Setting Up A Streaming Subscription Site, Part 1

Let us digress to suggest that the "new" way would for you to use an "escrow" service. The customer pays the funds to be sent to you into an escrow account provided by a third party, you ship the customer the goods, and if they are not dissatisfied (the goods described are actually what they have received) you are paid by the escrow company. This is a very good mechanism for users of auction sites or those selling goods privately that may have widely varying value depending on condition. By using an escrow service the buyer (your customer) is protected against fraudulent transactions – something less than true with PayPal and Visa. One of our staff recently purchased a watch from Russia using an escrow service and it was both a painless and an easy transaction. He felt a lot better about sending off an electronic funds transfer (EFT) for several hundred dollars when he knew he would have an opportunity to handle the watch before the transaction was completed.

One of the most recent players in the escrow field is Escrow.com. To use Escrow.com, all you need to do is open a new account. A transaction fee covers the cost of your transaction. A recent transaction to purchase a used motorcycle with a credit card ($1400) ran about $78US in fees. Not cheap, by any means, but a great way to protect yourself when you’re buying something valuable at a distance and want a chance to inspect it before concluding payment. Typical fees for check, wire transfer, or money order run 3% and 6% for credit card transactions (maximum charge allowed is $5000). Fees decrease as the amount of the transaction increases.

Visa offers ePay

Note that Visa has recently launched the "Visa ePay" service that looks like a pretty direct competitor to PayPal. The ePay system works by sending an electronic bill to your customer, then your customer authorizes payment from their financial institution, and the financial institution directs the payment into your bank account and notifies you that it has been received. This new service isn’t credit card processing and its very close to how PayPal works. Time will tell whether it gains the same acceptance that PayPal has gained, though we wouldn’t count against it with the Visa name associated with it.

All in all, PayPal looks like a much better choice for the small Web site. We would definitely recommend looking at their offerings. PayPal has recently added technology to support shopping carts – their implementation is easy to integrate with your site – and many customers will already be familiar and comfortable with their brand name.

Again, because there really is no fraud protection inherent in a PayPal-based transaction that doesn’t use credit cards, we would further recommend that you have a generous return policy for your customers. Better to have them speak well of you than have a few disgruntled ones slander you in chat rooms.

Editor’s Note: Look for Part 2 in the coming weeks