September 28, 2007, 12:00 AM

Paying Without Plastic

(Page 2 of 2)

Integrating PaidByCash took about a day, says Jeffrey Antisdel, chief marketing officer. In part, that’s because the transaction looks like a MasterCard purchase to the retailer’s processing system. The system, designed for consumers without credit cards or little available credit, lets a consumer hand over cash at 60,000 participating retail locations and then receive a MasterCard card number that can be used online.

The complexity of a retailer’s site also affects integration time. The Discovery Channel Store took 10 and a half weeks to integrate PayPal, partly because it is a highly customized site tied to a dozen television networks, says Josh Greene, director of online marketing. By contrast, Laptops for Less says one developer integrated PayPal in a week, not even working on it full time.

Hidden costs

There can be, however, hidden costs to alternative payments in the form of changes to business processes. For instance, says it cannot provide a partial refund electronically when a customer pays with eBillMe and then returns part of the order. Instead, the retailer has to issue a check. EBillMe says it is testing an upgrade that will automate partial refunds.

Payment reconciliation practices can also be affected. Whereas a retailer might reconcile credit card purchases daily, other options might settle less often, says Bob Nadeau, group executive for product development at payments processor Chase Paymentech. “That adds complexity that merchants don’t always think about,” he says.

And, although it’s hard to quantify the risk, some retailers worry about confusing customers with a cluttered checkout page. “You don’t want to bombard people with too many options to pay,” Greene says.

That could be a wise approach, as CyberSource’s merchant survey suggests there may be diminishing returns when it comes to adding payment choices. Shopping cart abandonment rates only dropped from 29% for retailers offering three payment options to 28% for those offering four or more.

Click Here for the Guide to Providers of Payment Processing Products & Services

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