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Do I need Paypal or a Merchant Account?

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The Paypal vs Merchant Account is a frequent conversation I have with clients, especially those who are new to owning their own business.

The conversations I had with clients 5-10 years ago are significantly different than conversations I have with clients today.  While even three years ago, the gap between using Paypal and a traditional merchant account to collect money from customers were vast. 

I used to advise clients that if they ONLY wanted to collect money from clients via the web, then Paypal was the way to go.  However, if they wanted to be able to process credit card transactions offline, then a merchant account was the way to go.  However, Paypal has changed and now offers a Virtual Terminal for clients and that changes EVERYTHING for merchants.

Here are the basics:

You need either a merchant’s account OR a Paypal business account to accept payments via credit card.  

According to Wikipedia: 

"A merchant account allows a business to accept credit cards, debit cards, gift cards and other forms of payment cards. This is also widely known as payment processing or credit card processing.

Merchants, or business owners who receive credit card payment for their goods or services, must first apply for a merchant account typically through a merchant bank or MSP (Merchant Service Provider). The merchant account will typically be established based on several factors. Merchants who own businesses with poor or no credit may find it difficult to establish a merchant account through traditional routes. 

WIth a traditional Merchant Account, you pay a monthly fee in addition to paying a % of each transaction.  The percentage paid is dependent upon a variety of factors, including the type of transaction AND your business’ credit score.

Paypal CAN act as your merchant account.

Paypal’s fees are constant.  Your personal credit history does not factor into the equation with Paypal.  It’s also not only free to sign up, but you only pay a fee when someone sends you money via Paypal.  Unlike a traditional Merchant Account, you only pay for Paypal’s services when someone sends you money via Paypal. Combine this with the fact that people tend to spend their Paypal account balances more freely than other sources, and you may find that Paypal is a GREAT option for your business.

In the past, if you used Paypal you had to rely upon the end user to start and complete the transaction.  The only way to collect money via Paypal was via the web.  That meant creating and picking up code and inserting it into a web page.  If you do most of your business via the web, then Paypal is a WONDERFUL way to accept payment via the web.

Another reason to use Paypal is customers feel more secure.  See, when someone pays you via Paypal, their personal payment information is never revealed to you, the merchant.  PayPal allows anyone to pay in any way they prefer, including through credit cards, bank accounts, buyer credit or account balances, without sharing financial information.

However, one of the BIGGEST drawbacks to Paypal (prior to their introduction of the Virtual Terminal) was that the BEST way to use Paypal was to embedd a button into a web page.  Oops!  That usually meant either contacting your web developer OR learning to insert the bit of code into your web pages on your own.

ENTER THE PAYPAL VIRTUAL TERMINAL

With the Paypal Virtual Terminal:

  1. Customer orders by phone, fax, or mail with credit card.
  2. You enter order into Virtual Terminal.
  3. PayPal processes the transaction and you get paid.

If you want to do business via the web, then learning to use Paypal is an essential skill.  I’m currently developing video tutorials to walk you through the process.  Contact me if you want to be notified of when these videos will be available.

iPhone Lesson: Yet ANOTHER way to piss off your customers

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I’m going to have to create a new category if this stuff keeps up!

Fox news reports that Apple has SLASHED the price of it’s highly touted iPhone a mere 10 weeks after it’s debut.  The $200 price cut has iPhone customers who were part of the less than expected rush hot under the collar to say the least!  The Mac Rumors blog is abuzz with the news, with thousands of unhappy customers venting their frustration in the comments section. 

With comments like: "I’m so ******* pissed off right now.." and " I feel like I just got punched in the face. Fanboy tax indeed."  it doesn’t appear this pricing strategy is winning the appreciation of customers who were loyal enough to the Apple brand to stand in long lines to get the product.

While Steven Jobs claims he wants to "make the phone affordable for everyone"  what he’s done instead is to create a FIRESTORM amongst loyal Apple customers.  Meanwhile, Joe Wickert is wondering why cut the price on the iPhone?  He suggests insteads a much saner pricing schedule where the price CLIMBS after the initial introduction instead of falls!

While controversy is a great way to get a blog noticed, I question that strategy for electronics products!

 

Is RSS for you?

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Back in the mid 00’s, I was amazed at the number of clients (and potential clients) who requested that their web site have “RSS.” What was really frustrating was few if any KNEW what RSS was.  I later learned that many “internet marketing gurus” were holding free classes exhorting class participants to be SURE their site is RSS capable. (For our purposes here, we’re going to deal with WRITTEN content and not podcasting.)

