You still find it hard to believe, but after that recent trip to the mountains, something that you thought was dead has been reborn! The creative spark! Yes, it's back, that tingly urge to craft, build, and endlessly modify, that very special feeling you thought had vanished for good after you failed "Art 101: Drawing and Sketching." And now, after weeks locked in your studio — the light-deprived cube that your friends still refer to as your bedroom — you have created a small but appealing collection of objects de art (maybe sculpture, maybe music, maybe both!). Next step? Find a way to sell your fiery ingots of love.

With local galleries too narrow-minded (obviously!) to appreciate your work, you turn the Internet, really the best and most far-reaching distribution network out there. You take all the obvious steps: Build a site, take some photos, write descriptions, ZIP your files, encode your songs into MP3 and ready them for download. But what happens when somebody visits your site, likes what they see and hear, and wants to purchase one of your creations? Are you ready to dip your toe into the chilly waters of e-biz?

Whether you're selling jewelry or you're just a programmer out to make some spending money on the side, the transfer of funds from them to you is a big step. And that's our topic for today — getting paid.

Of course, there are several different ways to receive funds online. Of course you can travel down the time-consuming-yet-intellectually-rewarding path of building your own shopping cart. Use Perl, ColdFusion, or transactional databases in MySQL, and you're quite literally in business. But if you don't have programming muscles to flex, let alone the time to build something yourself, why not set up shop with a Web storefront service? When moving currency from one party to another is involved, options are never hard to come by, and the time, money, and craftiness you need to implement them varies.

But what if you're short on resources? Or you don't have actual tangible items to sell? Maybe you want to accept donations for a free content service, collect payments for downloaded MP3s, or set up a payment system for a piece of software or Web-based application. Since no hard goods are exchanged — no shipping costs or taxes to calculate, no inventory being moved — simple cash payments may be the best answer.

If you do have actual trinkets to sell, hosting a third-party shopping cart on your site is also an option. Third-party shopping cart solutions are easy to put into action just by filling out a few forms and plugging in a credit card number (yours). However, since your users actually have go log in to a different and unfamiliar site when they want to purchase something, third-party shopping carts don't provide your customers with a seamless shopping experience. Also, many of these systems require you to set up a merchant account. Merchant accounts, which we'll look at in depth later, are tied to major financial institutions, so there are fees involved. The fees you pay for these all-inclusive systems will dramatically increase your overhead if you're strictly small-scale. So if you're still in mom-and-pop land, cash payments are the most economical and the easiest.

Cash payments on the Internet involve the transfer of funds from one person's bank or credit card account to another person's account. It's the same basic idea as sending a check through the mail, except a Web payment is faster, easily trackable, and more secure. These types of low-level e-commerce, different from the more complex world of shopping carts and inventory management, are sometimes called "e-cash payments." Several companies have developed payment systems that you can use either on a one-off basis, as a subscriber, or as a full-fledged credit merchant. Each service has its advantages and hang-ups, which is just what we'll be looking at as we examine a variety of services in the pages that follow.

In addition to cash payment services, we'll be cracking open e-wallet systems, as well as the aforementioned third-party shopping cart and merchant account services. I've rated all of these services based not only on their usability and coolness factors, but also on whether their sites clearly offered all the vital bits of info (security statements, fee schedules, and terms of use statements) — it's difficult to trust a company that doesn't provide all the facts right up front. Note that the list of services I chose to profile is by no means comprehensive. If you plan to use cash payments, I encourage you to follow up what you learn today with some research of your own before committing to a choice.

Let's start with simple cash payments. There's a company which I'm sure many of you are familiar with that handles millions of dollars in transactions per day. It's called PayPal.

PayPal-ing Around

For small businesses going for their very first joyride on the e-commerce bandwagon, there are few payment processing services more convenient than PayPal.

It's pretty simple: As long as your users have email addresses and bank accounts, they can send money to you from a PayPal account. To set up their PayPal account, they electronically transfer money from their bank account to their PayPal account. Otherwise, they can use a credit card or a personal check to fill up their PayPal account. Then, when the transaction is processed, PayPal transfers the amount of their purchase into your PayPal account. You can then do whatever you like with the money. Either spend it somewhere else on the Web via PayPal (in which case the resultant transaction is still subject to the normal fees!), or dump it into your bank account.

