After the announcement that the UK government had “lost” 25 million records containng the private details of many of the UK population, many people are starting to ask if online payment systems are safe? Can they be trusted? Are they more risky than traditional offline payment methods?

The truth is that where information is stored, and particularly information of a confidential nature, there will always be risks. However the risks associated with online payments are no different to those associated with offline payments – with many actually claiming they are safer. While there have been a number of online scares, whereby records have gone missing or information has been hacked – in general the online payment system has a good track record – with the main risk seemingly coming from retailers letting the security side down.

The bottom line is that fraud has been around since the year dot and while billions of pounds is invested into new and more secure systems, no system is ever 100% secure – anyone who tells you this is not being truthful! The security side of the internet has developed over the last decade or so, and it is actually more secure than the vast array of offline systems, with no chance of credit card cloning, no theft and a full audit trail available so that you can see in an instant where your funds have gone to.

So in summary there is no greater risk paying online than there is offline, and while the recent announcement of lost data, etc is shocking, it does not have any real bearing on the various payment systems available. The fact that some companies and government departments hold millions of records will always be a security risk, and while the headlines today are dramatic and worrying, they do not really reflect the overall position on the ground.

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Even in this day and age, the day when money can be transferred same day, PayPal accounts are overflowing with orders, you would be surprised at the amount of people who still like to pay by good old fashioned cheque. Even though cheques are perhaps the slowest form of payment, not to mention the increased risk of fraud, should you accommodate such customers?

While it does really depend what size of a business you are, and whether you can actually afford to turn away that type of business, you should really consider it. But also consider this, the whole process of payment by cheque is slow and more expensive to you. You have extra time for your staff opening envelopes, extra time going to the bank and extra time matching the cheque against an order. For this reason many sites who accept cheques will charge a fee on top, to cover extra handling costs, etc. But would a customer really pay this?

The idea is that if a customer really wants to pay by cheque, you are offering that option, even if you need to add a couple of pounds on top. If they have got to the payment stage, the chances are that they have decided to buy from you already and a small surcharge will not make a difference. However, if they do not want to pay a surcharge this will encourage them to use an online system, credit or debit card – which is exactly what you want!

In many cases the acceptance of cheques now a days is only superficial, and a way to grab your customer and try to shepherd them down a different route. If they do decide to pay by cheque, then so be it, but at least you have a new customer.

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When setting up a retail site, or at the very least a site where some form of online payment is required,. there are many many different payment options available. The cost of installing them all into an online shop format can be quite costly, but do you need to cover all of the angles, or just the main ones?

While some of the main payment methods include PayPal and Google Checkout, there are many more and even the likes of Amazon are set to introduce their own third party system into the market place. A number of factors which online retailers have to consider are :-

Who are you trying to attract? Which market.

Have you done your market research?

Which payment systems offer the best terms, compared to their popularity?

Are their any offers available, e.g. Google Checkout recently offered discounts to merchants.

Do you really want to go all of the way down the payment options chain? Some are more reliable than others.

These are just a few of the questions that you need to ask yourself when setting up your own site. Different payment methods have different charges, different usage penalties and different charge back rates (i.e. when customers cancel). You really need to find a balance between offering the best all round service, not giving your customer too many options (which may confuse them and make your site look untidy) and retaining a quality of service on your site.

While it is great to be able to attract more and more customers, some payment systems have troubled histories and are prone to certain actions by customers. Do you really want to become involved in this end of the market?

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Each day seems to bring another amazing story from the world of PayPal, with more and more customers complaining about their conduct and services. Derogatory comments on the internet, an increasing number of outstanding court cases and general customer dissatisfaction seem to be growing.

It seems that this fact has not gone unnoticed by others in the market………….

Amazon are rumoured to be about to introduce their own payment system into the market in the shape of the Amazon Flexible Payments Service. While there has been little word from Amazon about the rumour, the story has quickly grown legs, arms and a head over the last few days! If the rumours are correct, we may be about to see a very interesting three way battle between the likes of PayPal (owned by eBay), Checkout (owned by Google) and the new Amazon system.

Even though there is no argument that PayPal have a very strong stranglehold over the online payments industry, the latest bout of customer unrest could easily play into the hands of their competitors. Like Google in the Search Engine industry, PayPal have gone about their business with little or no real online competitor, slowly building their influence, but what many believe to be their lack of customer service skills may just turn out to be their Achilles heel.

While this recent turn of events may have taken many by surprise, it appears that Amazon have been testing out this new platform for a number of weeks. When you consider with cheap web hosting that amazon are the worlds largest online retailer, their scope to reach out to customers is enormous and offers the potential to open up a very lucrative “side line” for the company. It will be interesting to see how the likes of PayPal and Checkout respond if the rumours do turn out to be true……good times ahead for the consumer!

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