Why you should seriously consider accepting PayPal and/or Google Checkout

October 25, 2007 in An article, Business Intel

Paypal_logo_2 Are you accepting PayPal as a payment option for your ecommerce offering? Some studies suggest it's a great way to boost sales.

...according to a recent survey by JupiterResearch. Among Internet users, 33% said they had a PayPal account and 23% called it their preferred way to pay.

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...other benefits of accepting PayPal ...of the 153 million PayPal account holders, 36 million have used PayPal in the past 90 days, suggesting a large and loyal cadre of PayPal users.

And many of them keep balances in their PayPal accounts, often accumulated through sales on eBay. At any given time there is $2.5 billion in PayPal accounts, and that money typically turns over every two weeks. Much of that gets spent online, and 18% of U.S. online shoppers in a recent PayPal-sponsored survey said they would not have made a purchase if the retailer had not taken PayPal.

Google_checkout Are you taking advantage of the Google Checkout program which is waiving processing fees till 2008, and increasing visibility on AdWords ads by featuring a colorful button? Google Checkout will also give you $10 in free processing for every $1 spent on AdWords starting in '08.

Ritz Interactive, which operates such web sites as RitzCamera.com and BoatersWorld.com, says its click-through rate went up 23% after the Google Checkout badge was added to its ads, and that the conversion rate on those click-throughs went up 24%. Intermix, an apparel retailer, says its click-through and conversion rates went up about 20%. At sporting goods retailer Sportscloseouts.com, the Google Checkout badge boosted click-through rates from about 1.2% to 2.2%, an increase of more than 80%.

(emphases mine)

Source: the excellent Internet Retailer Magazine, October '07 article Google and PayPal collide at the checkout

See also: Adding three or more payment options at checkout has raised sales by an average of 14% according to payments processor CyberSource Corp. - Source July '07 Internet Retailer

Update: I had the Google credit, backwards.
 

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I believe you misunderstand the nature of Checkout's interaction with AdWords. I spend approximately $400 a month on AdWords and process approximately $1,000 a month through Checkout. Your explanation would suggest that I receive a $100 credit on AdWords.

This is incorrect.

What will actually happen in 2008 is that the fee-free processing continues for all of your processed transactions *up to* ten times your monthly AdWords spend. Ten times my spend is $4,000, I sell $1,000, ergo I will continue to pay nothing for Checkout (saving me approximately 4% at my price point, or $40, not $100). If, hypothetically, I processed $5,000 worth of transactions, I'd pay Google processing fees only on the last $1,000 worth of transactions.

For substantiation, see their pricing page:

https://checkout.google.com/seller/fees.html

Posted by: Patrick McKenzie | Oct 25, 2007 5:53:44 PM

Hi Patrick, you're right. I (and the print version of Internet Retailer!) had it backwards. You get $10 in free processing for every $1 you spend with Google AdWords. I've updated the post - thanks for the clarification.

Posted by: Carson McComas | Oct 25, 2007 6:04:33 PM

You're welcome. Incidentally, in response to the question at the end, integrating Checkout was one of the best things I ever did. (I had previously used Paypal and a legacy shareware payments service which I have now dropped like a hot potato.) Sales went up immediately (25% sounds a little on the low side), although it is difficult to figure out what portion of that was due to Checkout and what portion of that was due to dropping the unproductive payment service.

From my perspective, the main thing they offer is customer trust and, critically, streamlined checkout funnels. Every additional step and every additional form field in your funnel costs you sales. Paypal and Checkout both offer modern, minimalist checkout procedures, which directly increases sales. The experience is best for customers already having an account set up (no need to reenter 10 fields worth of information), and 50% of my Paypal customers had pre-existing Paypal accounts. However, only 1% or so of Google customers do.

Posted by: Patrick McKenzie | Oct 25, 2007 6:28:52 PM

As director of an eCommerce website, I have been trying to figure out how to fit in PayPal and Google Checkout into my website. However, they make it so difficult to integrate into a current ordering system! Not on the shopping cart side, on the "I need all orders in my own db" side. PayPal seems much more doable so that is what we are focusing on right now. But Google Checkout has absolutely no support for taking the person back to our website so we never have a chance to grab the order ourselves! All of our automated tools, shipping messages, etc are therefore null and void and all Google orders need to be handled manually -what a pain. Anyone know a way around this?
Jenn

Posted by: Jenn | Nov 11, 2007 8:16:33 AM

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