Alternatives to Accepting Credit Cards Online

Credit cards are one of the most common forms of payment in e-commerce today.  They are especially popular in the U.S.  However there are also major concerns with the security of credit cards now.  Credit card companies have been working to enforce a set of standards to ensure the security of the credit cards used in e-commerce, but most of the responsibility is put onto merchants to protect their customer’s data.

The bottom line anymore is that it is bad for the merchant to handle credit card information directly.  Therefore there are several alternatives that merchants can offer as options, a couple of which are very popular.

PayPal

PayPal is an intermediary for payments.  It can store credit cards and bank account information for a customer and when a customer pays, PayPal is the one that charges the card.  The customer’s credit card information isn’t transmitted to the merchant at all.  This means PayPal is taking on the liability for that card and providing the merchant with a special ID instead that has limited use.

Your customers can also pay directly from the balance of their own Paypal account rather than taking money out of a traditional bank account. The downside of PayPal is that its fees can add  up when compared to a regular credit card processor.

Google Wallet

This was formerly known as Google Checkout.  This is similar to PayPal, in that Google Wallet stores your credit and debit cards and issues virtual information to the merchant for payment, so the customer’s actual credit card numbers never leave Google Wallet.  This has a benefit for customers of also being able to utilize near field communication (NFC) technology on their phones to use Google Wallet to pay at physical locations in addition to making online payments.  The current main difference between Google Wallet and PayPal is that PayPal can store bank account information instead of a credit card whereas Google Checkout only stores credit and debit cards from the four major credit card companies.

E-Checks

An e-check is basically an electronic transfer from a bank account.  Customers would provide their bank account information and the merchant debit funds from it as if a check had been written by the customer. These can be accepted through some third party payment processors (including Paypal).

These are a few of the ways payments can be processed as either alternatives to credit cards or as intermediaries of credit card payments, so the merchant’s liability is limited.  As stricter security measures are imposed on credit card use, more options may pop up as merchants try to find ways to not have to deal with the liability of working directly with customer credit card data.

What forms of payment do you accept besides credit cards?  How do you limit your liability and keep costs down with the recent upswing in credit card security measures?


Jared Bovard is a software developer who has worked in the e-commerce and order / inventory management industry for more than 7 years. He currently works in internal development in the security industry. Jared also owns J-Brain Software, a company specializing in e-commerce and order management software consulting and development.

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