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EcommerceBytes-Update, Number 225 - October 19, 2008 - ISSN 1528-6703     2 of 7

ProPay Reveals Details of New PayPal Alternative on eBay

By Ina Steiner

October 19, 2008

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In a policy change that takes effect this week, eBay is requiring sellers to accept only electronic forms of payment and disallowing the overt use of checks and money orders its site. Sellers will be allowed to advertise only PayPal, ProPay and direct credit or debit card payment via a merchant credit card account in their listings. (Some categories are excluded, such as Mature Audiences and Real Estate, and "Payment on pick-up" is also an option but does not cover sellers under the eBay's Seller Protection Plan.)

eBay is allowing PayPal competitor ProPay to integrate with its website, and this week, ProPay revealed to AuctionBytes the details of its new pricing plans for sellers. ProPay, which has offered online payment processing to merchants since 1997, has developed a custom pricing plan specifically for integration on eBay, with lower processing rates than it previously offered. However, the plan is currently available only to eBay PowerSellers who are in the Silver, Gold, Platinum and Titanium tiers, and is only available to U.S. eBay sellers. ProPay will open its services to Bronze PowerSellers early next year. The integration of ProPay into eBay's seller tools is scheduled for this week.

Service Annual Fee (credited after processing $3,000) Per-Transaction Fee Processing Fee

ProPay eAuction Account

Bronze and lower **Available in 2009 $24 30 cents 3.1%
Silver PowerSeller $24 30 cents 2.7%
Gold PowerSeller $24 30 cents 2.4%
Platinum PowerSeller $24 30 cents 2.4%
Titanium PowerSeller Contact ProPay for custom rates    

ProPay - eAuction Pro Account

The eAuction Pro account, not yet available, is for eBay Silver PowerSellers and above who need specialized services face-to-face processing and other situations.

ProPay eAuction Fees
The ProPay eAuction Account for eBay Silver and higher PowerSellers has an annual fee of $24 billed annually upon sign up, with a $24 credit offered to sellers who process $3,000 or more with ProPay during their first 6 months. There is a 30-cent fee per transaction, with processing fees ranging from 2.4 percent for Gold and Platinum PowerSellers, to 2.7 percent for Silver PowerSellers. The processing fees for Bronze PowerSellers will be 3.1 percent when the program becomes available next year.

ProPay Executive Vice President of Sales and Marketing Bryce Thacker said Titanium level PowerSellers should contact ProPay for custom rates.

There are no other fees - no transaction downgrade fees, monthly gateway fees, monthly statement fees, or monthly minimum processing fees.

Processing fees are offered at a flat rate for merchants. Thacker said that while interchange fees go up for rewards cards and down for debit cards, merchants will pay a fixed rate no matter which card the buyer chooses to use.

Processing Rates & PowerSeller Status
Thacker said ProPay would take into account the seller's PowerSeller level when they first sign up for their ProPay account. The seller will remain at that level for one year. If the seller increases their PowerSeller level during that year, they can request an upgrade of their ProPay account to reflect that change.

Once the account is up for renewal, ProPay will access their PowerSeller status and assign them to the appropriate level. If the seller is still at the same level as when they originally signed up, they will continue on at that level. If their seller status has changed to a different level, their ProPay account will be adjusted accordingly.

ProPay and eBay DSRs
ProPay will only accept sellers who achieve a Detailed Seller Rating (DSR) of 4.3 or higher across all categories. Thacker said that if the DSR falls below 4.3, eBay prevents that user from any further eBay listings, which would also prevent them from signing up or processing using their ProPay account.

ProPay and eBay Data Sharing
When asked if ProPay would share data with eBay, such as chargeback rates, Thacker said, "ProPay and eBay will exchange relevant information to effectively serve our merchants who sell on eBay. Information such as DSRs, chargeback rates, chargeback representments, and how well a particular merchant resolves his or her disputes are potential examples of proposed data sharing according to eBay."