2019 edit: RSS has been declared “dead” many times as mainstay RSS readers such as Feedburner, Google Reader and Digg Reader have been shuttered.  However, RSS is a protocol not a product, so despite the demise of feed readers that allowed subscribers to follow the latest updates to a website, the protocol remains viable even though it is virtually ignored.

Danny Crichton writes in his article RSS is undead “At its core, [RSS] is a beautiful manifestation of some of the most visionary principles of the internet, namely transparency and openness.”

RSS stands for (depending upon who you ask) Really Simple Syndication.  According to Wikipedia:

RSS is a family of Web feed formats used to publish frequently updated content such as blog entries, news headlines or podcasts. An RSS document, which is called a “feed”, “web feed”, or “channel”, contains either a summary of content from an associated web site or the full text.

RSS makes it possible for people to keep up with their favorite web sites in an automated manner that’s easier than checking them manually.

RSS content can be read using software called a “feed reader” or an “aggregator.” The user subscribes to a feed by entering the feed’s link into the reader or by clicking an RSS icon in a browser that initiates the subscription process. The reader checks the user’s subscribed feeds regularly for new content, downloading any updates that it finds.

First, notice the text highlighted above.  “RSS makes it possible to keep up with a favorite web site.”  This makes the assumption that your site’s CONTENT changes frequently.

So, the first question which begs to be answered in the quest for whether RSS is for you is:

1) DO YOU MAKE REGULAR CHANGES TO YOUR WEB SITE?

If your web site is a BLOG then the answer is probably (hopefully) YES!

There are other content management systems (because a blog is really just a simple content management system) which also offer RSS, but the question still remains of how often are you publishing new content.

Still with me?  Great!  You’re making regular posts to your blog OR you’re making frequent content additions to your web site. Then it’s time for the next question:

2) IS YOUR CONTENT GEARED FOR TECH SAVVY READERS

Accord to Brad Hill over at RSS.Weblogs.com: 12 percent of the Internet population is aware of RSS technology by that name, and a bare 4 percent claim to use RSS.

According to the blog post (and comments to that post) podcasting experiences a much higher “awareness” level but the buzz around that form of syndication has not translated into heavy adoption.

2019 edit: rss.weblogs.com is no longer operational.  Smash.VC has an article that looks at the history of Weblogs Inc, and what happened to the site as well as  They distilled 6 Lessons Learned from Weblogs Inc and Jason Calacanis.   It’s a great read.

So the question which begs to be answered by you is: Are your readers part of the 4% who use RSS?

In general, if your target audience is LESS than “tech savvy” it’s entirely possible that you have a much LOWER percentage of readers who subscribe to RSS feeds.  If your target audience is EXTREMELY web savvy, it’s possible that you have a much higher percentage of RSS users.

money making businessIn the end, if you’re providing a consistent flow of information for a technically savvy audience, then yes, be sure to include a prominent place for your readers to subscribe via RSS to your content feed.  However, since the vast majority of my clients are NOT targeting the highly technical savvy user, I STRONGLY recommend that my clients continue to rely on the tried and true email newsletter to stay in contact with their audience.

Again, as always, it’s a matter of knowing WHO the members of your target market are and how comfortable they are with technology.  Just because someone can use a browser and email doesn’t mean they’re potential RSS subscribers.

2019 edit: Your WordPress powered website still offers RSS  protocol.  However, to access that information consumers need to use software that displays the content in an easy to read manner.  That’s why when the various tech giants shuttered their RSS readers,  many declared that RSS is dead.  However, don’t count it out entirely.  Somewhere, someone is probably trying to figure out a way to harness the power RSS offers in a new and exciting way.

 

Yet another way to piss off your customers…. fail to deliver what you specifically promise to deliver!

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Interestingly enough, shortly after my last post, I had a conversation with a friend in which she vented her frustration about a product she purchased online.

After 10 years of marriage, my friend’s husband decided to "trade in" my friend on a "newer" model, leaving her to navigate the ever treacherous waters of the "dating scene".  Newly single, she like many other Gen Y members turned to the internet for advice.  During this search, she came across an information product web site.

