Online Payment Service, Yea or Nay?

Dec 25, 2013 (Wed): Referring to Malaysia’s Economic Report 2013/2014, Malaysians have spent RM1.8 billion for online shopping in 2010 and the market will be estimated to reach RM5 billion next year. The statistics gathered from the market show electronic commerce or eCommerce is on the growing trend in the country as well as the region and thus it has attracted many people and companies started to venture into the online business.

When you are selling products and service over the internet, how do you collect the payments from your customers? Cash on delivery (COD), cash deposit, interbank bank transfer or using online payment service? Online payment service is a service allows buyers or shoppers to use electronic payment instruments such as credit card, debit card, internet banking (or direct debit) and virtual currency to pay for their goods or services purchased online.

Quite a big number of online sellers in the country especially those selling through blog and social media platforms are found not using any online payment service and their number one reason is to avoid the transaction fee charged for using the service.

Cash deposit or interbank bank transfer (known as GIRO) will be their preferred payment methods offered to their customers. Using both methods will not require the sellers to pay transaction fee but it will limit their sales opportunities. Remember online shoppers are from around the world and some customers prefer to use card instead of cash to pay for their purchases. Besides, the payments from both methods require manual way to trace the sender’s identity which will increase your operating cost.

Online payment service is a robot and it works for you 24x7x365, meaning it can help you to receive payments from your customers (as well as telling who made the payments and paid for which order) while you are sleeping. With online payment, you won’t limit your orders within domestic market but also can serve overseas customers. As long as you can accept Visa and MasterCard on your website, they can pay you with Visa and MasterCard anytime, anywhere.

Some customers feel more confident to pay using Visa and MasterCard because they understand that the global payment network able to offer them consumer protection against merchants’ fault. For instance, the cardholders are allowed to contact their issuing bank to dispute a particular credit card transaction when merchant didn’t fulfil their service or deliver the goods to them. Earning reward points and paying with credit are another two major reasons that drive customers to pay using credit card.

The service is also able to convert your customers’ instant gratification to a sale. Gratification over online purchase is the pleasurable emotional reaction of happiness in response to particular goods due to sales promotion offered by the seller. Without online payment, the customers’ gratification will be delayed and they have a chance to reconsider the purchase while they are making payments either by cash deposit or interbank transfer. You should not put a ‘coma’ in between the order and payment, it will become a “full stop” when their gratification is over and thus you will lose the sale.

No doubt, subscribing online payment service will cost you to pay certain fees such as one-time setup fee, maintenance fee and transaction fee (i.e. 2 – 4%). In fact, you just paying a very small fee for using online payment service which can deliver many benefits to your online business, including driving more sales (especially for cross border transactions), minimizing manual works and providing convenience to the customers.

This article is written by Terry KSYee, Vice President and Head of Internet Merchant Acquiring, GHL Systems Berhad – the leading payment solution provider in Southeast Asia and listed in main market of KLSE.

Author: Terry KS

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