Selling Online - What You’ll Need to Ask For
Hosting web sites that deliver digital content requires a special set of services from the hosting vendor. The following list illustrates some of the most important areas when considering such a vendor.
Integrated Payment Services
Once you’ve built your store and are ready to sell your products, you must find a way to accept payments. Virtually all eCommerce solutions provide multiple integrated payment methods by which you may receive payment. These will generally include all major credit cards and PayPal, and may include some alternative payment types like e-Checks (ACH) and
Bill Me Later®. If your vendor is an
IPSP, then they can provide you with your merchant account directly. If not, you will have to obtain your merchant account through one of the vendor’s payment processing partners.
Digital Rights Management
Selling digital goods involves specific challenges. It is important to be certain that you have received proper payment, and that that the buyer is restricted from distributing the product in prohibited ways. Many digital products are downloaded instantly after payment authorization is received. If the payment turns out to be fraudulent, then the merchant incurs a loss. eCommerce solutions employ a wide variety of techniques to authenticate buyers, and limit the ability for buyers to redistribute the digital product.
Subscription Management
Another important aspect of selling digital goods is the administration of content subscriptions, renewals, and technical support contracts. You may sell a game as one time purchase, or you may charge monthly for regular updates. You may also charge additional fees for add-ons or special features. All of these transactions need to be managed properly, controlled and accounted for via reporting. Most software vendors use eCommerce solutions or IPSPs to host their product for just these reasons. For example, Symantec, a large software vendor selling millions of antivirus software licenses per year, uses third party IPSP,
Digital River, to manage a good portion of their software licensing.
Recurring payments
Many products and services are delivered on a periodic basis. For instance, a dietary supplement is shipped on a monthly basis, with the customer’s card charged upon each shipment. Certain services, such as credit watch programs, are usually billed on a periodic basis, either monthly, quarterly or annually. Most eCommerce providers have support for these programs, which must bill customers in a timely manner and optimize the number of authorization approvals obtained.
Fraud Prevention Services
Most vendors offer advanced payment services geared toward special businesses. Fraud prevention, for example, is an important component for merchants selling digital goods and highly desirable electronics. Some providers even provide a for-fee program indemnifying merchants against fraud loss. Fraud prevention is a sensitive business. Set the protection too high, and you may lose valid customers through “false positives.” Set the protection too low, and rampant fraud may result. High fraud rates generally lead to high chargeback levels, which can land the merchant or IPSP in trouble with the card Associations.
Support
One of the biggest advantages of using an eCommerce solution is that the vendor is responsible for the ongoing management of your payment functions. The vendor is charged with making sure that the payment service is available to your customers around the clock. They are also responsible for maintaining credit card data security – a task that is now governed by strict Association rules that are difficult to implement by small businesses.
Many providers will offer your patrons first-line customer service for inquiries surrounding payment matters. Although service levels vary between vendors, some will provide guidance and support for chargeback handling. Virtually all vendors will provide online reporting covering your sales and payment activities.
Store Hosting
Constructing and managing your own Web store can be an expensive, monumental task. Most eCommerce vendors provide store hosting as well as utilities to easily design, publish and manage your store. If you are selling digital goods, then you will generally need a vendor that can physically host your digital content and distribute it as necessary.