OK, after a short interlude yesterday, for my birthday, we are back again today with another installment in my article series “When do you get paid?”.
So, let’s have a look today at the eCommerce business and when you get paid if you are selling on your own eCommerce site.
I have been in the eCommerce business for nearly 20 years now, in one form or another. These days, nearly every site that I own and operate has at least some form of eCommerce associated with it. I can only think of two sites that don’t have a store where people can buy products associated with the site, and on those two sites, adding a store is something that is coming soon! Truth is, eCommerce is a great way to make money, and I encourage it for anybody.
So, when do you get paid if you sell items through your own eCommerce store? Well, it depends! What does it depend on? Depends on who you are using for your payment processor. Depends on the bank you are using to accept transfers from the payment processor. Depends, of course, on when and how often you are making sales! But, let’s take a look in a general way at when, how often, and how long it takes to get your money.
Doing eCommerce can be tough, cash flow wise, if you are not doing it in a way where you can get your money quickly. Reason is that for the most part, you need to deliver product quickly, if you don’t do that your customers will not be happy. Unhappy customers means poor word of mouth, and few repeat sales. So, unless you have a lot of money so that you can fulfill sales with your reserve capital, you need to get your cash quickly.
For my eCommerce businesses, I basically use two different payment processing methods. Most stores offer both methods, and the customer can choose which he prefers. The two payment methods that I generally offer to people are:
- Paypal. Most people know what Paypal is, but a lot of people have trouble using it. Paypal will accept customers paying using their Paypal account, or paying with a credit card. However, the vast majority of people can’t figure out how to pay on Paypal with their credit card. Because of this, if you use Paypal only, you will get a lot of customer complaints that they want to pay with credit cards (even though Paypal will do that). This is why I suggest using a second payment method, so that people can comfortably and easily pay using a straight credit (or debit) card payment.
- 2Checkout. 2Checkout is a company that offers credit card processing/sales for eCommerce operators. If you reside in the USA, and presumably other countries, you can get a better deal from your bank or major credit card processors. If you are like me and live in the Philippines or some other developing country, getting a merchant account is difficult at best. With 2Checkout, it works well, though, and they accept merchants from around the world. It is more expensive, though, I pay 2CO 4.5% of the sale plus a small fee (I think it is 30 cents) for each sale. They also keep a 1% reserve for like 2 months or so as I recall, but you get that back on a rolling system.
I have been using Paypal since the late 90s, I think 1996 or so, when they first went into business. I have been using 2Checkout, as I recall, since 2004, so I am well established with each company.
I like it best when people buy and use Paypal. Two reasons for this preference. Firstly, Paypal charges a bit lower charge for the service compared to 2CO. Secondly, when people pay with Paypal I can get the money within minutes. Transferring money from my Paypal account to my EON Debit Card from UnionBank (Philippines) takes less than a minute, and then I can spend the money by using the debit card at any store that accepts Visa, or I can go to an ATM and get the money instantly as well. This quick transfer from Paypal to my EON account started about 2 or 3 years ago, and it is great. Alternatively, I can also transfer money from Paypal to my US Bank account and that takes about 3 or 4 days to complete, I can then use a local ATM to withdraw funds from the US account. I can also transfer funds from Paypal to my Payoneer Virtual Account, which has a debit card. That transfer to Payoneer usually takes 1 day to complete. Some people will mention to me that I should get a Paypal Debit card and I can instantly access the funds in my account, but please keep in mind that I am in the Philippines, and the debit card is not available from Paypal in this country. 🙂
For 2Checkout, for sales beginning after 12 Noon (Philippine Time) on Tuesdays, through 11:59 am on Tuesday Philippine time, I get paid on Friday morning. So, depending on when the sale was made, it could be 3 days up to 10 days for payment to reach me. 2Checkout actually transfers the money via ACH to my Payoneer Virtual Account, and the money reaches my debit card by Friday morning when I get up.
So, as you can see, the very best is if Paypal is used, because if I am running short on cash, I can have the funds in hand in minutes.
During a busy season like Christmas or Valentine’s day (my company, WowPhilippines, does flower deliveries and generally deliveries of gifts to girlfriends, wives and such, so those are our busiest times of year), when I do a LOT of business, it works out kind of nice. About half of the customers use Paypal and about half use 2CO. So, I have the Paypal funds to fund the orders on a daily basis, and the lump sum that comes once per week from 2CO is money that I can generally sock away for savings. That is quite convenient.
So, for eCommerce business, now you have an idea about how payments work, how long they take, and who I am using.