How small business can get the most out of PayPal

In the last 13 years, PayPal has expanded far beyond its initial growth spurt on auction Web sites.

According to its second-quarter results, theonline payment service busted through the $1 billion-earnings mark andis processing morethan $315 million a day in online payments.

PayPal has come up with servicesto match myriad business needs, and its fees are often much cheaperthan those of a merchant account at a bank or with a credit cardcompany for small businesses that do under a certain volume of sales.

Many small to medium-sized business owners rely on PayPal every day,but the service does more than let online shops and shoppers exchangefunds, one transaction at a time. Here’s a closer look at other ways toget more out of PayPal.

Use Subscription Billing andRecurring Payments
If your business or organization offers ongoing services, such asmonthly charges to use your software, you already know about PayPal’sSubscription Billing. This frees up bookkeeping time andmakes the process of working with PayPal more seamless. Payments areautomatic, so you can potentially retain more customers.

Use Recurring Payments for LayawayBilling
Recurring payments can also be a way of allowing clients to makesmaller payments on a larger purchase, kind of like an online versionof layaway. As any marketer knows, four payments of $19.99 sound a lotbetter to a potential customer than one payment of $100. Here is anexample of onebusiness that is using this feature for layaways. In thiseconomy, every online business should be taking advantage of this.

Use a Virtual Terminal
If you don’t want to commit to a debit or credit terminal just yet butstill want to accept payments at trade shows, your PayPal account canserve as a virtual terminal that you can use from anywhere. There areno setup fees, minimum transaction amounts, or other chargestraditionally associated with merchant credit card accounts. While thisis handy, it doesn’t handle debit, so it’s only good if your businessjust pops it head into the retail space occasionally.

Handle Rebates and Commissions
If you have a commissioned sales force or are running an affiliateprogram, PayPal’sMass Payments system allows you to make related paymentsinstantly and in international currencies. Fees are low, at 2 percentper payment to a maximum $1.25, so you won’t spend a lot of money tosend money.

PayPal for Nonprofits
PayPal offers widgets that allow your nonprofit to receive donationsvia your website or through Facebook.The widgets go further than acting as a payment gateway byacknowledging top contributors and showing how close your organizationis to your campaign goal.

If you don’t have your own website, PayPal has teamed up with Blackbaudto createBlackBaud Now, a simple way for a smaller nonprofit toreceive donations via email. PayPal offers a special rate fornonprofits of 1.9 percent plus 30 cents per transaction fororganizations with over $100,000 monthly volume and 2.2 percent plus 30cents per transaction for organizations with less than $100,000 monthlyvolume. You must provide proof of non-profit status to receive thediscounted rate.

Use PayPal Reporting Tools
Reporting is something that most of us only care about when it comes toaccounting and sales software. Why would you bother doing it withinPayPal? There are a couple of useful reports in PayPal that you canaccess while logged in through My Account, History, and then Reports.

Case Reports are extremely useful if you have experienced anychargebacks or have faced any payment disputes through PayPal. You’ll see a record of all actions on the case here.

Recurring Payments allow you to see who has set up a recurring paymentthrough your site, so you can determine if you are close to having toship out a product that you’ve offered through a layaway program. Theother reports are typically items that you’ll find in your accountingsoftware, but if you are an accounting geek you can reconcile thenumbers in both places.

PayPal Offers Content Resources, Too
PayPal’sMerchant Learning Center offers useful articles, likethis one on how to prevent shopping cart abandonment, andthis one on howto position design elements in your website for better sales.There’s even a book, “The PayPal Official Insider Guide toGrowing Your Business”, which discusses fraud protection, the properuse of PayPal reports, and tips for online marketing.

Get to Know PayPal’s SecurityPolicies
PayPal makes protecting itself from security threats a top priority.Despite this, the sheer volume of transactions going through PayPalwill always make it a target for hackers. PayPal’s buyer and sellerprotection policies do shield your organization from a certain amountof liability in the event of a breach, but doing business is neverwithout risk. Not surprisingly, PayPalhas a lot to say about how it’s ensuring safety and security.

Look Out for a Facebook-PayPalAlliance?
Author Robert Scoble announced that PayPaland Facebook are about to get more tightly integrated, and itwill be making the announcement at eBay’s X.Commerce Innovateconference in mid-October. If he’s right, and your company has aFacebook Page, this could lead to new opportunities.

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Jim Love, Chief Content Officer, IT World Canada

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