to sell online without setting up a merchant account with a bank. Both enable sales using either a ‘Buy Now’ button or a shopping cart. Both support one off and recurring (subscription) payments. But what sets them apart?
To have a closer look at the main alternative to PayPal in Australia, I talked to Dilip Rao, Managing Director of Paymate.
Glenn: Hi Dilip, last month you issued an open challenge to eBay Australia to prove its claims that PayPal offers better buyer and seller support than Paymate. Have eBay backed up their claims?
Dilip: No. And they haven’t provided any data to suggest rampant fraud in online payments.
eBay have announced that PayPal will increase their buyer protection programme from $3,000 to $20,000. If we can offer Paymate on eBay, we will increase our protection from $3,000 to $20,000 as well.
PayPal protect themselves by holding your money for 3 days. This gives them time to freeze your account if they think something is fraudulent.
Paymate pays money into the seller’s account – around 80% of the time, it goes across that night. If we think something might be fraudulent, we do more investigations before approving the payment.
This is more like a merchant facility with a bank, where your funds get paid to you. With PayPal, the reality is that for 3 days you don’t have the money, and they can just freeze your account if they want to.
Glenn: So for selling online, what risks should a small business owner be looking at?
Dilip: Nobody can guarantee payments are risk free. When a card is used physically, the merchant has no liability for fraud, the bank carries it. Even if you don’t check the signature, the issuing bank will wear it. But online, it is known as a Card Not Present transaction, and the merchant – you – wears the liability.
Paymate have been in business 7 years, and we have invested in systems to do risk assessment online. We look for the signs a transaction may be fraudulent, and have systems to do this.
Glenn: So what would you say to small business owners about security and eCommerce?
Dilip: If you get a merchant facility from a bank with a gateway plugged in, you carry the liability for fraudulent transactions. So be aware of who you are dealing with. Someone might register with you under a false name, how can you tell? Encryption, SSL and so on – it protects the buyer, not you.
Storing payment card information is risky as well. You’ve seen the stories about companies getting in trouble for losing credit card information. The banks have been implementing the Payment Card Industry (PCI) Data Security Standards for years, they set 12 standards for managing sensitive information. You need to consider protecting payment details from hackers and other technical risks. But also think about operational risks, like the temp who has access to paper records with payment details on them (and those can easily be used the next day to make purchases). If your bank sees you have violated PCI standards, they can take your merchant facility off you.
When you use a service like Paymate, you are outsourcing the risk management to us, outsourcing most of your back office where payments are concerned.
Glenn: Tell me about the fee situation. How does Paymate compare with PayPal?
Dilip: You need to look at what you get for your money. You pay a slightly higher price for a higher level of service.
Think about your bank, you don’t know about them when things are going well. The reason you call is when things go wrong. Same with payment providers. If you pick up the phone and call Paymate, you speak to a person. No IVR. It is a very personalised service. We answer all emails within 1 business day. It is true you can get personalised service from PayPal, but that is only for large PayPal sellers who are assigned an account manager. Our supplier service is highly valued by those who switch from PayPal.
Small businesses often want someone who can just sort things out for them. We do that. A Paymate seler delivered a $2,400 handbag to Florida only to encounter fraud. We fought for 9 mths and got her money back for her.
Glenn: With Paymate you can split the fee into a Buyer Fee and a Seller Fee, or the seller can absorb all the fees. How well is the Buyer Fee accepted?
Dilip: I think this generates more anxiety than it is worth. If I’m buying something for $100, it will cost $103.50 using Paymate. That $3.50 gives me confidence all my details are with Paymate. And if I have an issue you will sort it out. Sellers sometimes absorb the fee, it can be a trivial exercise. By allowing you to split the fee, we allow Paymate sellers to keep their prices low.
Glenn: What are the trends you see for small business and eCommerce?
Dilip: The challenge for a small business is how to get sales. A lot of businesses go online in Australia, but it is only about 3% of them that accept payment online. What are you going to do, just get someone to call you?
More businesses need to be able to make an ecommerce site rather than a brochure site. We have introduced new services to make this easier. Paid support – $25 for 30 minutes. Search engine optimisation and search engine marketing are seen as hard, so we offer Paymate Hits (for SEO) and Paymate Clicks (for SEM) services as an alternative to spending thousands of dollars with an SEO consultant.
A business needs services to drive traffic. It is worth having an eCommerce capability. But you need to be able to do the marketing, to drive traffic and convert customers.
Glenn: Tell me about your subscription payments, who uses them?
Dilip: Dilip: We have a number of hosting companies using subscription payments for ongoing services, and other services companies. They are buyer initiated,
more defensible. The buyer doesn’t feel they are being debited without their approval.
Glenn: Ok Dilip, to wrap up, what would you nominate as the major advantages Paymate offers over PayPal?
Dilip. Our client service. It is more personalised and responsive, you’ll know who you are talking to. Our risk management – we fight for sellers. And our speedy service – get your money the same night.
Glenn: Thanks Dilip.
More information about Paymate.
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