The marketing behind this information product was SUBERBLY crafted.  The product developers showed incredible insight on crafting a compelling message.  They understood that no one was going to show up on their web site and fork over $500 for their info product on the first visit, so they offered a tempting free bribe in exchange for signing up for their newsletter.

According to my friend, the ensuing monthly mailers were exquisitely crafted to create a compelling pitch for the product.  Dan Theis does a WONDERFUL job of outlining this strategy in his post :

How Internet Marketers Use "Straw Man" Logic To Sell Products

The way they [internet marketing gurus] convince you to buy the product they’re pushing involves a lot of "straw man" arguments. Let me walk you through the basic template they’re using here:

  1. If you have failed at (SEO, marketing, business, life) it’s not your fault.
  2. You’re not failing because you didn’t actually put in the time and effort to do things right
  3. No, it’s not your fault, it’s all those evil "gurus" who aren’t telling you the whole truth!
  4. As an example, watch us construct a straw man and knock it down
  5. See, we’re smart, and we’re trying to help you.
  6. Open your wallet now.

Well, on one particular day, an email landed in my friend’s inbox from this internet marketing, uh I mean DATING guru.  In this edition, he happened to hit upon a scenario that my friend was currently experiencing.  It was as if he’d been spying upon her or was in some way psychic.  In this email he wrote that after a honeymoon period, the man in the relationship would pull back and stop calling.  According to the email, his information product would not only tell you WHY your man is doing that, but WHAT you MUST do to save the relationship.

As you can guess, my friend had NO TROUBLE finding her credit card and purchasing the product.  After all, she was going to find out EXACTLY what to do to save her faltering relationship!

The DVD’s arrived in short order and my friend consumed the series in short order. 

IMAGINE HER FURY to discover that while the series did indeed explain WHY her gentleman friend had pulled away, it failed to direct her in what she needed to do to salvage the relationship!

Hell hath no fury like a woman scorned!

Not only was my friend venting to me, she was venting to EVERY SINGLE WOMAN SHE KNOWS!

Ouch!  My advertising mentor taught me long ago that a happy customer will tell 3 friends… and a disgruntled one will tell 12.  Recent research puts the second figure at closer to 16.  My friend is on track to beat that estimate.  She is now a woman on a mission.  She’s not only telling every one she knows, but she’s also spending time online warning others. 

She’s also taking advantage of the site’s "30 day money back guarantee"….. and is fully prepared to contact the state’s attorney general if they fail to refund her money as promised.

By promising something he had no intention of delivering, he’s not only going to get to refund her the $497 she paid, he’s also going to have to battle the bad PR my friend is so intent on delivering.  All because he over promised and under delivered. 

That’s one of the perils of tightly targeting a niche market.  If you fail to deliver what you promise, your customers usually spread the word quickly to destroy you.

 

New rising stars… blogging FORUMS

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Blogs are a great interactive medium where one person writes and then others comment on the article.  I adore blogs for my clients because it’s a cost effective way for bootstrapping entrpreneurs to get their marketing messages onto the web easily and effectively.

Jack Hughes has pointed out that the rise of blogging forums may be pointing to flaws in blogs….

If there is a "flaw" to blogging it’s this: creating content is TOUGH!  As Jack and other bloggers have found, staying motivated to blog regularly requires a hurculean effort, especially if your talents don’t lend themselves to writing.  A blog without posts is like a day without sunshine and blog irregularity is a common affliction amongst many blogs.

While blogs require consistency in effort… forums on the other hand don’t.  Forums are a "set it and forget it" option for many web site owners.  Start a thread, drive some traffic and soon you’ll find other people are generating content for your forum.  It’s no secret that search engines love forum threads and forums really don’t require a lot of effort on the owner’s part.

One client of mine launched a forum and she set it and forgot about it.  It didn’t take long for the forum to get active and popular.  That is when the problems began.  Once her forum posts began rising in the SERPs…. she began getting the seedier crowd nosing around.  Before long, a security hole was exposed and patched by the developer of the bulletin board software, except my client didn’t upgrade her installation.  It wasn’t long before the bad guys had gained access to her site through a back door.  When she went to check on her site one day, she saw there were 10’s of thousands of spam posts.  The board was dead.  Anyone wanting information on the original topic would find post after post advertising seedier sites on the internet.

If you want to launch a forum, it is truly the "easier softer way"…. but it’s definitely not a "set it and forget it" option. 

I would say the "set it and forget it" appeal is the reason blogging forums are on the rise.