For all of this behind-the-scenes wizardry, PayPal charges you, the online e-tailer, a standard fee of 30 cents plus 2.9 percent of the transaction. So if somebody spends US$100 on your site, PayPal automagically deducts $3.20 from the transaction, and the remaining $96.80 gets deposited into your PayPal account. Other than additional fees for international purchases, that's as bad as it gets in PayPal land. You can actually lower your fees by enrolling in one of PayPal's preferred customer programs. If you do a fair amount of business, like over $1000 per month in received funds through PayPal, you can become a PayPal Merchant. This status entitles you to a lower percentage rate on your transaction fees, and it gives your customers a little more assurance that you're a trustworthy, goody-goody type. I mean, we know that, but do they?

Aside from simplicity, another thing PayPal has going for it is its cost. There's no setup fee, no monthly fee, no lengthy contract, and no hidden charges (or at least none that I could find).

However, when pressed to find any real contact information, PayPal's website turned up zilch. No phone number on their site, and both their FAQ section and self-help systems are cryptic and sparse. Their feedback and contact device is a Web form. If something goes wrong with a transaction, it's the responsibility of the e-tailer to offer a quick solution and sort out snags in a timely manner. And when you're dealing with OPM (other people's money), you need to find answers fast. That said, the lack of readily available contact information should give you pause. Hey, guys? How about an email address or, better yet, a phone number?

PayPal has been in the online payment business for four years. It is still the easiest to use and the least expensive of any online payment system, but it has come under fire recently. The hottest topic on the list of complaints is Paypal's immunity against legal action, according to its lengthy terms of service agreement. Consider this a warning — always read the user agreements and terms of service carefully before allowing anyone to touch your money. Especially a large company with expensive lawyers in fancy suits!

Do You Yahoo! PayDirect?

Yahoo! PayDirect is one of PayPal's main competitors, and it operates in very much the same manner. Your customers can transfer funds between their PayDirect accounts and yours by entering your email address or by following a link from your site to the Yahoo! servers. The fees are similar to PayPal, a flat rate of 2.5 percent of the transaction, plus 30 cents per transaction. You can lower your percentage rate by becoming a preferred customer, but to do so, your PayDirect payments need to exceed the US$2,000 per business quarter. So, if you're a selling a hot product and you can keep your sales numbers up, then you can get the lower percentage rate. Otherwise, you're paying the flat rate. Which is still lower than PayPal's!

PayDirect also has a two-level security system. There are two initial security measures — a Yahoo! ID and a Yahoo! security key — both of which are required to use PayDirect. To purchase something through your store, users need to become Yahoo! members, which gives them each a Yahoo! user ID and login password. The final step is to obtain a Yahoo! security key, which involves physical verification of the mailing address the users have on file at their banks. Here's the stinger. Before they can send any money or make any transactions with PayDirect, the users must wait to receive a physical letter that's mailed to their houses by Yahoo! and contains the security code they must use to log in to their Yahoo accounts. Only then are they in business.

This rather involved process can possibly drive away potential customers. It does show, however, that Yahoo! is particularly concerned about security, a benefit that could rub off on you by association. Those of your customers who already have a Yahoo! security key or those who crave security at every step of a Web purchase will, of course, be punch-pleased with your decision to go with Yahoo! PayDirect.

Ecount, ProPay, More!

PayPal and Yahoo! are both big companies, but they aren't the only players in this game. There are several smaller Web cash payment services that do the job just as well, and offer some rather interesting variations on the cash payment concept.

Ecount

Ecount has a wider variety of features than most online cash payment services. It's different from services like PayPal and Yahoo! PayDirect because it's actually a debit account that can be used both as a credit card and as an email-based cash payment system. Users fill up the account by charging a balance on a credit card, and then they spend the money anywhere on the Web where MasterCard is accepted. Ecount also has a few other nifty options, such as an ATM/Debit card that you can order (with your name on it and everything!) and use just like a MasterCard when you want to take your spending off the Web and onto the streets.

It doesn't cost anything to send money over email or to purchase stuff on the Web. A US$2.00 fee is applied when money is transferred from a credit card account into an Ecount Account, and that's it. Spending is free! There are some limits, though, such as it can't be used at a site unless MasterCard is accepted there. Also, transactions are limited to businesses and individuals within the United States, so you won't be able to sell any goods to folks overseas. This is particularly sticky for those wishing to collect payments for software and MP3s, as such commodities tend to be more global in nature. Consumers are limited to nine transactions per day, but as an e-tailer, this shouldn't necessarily concern you.

In the areas of security and privacy, Ecount scores highly. It uses VeriSign's certificate encryption to protect your credit card info. Also, contact information, a customer liability statement, and a privacy statement are all readily accessible on its website.

ProPay

Like PayPal and Yahoo!, ProPay provides cash payment services using nothing more than existing bank accounts and email addresses. ProPay also puts a nice spin on "P2P" (that's person-to-person, not peer-to-peer) cash payments — its system enables a customer to pay you, the merchant, without ever having to sign up for a ProPay account.

