Accepting Credit Card Payments on eBay - dummies

By Marsha Collier

As an eBay seller, you can accept credit card payments from the winning bidders on your auction items. Paying by credit card is becoming more popular on eBay. Plus, major credit card payment services have insured eBay payments to registered users, making credit cards safe for the buyer and easy for you.

For all this instantaneous money transfer, however, you pay a price. Whether you have your own merchant account (a credit card acceptance account in the name of your business) or take credit cards through a payment service, you pay a fee. Your fees can range from 2 to 7 percent, depending on how you plan to accept cards and which ones you accept. Unfortunately, many states have made it illegal to charge a credit card surcharge to make up this difference. You have to write off the expense of accepting credit cards as part of your business budget in the Cost of Goods Sold (COGS).

The fees that brick-and-mortar stores pay for accepting credit cards are much less than those paid by online, mail, or phone orders. In most promotional material, the vendor usually quotes the “swiped card” rates. Because you won’t have the buyer’s card in hand to swipe, be sure to inquire with your provider for the proper rate before signing any papers.

To protect yourself, please be sure to check the bidders’ feedback before accepting any form of credit card payment for a high-ticket item. Some buyers are chronic complainers and are rarely pleased with their purchases. They may not be satisfied with your item after it ships. In that case, they can simply call their credit card company and get credit for the payment; you’ll be charged back (your account will be debited) the amount of the sale.

When buyers dispute a sale, they can simply call PayPal or their credit card company and refuse to pay for the item. You lose the sale and possibly won’t be able to retrieve your merchandise. A payment service or merchant account will then chargeback your account without contacting you and without negotiating. Technically, the buyer has made the purchase from the payment service — not from you — and the payment service won’t defend you. I’ve heard of chargebacks occurring as long as six months after the transaction, although eBay says they can occur no later than two months after they sent you the first bill on which the transaction or error appeared. No one is forcing the buyer to ship the merchandise back to you. As with eBay Fraud Protection, the credit card companies skew the rules to defend the consumer. As the seller, you have to fend for yourself. You usually have no way to verify that the shipping address is the one the credit card bills to. So, to add to your problems, the card may actually be stolen.