Category Archives: ecommerce

GoogleCheckout price increase

googlecheckoutIt was always on the cards that Google was going to raise the prices of their payment processing service, GoogleCheckout. Up till now I had effectively used GoogleCheckout for free, as they offset their 1.5% + £0.15 processing fee against my Adwords spending. But they are dropping the Adwords offsetting and introducing a new tiered pricing structure.

As I put most of my payments through PayPal I will probably be on the highest price tier of 3.4% + £0.20 per transaction. This means that a £19.95 sale will cost me £0.88 (4.4%) through GoogleCheckout as opposed to the £0.68 (3.4%) I pay through PayPal. I wouldn’t mind the higher fees if I got a better service than PayPal. Unfortunately GoogleCheckout still has all the flaws I commented on back in April 2007, namely:

  • Google still don’t accept payments in more than one currency (e.g. as a UK resident I can only accept payments in £). Expecting anyone outside the UK to pay in £ is a very bad idea.
  • Delays between customer purchase and payment clearance result in angry and/or confused emails from customers wondering why their licence key hasn’t arrived. This has improved since the early days of GoogleCheckout, but it is still an issue.
  • Google’s option to anonymise the customer email address is a royal pain in the backside for the vendor.  It causes me of lots of wasted time and unecessary emails.
  • The customer *has* to sign up for a GoogleCheckout account (unlike PayPal).
  • There is a £7 chargeback fee (PayPal don’t charge a chargeback fee).
  • Customers prefer PayPal.

About the only advantage of GoogleCheckout is the GoogleCheckout badge that appears alongside your Google Adwords ad. In their email to me explaining the price rise Google claim:

Advertisers who use Checkout have the opportunity to display the Checkout badge on their ads, which has proven to  be an effective way to differentiate ads and attract user interest. Checkout users click on ads 10% more when the ad displays the Checkout badge and convert 40% more than shoppers who have not used Checkout in the past.

My own measurements showed a worthwhile effect from the GoogleCheckout badge, but I am not convinced it is worth the additional problems and expense of GoogleCheckout just to get the badge.

I already push PayPal more than GoogleCheckout (e.g. you have to click a link from my US dollar payment page to see a GoogleCheckout button). The price increases will probably result in GoogleCheckout being pushed further into the background for use just as an alternative for those that don’t like PayPal. I don’t know if Google will punish me by removing my Adwords badge.

Note, in order to continue to use GoogleCheckout from 5 May 2009 onwards, you must login to your account and accept the new Terms of Service between 18 March and 4 May.

Does 2Checkout have the ugliest payment page?

Over on the BOS forum Rensy commented on how ugly the 2Checkout payment page is. They appear to have beaten it with an ugly stick in a recent ‘makeover’. Below is the Perfect Table Plan 2Checkout payment page, click on the image to see it in it’s full glory:

2Checkout page 1

When (if) you finally work out where to click you are confronted with another equally ugly page:

2Checkout page 2

Presumably the icons down the left side are supposed to reassure me that the site is trustworthy. But all they do is distract and confuse me. When you emphasize everything, you emphasize nothing. The overlapping boxes, the choice of fonts and white space also look amateurish.

The PayPal and GoogleCheckout pages are models of taste and minimalism by comparison (apart from the huge and inexplicable white space at the bottom of the GoogleCheckout page):

PayPal

PayPal

GoogleCheckout

PayPal and GoogleCheckout also use a single page where 2Checkout uses two. This means one less click for your customer and, critically, one less chance to change their mind. I’m glad I only use 2Checkout as a back-up for customers who don’t want to use PayPal.

Does 2Checkout have the ugliest payment pages? Please add a comment below if you have seen worse (ideally with a link to a screenshot).

Amazon payments

Amazon have launched their Amazon payments ecommerce service. From a quick browse it looks quite similar to PayPal and GoogleCheckout in scope and pricing. It doesn’t say in the FAQ which currencies and countries are supported, so it may only be US dollars/USA at present. I already offer payment by PayPal, GoogleCheckout, 2Checkout and cheque, so I don’t feel any need to be an early adopter of Amazon. I will be keeping an eye on it though and a bit of extra competition for PayPal and Google is welcome.

PayPal vs GoogleCheckout revisited

I wrote back into December 2007 that 70% of my customers prefer PayPal over GoogleCheckout, given the choice. I re-checked the figures today to see if GoogleCheckout was gaining traction with my customers. It isn’t.

% of UK customers[1] choosing PayPal vs GoogleCheckout by month

I’m glad. Despite PayPal’s recent flakiness (since improved) and higher transaction fees[2], I still prefer them as a payment processor due to Google’s confidential email option (which a pain in the butt for support), lack of multi-currency support, chargeback fees and slow processing of many orders. It is useful to have an alternative to PayPal though.

[1] GoogleCheckout only lets me accept payment in pounds sterling, so I only offer it to UK customers.

[2] For a £19.95 transaction PayPal charges me £0.68 and GoogleCheckout charges me £0.45. But Google currently refunds transaction fees for 10x my adwords spend, meaning I don’t pay any transaction fees at all to Google in a typical month.