Here's a quick tour of ProPay's setup. When you're ready to start accepting payments, you go to the ProPay site and sign up as a user. Then, when a customer wants to purchase something from your site, you log in at ProPay and enter the customer's email address and the amount of the sale into a simple form. The customer then receives a payment request email from ProPay that contains a unique URL that leads to a secure page. The user follows the link, fills in their credit card or check card information, and the money is dumped into your ProPay account.

The fees involved are comparable to those of other services, and they're charged to your business only, so your customers don't have to give ProPay one red cent. The one-time fee for setting up an account as a seller is US$35.00, more than most competitors. However, the per-transaction charge is 3.5 percent of the total sale plus 35 cents, which stands up well in comparison to Yahoo! and PayPal. Whenever you make a sale, the money goes into your ProPay account, and every time you want to move your funds over to your credit card or checking account, ProPay charges you a 35-cent transfer fee. Such fees are not too restrictive, and the fact that your users never have to sign up for the ProPay service is an added bonus that many other cash payment companies can't offer.

ProPay does have a few snags that you should consider. First of all, ProPay does not offer a fully integrated customer experience like a shopping cart, or even a PayPal merchant page. If your customers are interested in purchasing something from you, they need to send you an email outlining what they want to buy, what their address is, which shipping option they prefer, and so on. Of course, you could build a simple JavaScript form for customers to fill out that will notify you via email of a pending sale, but that's just one more thing you have to do for yourself. Also, there's a transaction limit of $250 per sale, or $1000 per month. So if you want to sell life-sized Han Solo dolls for two grand a pop, no dice. Finally, any funds paid to you need to be processed through ProPay's outsourced check clearing house before you can access them, which can take up to four days. So, grab a nice thick book!

Other Creative Services

The services mentioned so far are excellent places to start looking for an easy entry into e-commerce. There are also a great deal of other Web payment services out there that offer strange and interesting — though not entirely appealing — ways to transfer money from one place to another. Web payment service companies are trying everything from charging purchases to a consumer's telephone bill as a faux 900 number to allowing users to pay for goods out of their future paychecks.

Paytrust and PayByWeb both have attractive features. If you like the idea of having a major financial institution behind you, Western Union's MoneyZap service has a brand name you can trust.

Throughout my research, I came across a fair number of smaller online payment services that have fallen upon hard times over the past year. Some have even gone out of business. Is this a warning to stick to the companies backed by large banks or even larger Web conglomerates? Maybe. I'd still encourage you to put customer service, security, and reliability at the top of your checklist as you conduct your own research. If a smaller business looks like the perfect fit for your needs, support them and help them grow — don't forget that PayPal was once really small, too.

But if consumer confidence is your highest priority, it might be best to go with a payment service with a brand name that both you and your customers will recognize on first mention. However I also encourage you to explore as many services as possible to find the best one for your specific business. Some great places to start are the Lycos or Google listings for electronic cash services.

You will also notice that a number of these payment services require you to set up merchant accounts. But what are they? And why would you need one? Let's take a closer look at merchant accounts and what you can expect when you play with the big fishes.

Setting Sail with Merchant Accounts

Let's say you get into the e-commerce game and you do well. Your products, Little Leo's Latkes, are selling like hot cakes and you're fast becoming a too big for simple cash payments. There are advantages to moving on to merchant status, but beware that you'll be playing in a whole new league with different rules.

Unlike becoming a merchant member at PayPal or Yahoo!, setting up a merchant account means entering into a relationship with an FDIC-insured merchant bank, thus allowing you to accept and process customers' credit cards on your own terms. All merchant banks require you to meet certain criteria before you can open a merchant account. Usually this involves high revenue and proof that you've been in business (and making customers happy) for a while.

While elaborate process of turning a small Web shop into the "real deal" can be a real headache, merchant accounts are still the easiest and most financially efficient way to get money off of people's credit cards and into your bulging coffers.

The biggest reason to do it? Merchant accounts are secure, secure, secure — both physically, because your users and their precious information are handled by you and you alone, and psychologically, because your customers don't need to trust a mysterious third party with their digits.

The downs? Merchant accounts are costly. Banks, surprise, want to turn a profit, so they charge account setup fees, processing fees, and a handful of miscellaneous fees as well. To make the fees worthwhile, you need to do at least US$500-600 in business per month. Otherwise, you're better off letting another company handle the high-finance shtick.

