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Online Payment Service

Learn how an online payment service is useful to both businesses and consumers.

An online payment service allows a business to serve customers around the globe. [©Jupiter Images, 2009]
©Jupiter Images, 2009
An online payment service allows a business to serve customers around the globe.

An online payment service can help businesses collect payments from online customers. Online payment services use a small piece of code that is written into a Web page's programming, allowing the recipient to accept credit cards or e-checks, typically in exchange for a small monthly fee and a percentage of the transaction. As e-commerce continues to grow it is essential for business owners to have the ability to accept electronic payments.

Why use online payment services?

There are many reasons why businesses may want to use an online payment service. Consumers are generally wary of credit card fraud and may hesitate to give businesses credit card numbers electronically and over the telephone. Often there is no way for customers to know whether an online business is legitimate. Online payment services act as middlemen so the business never sees the customer's financial data. This can make customers feel more secure when purchasing through a Web site.

The use of an online payment service also expands a business' boundaries, allowing it to serve customers around the globe. Furthermore, businesses a dedicated Web site is not necessary to employ an online payment service. It's also ideal for businesses that wish to invoice their clients electronically. The client can then pay with a credit card or a check.


PayPal is one of the largest and most popular online payment services. Using the service, businesses can send invoices, collect payments through their Web sites and create a virtual shopping cart that allows customers to purchase several items at once. PayPal also allows businesses to collect payment by phone, fax or mail.

To use PayPal, customers must register for an account that links to their regular bank account. Money is held in the PayPal account until the business initiates a funds transfer, which takes two to five business days. For businesses that wish to receive payment more quickly, PayPal also issues debit cards, which allows business owners to withdraw funds from an ATM. Depending on the account level, PayPal may charge a monthly fee and a certain percentage per transaction.

Shopping Carts

Businesses that sell products rather than services may be interested in shopping cart options, which allow customers to select and pay for several items in one transaction. Zen Cart is a popular tool for doing this. It is open source software, which means that it is free and users can take the code and modify it to suit their needs.

Zen Cart software features easy installation, a template system and the ability to offer discounts on products. In addition to the regular program, there are a number of add-on options available, which can help change the look of the program or even change the language of the shopping cart, allowing truly global sales.

Merchant Services from Banks

Many traditional banks, such as Bank of America, offer merchant services that allow businesses to accept credit cards, gift cards, prepaid cards and debit cards from their customers. Businesses may also print monthly transaction reports using these services. Pricing is determined on an individual basis and is based on the types of transactions the business requires.

Online Payment Service Installation

Adding an online payment service to a Web site generally is not difficult for those who have some Web design knowledge. In most cases, it involves adding a bit of code to the site. Both PayPal and Zen Cart have extensive databases to help customers install their systems. The companies also have online forums on which users can ask questions and get help with installation.

For businesses without in-house Web design expertise, it's a good idea to leave installation to Web design professionals. If a business Web site is to be designed from scratch, the addition of an online payment processor should be considered before designing the site. Businesses with existing Web sites usually can add a payment system.

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