Information on Merchant Accounts,
Ecommerce and Credit Card Processing

November 27th, 2006 by Jamie Estep

Accepting payments on eBay

Filed in: Ecommerce, Merchant Accounts | 1 comment

Ebay has become one of the largest marketplaces for selling in the world. Actually getting money from an eBay auction can be as hard as selling something.

Here’s a quick overview of the different methods of payment you can consider for your eBay auctions.

Paypal is by far the easiest and most tightly integrated method of accepting payments on eBay. Paypal is automatically tied into the eBay checkout system, and Paypal is widely used by buyers. There is however a percentage of buyers and sellers that have bad experiences with Paypal, and wont use it. For this reason it is always best to provide at least one supplemental payment method for selling on eBay. But, buyers normally want to use Paypal to pay for auctions and from a sellers perspective it is wise to accept Paypal, even if you have had a negative experience with them. As crazy as this may sound, Paypal auctions almost always sell for much higher than an auctions where Paypal is not accepted. Even an automated credit card acceptance system does not offer a suitable replacement for the wide use of Paypal.

Credit cards:
Credit cards can be tricky to accept on eBay auctions, but are the second most desired method of payment next to Paypal. Depending on how many products you sell, manually accepting orders over the phone from eBay sales can be the perfect solution or simple impossible. There are a variety of pre-made systems that can integrate eBay with your payment gateway and merchant account, but these systems often add unnecessary extra fees to the already high cut that eBay takes. If you run a successful online business, I recommend hiring a programmer to develop an eBay checkout system for your auctions through your existing payment gateway. This creates a much more usable system, and eBay orders can be better integrated with website orders for inventory, customer service, and tracking.

Personal checks:
In my opinion, personal checks are the worst method of payment for eBay auctions that work well enough to consider. Checks are slow, they must clear a bank account, they are prone to bouncing and being lost in the mail, and they create a very poor user experience. With the exception of a few rare occasions, checks are not a convenient, timely, or cost effective method of payments for eBay. The money you save by not using Paypal or accepting credit cards, is most definitely more than offset by the lack of bids you get on your auctions. Nearly every bad experience I have had on eBay was a result of having to send or received a check.

Money orders & cashiers checks:
Money orders and cashiers checks are safe and effective methods of getting paid on eBay. But, they are slow as they have to be mailed by the buyer and deposited into a bank account before the auction item can be shipped. They are best used with high dollar auctions where it is essential that the seller is protected from any buyer fraud or frivolous chargebacks and disputes, and time is not of the utmost importance. For high dollar items, I recommend getting an initial deposit via Paypal or credit card, and accepting the balance by cashiers check. I would consider a high dollar item anything of about $2000 and up.

I would not even consider sending or requesting cash through the mail. If you sell locally and are comfortable with meeting your customers, than cash can be a great method of getting paid for your auctions. For most of us, cash is rarely if ever a viable option. For those that do meet their customers, I would highly recommend taking appropriate precautions to protect yourself. If you do not have a business address, I recommend meeting your customers in a public place, not at your residence. Most likely you will never have a problem with a buyer, but it’s simply not worth the risk to you or your family.

Western Union:
Western union is not an acceptable method of payment for eBay. It is commonly associated with fraud, and a very high chance of someone getting burned exists with western union. I do not recommend using western union for auction payments at all. eBay also warns against it. Just don’t do it.

Other 3rd party checkout systems:
There are several other common checkout systems that can be used for accepting payments on eBay. Personally, I find most of these systems to offer a poor experience for a customer, but they are still used often enough to mention. Andale, Bidpay, Vendio, and USAepay are some of the commonly used checkout systems for eBay auctions. These systems have a hosted checkout process for your auction winners. They also help manage your existing auctions, shipping, and have a variety or reporting tools that help you keep track of all of your eBay affairs. All of these services have fees associated with different levels of their services, but they can help sellers that have a large quantity of items to manage.

Using a payment method that your ‘buyers‘ want to use is vital to getting the most out of your eBay auctions. It is important to provide at least two options for payment from your customers, and make it as easy as possible for your customers to pay. One of the largest contributors to a low quantity of bids on auctions is not accepting the payment method that buyers want to use.

One Response to “Accepting payments on eBay”

  1. finance software March 9, 2010 at 4:36 am

    It is important to provide at least two options for payment from your customers, and make it as easy as possible for your customers to pay.