July 17, 2006
eBay's decision to ban Google Checkout as a
viable payment solution raised the eyebrows of many observers
in the eCommerce community who complained that the restriction
is totally unfair to Internet consumers.
However, eBay's decision opens up a debate as to how eCommerce
merchants should balance the risks and rewards of accepting
different payment systems.
Robert Chesnut, senior V.P. of eBay's Global Trust and Safety
Organization (GTSO), placed a message on the eBay's website on July 6,
informing users that eBay had changed its global payments policy,
which it had first introduced in October last year.
The only current accepted payment options include credit cards,
debit cards, bank-to-bank transfers, PayPal and cash on delivery
as well as about a dozen nontraditional methods such as cash2india,
hyperwallet.com and Paymate.com.au.
In fact, Google Checkout and about three dozen other alternative
methods such as GearPay, Moneygram.com, sendmoneyorder.com,
Stormpay and wmtransfer.com -- have been designated as unacceptable.
Violations of eBay's policy could result in a range of actions
including cancellation of your listings, forfeit of eBay fees
on canceled listings, limits on account privileges, loss of
PowerSeller status and outright account suspension.
"We have the policy in place to make sure our marketplace offers
a variety of choices, but those choices are safe," Catherine
England, an eBay spokesperson said.
"We spell out several factors we take into consideration,
including making certain the different providers have a substantial
historical track record of having safe methods of transaction
services. We don't have a lot of insight into if, and how,
the market will use Google Checkout."
Google assures shoppers that they can enhance their security
when making purchases through Google Checkout simply because the
service conceals the buyer's credit card number and provides
reimbursement for unauthorized purchases.
But, the service was only announced at the beginning of the month.
If Google Checkout proves to be a good and viable alternative,
eBay eventually might consider it as an option, according to
England. "In general, we're constantly trying to communicate with
buyers and sellers to see what their real needs are," she said.
"Decisions are based on demands from our customers and looking to
protect our community from a fraud perspective."
In addition to all these criteria, eBay also will consider
the following factors, among others, in making its determination,
according to the company's policy:
1) Whether the payment model offers substantial financial,
privacy and anti-fraud protection for buyers and sellers.
2) Whether the payment model raises the potential for confusion
among eBay users or involves incentives that may present fraud
3) The identity, background and other business interests of the
payment service sponsor.
4) The license/regulatory status of the payment provider in
the countries where it provides payment services.
When it comes to payment options, eCommerce merchants should
err on the side of caution, said Nick Selby, a senior analyst with The
"Online retailers are trying to conduct business in a medium that is
known to be fraught with security risks," he notes, "and through
bitter experience and trial and error, they've come up with a balance
of payment methods that allow them to conduct business to as wide
an audience as possible without exposing them to unnecessary risks.
"They've struck a balance that's comfortable -- that's letting
them grow online sales -- and nobody's eager to throw that out
of balance," he said.
England cited Western Union as an example of a risky option,
noting that eBay changed the name of its policy from "Safe Payments"
to "Accepted Payments," recognizing that many options it doesn't
recognize as safe within its own community are appropriate in other
The company has seen a correlation between attempted fraud and
sellers who will only accept Western Union as a method of payment,
she said. "It's great when you know who you're sending money to,
but not when you're sending money to a stranger. Once you send it
that way, the money is pretty much gone."
On the other hand, restricting options for consumers may also
be reducing wallet share for companies like eBay, suggested Ed
Kountz, a JupiterResearch senior analyst focusing on payments.
"The advantage of accepting money orders or transfers is you may
be able to tap into customers who are not comfortable using
traditional online payment criteria, even if that that market isn't very
big," Kountz said.
However, he did acknowledged that most of these methods take some time to
clear and that it can be rather difficult to ensure the payments are
valid and more difficult to trace if something does go wrong.
"It's understandable that eTailers will be skeptical of any
kind of new method that doesn't provide the same level of
reliability and security as the payment methods they have currently,"
Source: eCommerce Times
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