To mitigate the pain of setting up a merchant account, several companies offer tiered services for those who want to ease into becoming a credit card merchant. iBill sells a complete solution that "outsources" customer billing and credit card processing to iBill's pre-existing merchant account. In return, it takes a flat percentage of the sale. You can use its storefront or add its pre-built functionality to your existing site. Either way, all of the e-commerce takes place on its secure servers. Using the optional store builder feature puts your entire Web presence onto its servers for a $9.95-per-month subscription fee. But don't fire your designer just yet — the provided interface is a little on the ugly side.

Another company, 2Checkout, will set you up with a merchant account for a measly $49. After you start moving goods, they charge 45 cents per transaction, plus 5.5 percent of transaction amount. That's more expensive than PayPal, but you become a merchant, which gives your customers an added sense of security. Most sites offering an "easy in" to becoming a merchant require a commitment of a year or two, so it's quite a relief that 2Checkout.com doesn't make you sign a lease or pay monthly fees. You just pay the set-up fee and the per-transaction costs. Also, it has some plug-and-play code that you can use to integrate its site interface with yours.

Again, these sites are only the tip of the iceberg. Also, a merchant account is probably way more trouble than it's worth for 90 percent of you. So, let's dig into the back pocket of our Levis and have a peek into electronic wallet services.

Hey, nice driver's license picture ... Poindexter!

Collecting Cash from E-wallets

Security can be a terrible burden. These days, most Internet users maintain multiple accounts with multiple passwords. And keeping track of all those passwords can be mighty confusing.

It's precisely this confusion that Web shoppers hope to avoid when they sign up for one of the many electronic wallet services. An electronic wallet, also called an e-wallet or an e-pass (it never ends), logs a user's login information, passwords, and credit card information for multiple sites in one convenient virtual "wallet." Matt Margolin recently discussed the ups and downs of electronic wallets, among other things, in his article on security.

Whenever a wallet-endowed user proceeds through the check-out process on a site that uses an electronic wallet system, the familiar form-field screen appears asking for user data — name, address, and credit card number — is automatically populated with the user's info and the order is processed. Security issues aside, the recent upward trend in the use of electronic wallets is a good sign for online retailers.

So how can you collect cash from customers who use electronic wallets? First, you need to become affiliated with one of the many e-wallet services, most of which list between 3,000 and 5,000 Web-based businesses that accept their wallet system. Companies like Gator, monCASH, and Microsoft, which traffic in the electronic wallet circuit, have established criteria that you need to meet to be part of their network. Meet the criteria, and your business is added to a directory that the company keeps and distributes to users who are looking for their next shopping adventure.

If you have actual hard goods to sell and you're already doing some brisk business, an e-wallet system might be a good fit for your online business. But if you are collecting money for software, for downloaded files, or if you only sell small quantities every now and then, the simpler cash payments systems might be a less complicated solution. However, no business is too small to step into the e-wallet realm — whether or not it's worth the hassle is your decision.

Whichever path you decide to take as you enter the e-commerce world, there are some important final points that you should consider before you get up and running.

Final Words of Advice

Before you e-cash in on the product of your latest brainstorm, here are some final pieces of advice and further readings that might make the journey less painful for you and your customers.

• Always read the user agreements aimed at both sellers and buyers. As mentioned before, many consumers have been burned by PayPal's reportedly dodgy terms of service. As a general rule, steer clear of services that take rights away from your customers or from you. This doesn't mean you shouldn't use PayPal, it just means that you should read everything carefully, and you should encourage your customers to do the same. If your customers have a positive experience at every step of their dealings with you and your payment service, they are more likely to return.
• Be a stickler for security. While too much security steps can send potential customers packing, it's wise to pick a payment system that's going to clearly offer confidence to your customers. People who spend money on the Web like to see features like SSL, password protection, P3P statements, and privacy statements. Also, choosing a service with an established brand can help ease the security jitters your users may feel.
• You didn't forget about taxes, did you?
• And how are you going to ship? FedEx? UPS? US Mail? Carrier pigeon? Just some other costs that need addressing.
• Beware of hidden special rules attached to some services. Some payment systems only allow one-time billing for security reasons. Some require customers to input excessive personal info that may not have anything to do with your product.
• Leave room to grow. If your product is generating gobs of press — or even hype — then do yourself a favor and pick a payment service that's going to allow you to grow. Who knows, in a year, you may need to coordinate a database-driven shopping cart system with a warehouse full of inventory!

Armed with this information, you're more than ready to go forth and get what's yours. I'm talking about money here! Money for your hard work, your hours spent away from loved ones, your time that could have been spent chasing squirrels or learning how to play the drums. You've got to start somewhere, so pick the right level of commitment and go for it. Don't leave those customers waiting.