A few years back I was running a little ecommerce service as part of my Magic: The Gathering trading card site MTGParadise.com. Back when I was in the thick of things playing the game I used to win a lot of cards and did a hell of a lot of trading and selling at every tournament. More often I enjoyed the trading and selling more than the tournament itself.
Once my site became huge and I realised that there really wasn’t a good online card shop for Australians I decided to try and be that card shop. I had the audience and that’s usually the hard part. I managed to locate some wholesalers and went to work creating what I called MTGParadise Mail Order. I listed a lot of my personal collection which I had built up over the years from winning, buying and selling. I also listed sealed new product which was sold in boxes and booster packs which I located from the wholesalers. Because I had no wish to expose myself to too much stock investment I would almost “drop ship” before drop shipping became common for the public to do, in the sense that I would buy sealed product as sales came through rather than maintain a new stock inventory. Unfortunately it wasn’t real drop shipping since I had to still order the products, have them shipped to me, and then ship them out to the client which slowed things down.
The service did reasonably well. It was a horribly manual process because I would have to update card lists and inventory counts all by hand and I spent a lot of time running to the post office. I didn’t plan the service to be a proper business so I wasn’t considering systematising my inventory and having an online shopping cart like overseas card stores (which I would for sure do now, manual updates are a pain!). Another problem was that card selling has tiny margins and if it wasn’t for the fact that I managed to win cards I don’t think I would have made much profit. I did enjoy it for the most part though so I kept it going for a good year or so while studying at university.
One day I got a query from a person in Thailand wanting to buy boxes of cards. The profit wouldn’t be much because of the aforementioned tiny margins, but it would be significant enough that I was very keen to get his business.
He wanted to pay with credit card.
I asked my father about taking credit cards since he did for his business. My dad offered use of his “click-clack” manual credit card processor for the order. The customer emailed his credit card number and details and we checked the number against the ‘reported stolen’ list and it was fine. I processed the order, shipped the cards and was pleased with my first big sale.
Over the next few months I continued to have increasingly significant orders from this client which I carefully processed through my father’s credit card processor. Since I was doing such a regular amount I decided to get my own merchant account and after some looking around a bank was willing to provide me with the account. I then started to process orders through my own account.
One day many months after the first Thailand order I got a call from my father’s wife about a chargeback that had been initiated on the first credit card order I had processed from this customer in Thailand. I was worried, but not too worried because I thought that since we had verified the card for every purchase and it checked out that it just must be a mistake. I emailed the client and he told me it was just a mistake at his end so I relaxed a bit.
Unfortunately it wasn’t, the customer was a credit card fraudster and I had been very stupid. Over the next few weeks I came to grips with the fact that many thousands of dollars of sales would be ‘bouncing’. Initially I was angry with the banks that they didn’t offer more protection but as I slowly investigated the whole merchant account system I realised that the merchant is usually always the one taking the risk and that when no signature from the customer is present, which for web based orders is not really feasible, then the customer has all the power. I also read over the communications from the months of dealing with this client and realised that there were plenty of warning signs that I just refused to take notice of. I was caught up in the ‘business’ of it all and being very naive.
It was a lesson learnt. I learnt about credit card fraud, merchant accounts and the risk involved with selling over the Internet. I learnt to be more cautious and not jump with eagerness at every significant order that comes through. Call me paranoid, but it’s from experience. Note that I am complaining from the point of view of a merchant but there are instances where the customer has problems too.
When I then went on to setup credit card payment options for my clients at BetterEdit.com I was very careful. By this time I had discovered paypal and later I would also learn about Paymate, an Australian version of Paypal. These services were reasonably good solutions to provide online payment options and to this day BetterEdit processes many transactions online through them.
I have not had one problem with credit card fraud for any Betteredit essay editing service order (touch wood) but on many occasions I have been contacted by the staff at Paymate regarding suspect orders. After my experiences I really appreciate the extra layer of protection provided by Paymate. They protect you before an order is processed and offer personalised protection. As an Australian running an Australian based business I can recommend Paymate as one of the safest ways to accept credit cards and I don’t mind paying the fees for that extra level of security. Sure there are features I’d like to see and things I’d like changed at Paymate, but for the moment they offer the best option available.
I would also like to say I feel secure with Paypal but to be honest I do not. I’ve heard a lot of horror stories from other Paypal users. I’ve read through the chargeback policies at Paypal and while they do have a ‘department’ to deal with fraud, they make every effort to argue the case on behalf of their sellers and have an ‘industry leading’ low fraud rate I don’t feel 100% confident. They seem very reactive rather than proactive when dealing with credit card fraud. Their system doesn’t talk much about how they protect you from first taking fraudulent credit card orders, rather they help you to argue your case after a chargeback occurs. I know from experience that for online orders the merchant has little hope because the credit card company almost always is in favour of the cardholder.
The Paypal website seems designed to make it difficult to contact a person. I’ve tried to contact them over the phone and spent an annoyingly long time waiting and trying to navigate a phone system clearly designed so they don’t have to employ too many phone staff. Their web support is much the same. Their whole system tries to avoid providing any personal support. They point you to look for an answer online via their FAQs which is great for the easy questions but often leads to a wild goose chase if you want to find answer to your very particular question. Even just timely and helpful customer service email support would be good but I always seem to find myself waiting a few days for a response that only half answers my question. Paymate on the other hand has a simple ‘Contact’ link which pops up an email that goes direct to a real live person that responds within 24 hours with a good answer. What more could you ask for.
All the problems at Paypal seem symptomatic of a business that got too big too quickly and I hope over time their customer support will improve as it ‘catches up’. All in all though I should note that Paypal has been good for my business and since it is the market leader in online payment processing it will most likely remain as a payment option at BetterEdit.com.