Accepting Payments on eBay

So your item has sold on eBay, and it is time to collect your money. But how do buyers across the country — or even across the world — pay for their purchases?

There are any number of ways to get paid for the sales you make. All the traditional methods still apply — cash, check, money order, and credit card — and there are a variety innovative online methods, too.

PayPal, which was acquired by eBay in 2002, is the most popular method of accepting payments on eBay. PayPal allows sellers to accept payments via credit card, electronic funds transfers from bank accounts, and, of course, from a user's PayPal balance.

Sellers bear all the fees for PayPal transactions. Their standard fee for domestic U.S. payments is 2.9 percent plus $0.30 per transaction. If you receive at least $3,000 a month via PayPal, you can apply for Merchant status, which will reduce that percent you pay on each transaction. Depending on the volume of payments you receive, rates can go as low as 1.9 percent.

PayPal also offers limited protection up to $5,000 against chargebacks through their Seller Protection Policy.

PayPal isn't the only online payment processor, but they are the biggest by far. Other services, including BidPay, ProPay, and 2checkout, have much smaller market share, and aren't as well-known — or well-used by buyers — as PayPal.

If you already have a merchant account, you can accept credit card payments directly from your buyers. Most merchant credit card processors offer better rates than PayPal and its competitors. But since so many eBayers use PayPal, it is still a good idea to accept PayPal for non-credit card payments. Otherwise you may be cutting yourself off from a large percentage of potential buyers.

Personal checks, cashier's checks, money orders, and even wire transfers are also options for sellers. These methods don't have the instant appeal of an electronic payment, but many buyers still prefer these relatively old-fashioned forms of payment.

Of course, there are other drawbacks to these methods: Checks (and even money orders) may bounce, and these "hard" forms of payment are harder to keep track of. With electronic payments, all your buyer's information, including shipping address, is stored on the processor's Web site, and there's no paper to misplace.

If the winner of your auction is local, you could even offer to do an in-person cash-and-carry transaction. Of course, not all buyers are willing to meet up for an exchange, but some are, if only to avoid paying for shipping. If you decide to do an in-person exchange, suggest meeting in a public place, for your safety and for the buyer's peace of mind.

When determining what forms of payment to accept, you will need to consider the potential drawbacks of each method and balance them with the benefit of a larger pool of potential bidders. Especially in an auction model, it's in your interest to have the largest possible number of bidders. And not accepting certain forms of payment may substantially reduce the number of bidders interested in your item.