Mailbag: Shopping carts, merchant accounts and PayPal

from Lynette Chandler 

We have a great question from Liz Lewis this time around. She asks,

“What is the difference between a shopping cart and a merchant account like paypal or other? Do i need to establish both relationships to have a complete and fully functioning ecommerce site?”

A: Liz, merchant accounts and PayPal are payment processors. Which means their systems connect to the credit card companies and banks to completes the transfer of money. A shopping cart however helps you take the order, collects all necessary information from the customer, sends it along to the payment processor (merchant account or PayPal) to help you collect the money. Once the payment processor says OK, money collected, go ahead and deliver the product, your shopping cart receives this information and records
it. If you have a digital product it will then send the customer to a download page and send everyone the necessary emails.

So the process is something like this:

Shopping cart and payment processor

Whether you need both depends how far you want to take your business. If you are casually selling one or a handful of items as a hobby. Then you don’t need a shopping cart. All you need is a PayPal account. Inside PayPal, you navigate to Merchant Services and you can simply start using the Buy Now buttons or Add To Cart buttons. PayPal includes a basic shopping cart system.

PayPal buy now

However, keep in mind when using this method, you retain little information about a customer. It also doesn’t have an affiliate program. When you use a shopping cart (depending on the cart), you can usually offer your customers a bit more in terms of customization next time they return to your store. You can also build an affiliate program, set your digital product links to expire or protect the thank you page. You also get to analyze and track your sales better. In other words better customer and sales management.

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