Setting up a ProPay Account on eBay ProPay's eAuction account is integrated directly with the eBay checkout process. PowerSellers who want to provide ProPay as a payment option for their buyers will go through the following steps:

  • Click on "sign up today" at www.ProPay.com/ebay (This link will go live the week of October 20th.)
  • Verify their eBay account and selling tier
  • Complete and submit the eAuction signup form
  • Answer the identity verification questions

Once their account is set up, the seller selects ProPay as a payment option when setting up each auction. After an auction has been won, the buyer goes through the eBay Checkout process and selects ProPay as the payment option. The buyer is taken to ProPay's secure purchase page, which displays the auction information and asks for the buyer's name, credit card number, and card security code. The buyer submits the information for processing. If the transaction is successful, the buyer receives a confirmation screen and the money will be moved to the seller's ProPay account as a pending transaction. If the transaction is declined, the buyer is prompted to re-enter the information and try again.

How ProPay Is Different from PayPal
A key difference between ProPay and PayPal is that ProPay provides an actual individual merchant account for each eBay seller whereas PayPal processes all transactions through an aggregated model. According to Thacker, that difference benefits eBay sellers in several ways:

eBay sellers are ProPay's primary customers. So, while ProPay is bound by the credit card brands cardholder protection rules, ProPay actively helps their merchants resolve charge backs and fight fraud.

eBay sellers receive a merchant ID for their eBay ProPay transactions. The funds eBay sellers generate through their merchant accounts are attributable to them and are recognized by financial institutions. Having these funds acknowledged is important when eBay sellers try to qualify for business and other loans.

ProPay provides free, online traditional monthly merchant statements and an annual statement for tax purposes.

eBay sellers can process credit/debit card transactions immediately through their ProPay merchant account without having to require their buyers to first sign up for their own ProPay accounts or work through alternative payment suggestions. That removes some hurdles for many eBay buyers and increases the speed and convenience of checkout.

Chargeback Protections
When you step into the merchant account world, Thacker said, there are already some ground rules present that sellers and buyers have to abide by. The buyer has to go through a presentment and re-presentment process. "Our customer is the merchant. We are very active in helping our sellers, our merchants, work through any of those chargeback situations."

ProPay's website lists recommended seller practices for reducing disputes and chargebacks and giving themselves and ProPay the best opportunity to win those disputes should they arise:

1) Always get a positive address verification code on your buyer's billing address

2) Only ship to verified addresses. Doing so proves that you sent your product to the actual cardholder.

3) Have signed proof of delivery to that address to evidence that you actually shipped to the cardholder's address.

4) Keep shipping documentation and an invoice of the products for each sale. If a dispute is filed, you'll have evidence to show that you shipped to the cardholder, and what you shipped.

5) Communicate to your customers what will appear on their card statements for your transactions. Doing so should prevent cardholder confusion that can lead to chargeback disputes.

6) Provide ProPay with the best phone number to reach you. ProPay sends this phone number to be printed on the cardholder statement so that your customer can call you with any questions or problems.

7) Have a very clear written refund/return policy displayed in your listings and follow it precisely.

eAuction Pro Account
In January 2009, ProPay will unveil the eAuction Pro Account for eBay Silver tier PowerSellers and higher who need additional, specialized services for processing credit and debit cards in face-to-face and other situations. This account will add processing options such as ProPay's online virtual terminal; touch-tone phone processing; email invoice; direct API integration; and secure card reader. The annual fee for the eAuction Pro Account will be $240, billed annually at sign up, and transaction fees will be identical to the regular eAuction account.

ProPay is integrated with secure shopping carts and will announce these when the eAuction Pro account, which supports personal website transactions, is released.

eBay's Payments Policy
eBay is working with several other payment services to integrate them into eBay Checkout, and hopes to announce 2-3 more payment options in January. It said integration of sellers' merchant credit card accounts into eBay Checkout would be a requirement next year. In the meantime, sellers may continue to accept credit or debit card payments directly in the same way they currently accept them.

eBay is giving a grace period until January for sellers to remove references to checks and money orders from the Item Description section. Under the new policy, however, even if checks or money orders are mentioned in the Item Description section, sellers should not solicit checks and money orders in any other way, such as emailing to ask buyers to pay by check or money order.

Sellers can revise their listings to remove prohibited payment methods through their seller preferences page in My eBay. To remove item description wording in a large number of listings, eBay recommends sellers use "search and replace" within Turbo Lister.

Sellers can learn more about ProPay's plans for eBay sellers in this announcement and beginning this week, on ProPay's sign-up page.

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.

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