According to a recent AuctionBytes survey, the vast majority of buyers and sellers rely on online payment services to transact business on the Internet. Just over two years ago, there were virtually no online payment services in place, now there are quite a few options to choose from.
There are two main types of payment services, and accounts are generally funded through bank accounts or credit card accounts. The first type is a P2P (person-to-person) account where users can send money electronically to other members. PayPal (now owned by eBay) is the best-known P2P payment service. These types of services are usually free when sending money, but charge fees for accepting money into the account.
Another type of payment service allows buyers to purchase money orders electronically, which are then sent via regular mail to recipients. Buyers pay fees for using these services. BidPay is one of the best-know money order payment services.
Established businesses that have merchant accounts, which allows them to accept credit card payments, may use them for online transactions as well. ProPay is a hybrid service; it allows users without a merchant account to process credit card payments for lower maintenance fees (but higher transaction fees) than a regular merchant account, but there are stricter limits on the amount of money that can be processed.
In fact, most online payment services have strict limits on how much money can be sent and received, giving PayPal the biggest advantage in the industry. In this issue, Izzy Goodman talks about the latest option for small sellers: the dynamic merchant account (see the next article, "The Evolution of Merchant Accounts for Online Auction Sellers").
We've updated the payment chart on our Site, listing some of the major online payment services, including their fees and features, as well as contact information. For the updated chart, go to http://www.auctionbytes.com/cab/pages/payment.