PayPal reliability problems

paypalPayPal appear to be having major reliability issues over the last few weeks. When someone buys my software through PayPal I should get a PayPal notification email and PayPal should send an IPN to e-junkie. The IPN to e-junkie causes a temporary licence key to be emailed to the customer immediately and the full details of the transaction to be emailed to me (I then send a permanent licence key at my leisure). But sometimes the IPN is sent 30+ minutes after purchase. The leads to very unhappy customers. They have paid for their licence and they want the key. Now. Other times the PayPal notification email never arrives. This is less of a problem, but it doesn’t inspire confidence.

It is not just me having these problems. I have seen complaints on quite a few blogs and forums. The problems seem to be particularly acute for subscription payments. This is causing huge problems for some companies. It is rather worrying that:

a) PayPal broke something so fundamental as subscription payments. Don’t they have proper testing before they roll out changes?

b) It still wasn’t fixed 12 days later.

c) PayPal seem completely unresponsive to requests for information from developers when problems occur.

I have also noticed the PayPal sometimes includes the referral data I read from cookies in customer notification emails. There is no reason why customers should see custom data I pass through to PayPal for tracking purposes. I’m not trying to hide the fact I use cookies. But I don’t want to shove it in their face either. Whether they include this custom data in notifications emails seems quite random. Sometimes they do, sometimes they don’t.

Reliability is my top requirements for a payment processor. PayPal can’t really afford to drop the ball on something as basic as this with GoogleCheckout and Amazon payments breathing down their necks. If I was running PayPal head would be rolling. I hope they sort all these issues out soon. A bit more transparency wouldn’t hurt either.

RegSoft customers beware

It looks like Digital River have added ‘Reservation rewards’ to at least some of their RegSoft customers’ shopping baskets, as they did earlier with SWREG. If you take the bait and sign up for Reservation Rewards, you will be billed $9 per month forever, and get nothing useful in return. It is an absolute disgrace. If you are with RegSoft (or any other Digital River company) I suggest you check your shopping backet ASAP and seriously consider moving to an non-Digital River alternative.

Credit card fraud

mount seftonFraud can be a very big problem for online software vendors. Fraudsters can easily use throwaway email addresses that can’t be traced back to them (e.g. Hotmail) and IP addresses aren’t difficult to hide. Not only does the vendor lose the payment when the fraud is reported, they also often get hit with a chargeback fee. This is pretty outrageous when you think about it – the credit card companies are charging vendors for the fraudulent transactions that they themselves have failed to detect.

Thankfully I have had relatively few fraudulent transactions in the last 3 years of running my own business. However some more mainstream B2C businesses aren’t as lucky. Below are the experiences of one software vendor I have corresponded with [1]. It makes for scary reading. The vendor wishes to remain anonymous for understandable reasons.

I tracked one of our recent chargeback emails to a forum were they had been openly selling stolen credit card information for $2 each. If you do have a popular product that may be prone to chargebacks then it is a small nightmare unless you have a fraud system in place as there are 1000s of credit card info out there with full contact details. There is not a day goes by that we don’t get at least 3 stolen credit card purchase attempts.

We use WorldPay and they have a quick check on cv2 code and if the country, postal address and postcode match. But almost all of these purchases pass the simple fraud checks. You cannot even rely on IP checking as the fraudsters are pretty smart and use proxies, or even hijack PCs to make purchases from the same country the credit card is issued. PayPal is not quite as serious, but we do still receive quite a few hijacked account purchases also.

WorldPay fraud checking is next to useless. Even the ones they warn on are usually legitimate. They have recently released a new backend, but they have made the problem worse as they seem to warn if the IP address isn’t from the same country. The problem with that is we get a lot of sales that don’t match, from military based in different countries. Our whitelist used to let them go through automatically, but now we have to manually capture the payment.

The number of fraudulent purchases changes depending if you make a new release etc or if your software is hard to find an easy crack. It can be from 1% to 15% depending, as you may have a single user trying to hit you on certain days.

We were forced to make our own fraud checking system. At least we had all the information at hand as we make users sign up to our site before making a purchase and we log all activity from a user, but to get that information we had to lose many thousands of pounds in fees. Since implementing our own fraud check (as fraudsters do tend to use amazingly similar criteria each time) we have reduced it to on average 1-2 a week, which are almost impossible to catch.

I think the level of fraud has to do with the type of users we sell software to. They are the sort of people that know exactly where to find cracks/keygens. Our software does have pretty good protection and online activation, so it is not so easy to get an easy “working” crack/keygen for it. We also have large volume sales over the past few years, so we have more information than most developers would see.

The credit card companies can’t really lose, especially with “no card holder signature” sales. Chargebacks cost on average 15 Euros. I have even contacted the likes of PayPal telling them that sales are fraudulent, and quite a lot of times they do not care.

We get to see all our sales, I would hate to think what is happening at these merchant services like Regsoft etc. How many sales are being refused that may be legitimate? I tried paying a programmer once who accepted payments using Regnow from my PayPal account and they refused it. My account was verified and had been in good standing for many years. It wouldn’t have been so bad but the person I was paying did not have a clue it was refused.

So, if you have a successful consumer product that fraudsters might be interested in, be prepared to expend a significant amount of money and effort dealing with online fraud. And don’t expect the payment processors and credit card companies to give you much help. I guess the credit card companies don’t have much incentive to reduce fraud. As long as they can keep pushing the cost of fraud onto the vendors and the fraudsters don’t bring the whole system down, the credit card companies seem quite happy. Why wouldn’t they be?

[1] I have spliced together the contents of several emails and edited it for continuity and brevity.