The payment methods you offer in your checkout can make or break your store. You should strive to offer ways of payment that make you appear as trustworthy as possible, and that provide the least hassle to your customers. Which payment methods you should set up for your store depends on which countries you will be active in and in which market you are going to sell. In this chapter you will find out how setting up payment methods in Magento works. Magento has a few payment methods available by default, which will be tackled first. After that other payment methods and Payment Service Providers (PSPs) will be discussed.
In this chapter, we will learn:
- What common payment methods are supported by Magento
- Setting up the default payment methods in Magento
- What a payment service provider is
- Setting up a payment service provider
It is essential to offer the right payment methods for your market and geography. As an example of tailoring to the market you are in: if you are selling beds with a long delivery time, a lot of customers will want to pay upon delivery instead of up front. On the other hand, if you're selling standard goods such as DVDs, which are shipped very quickly, requiring payment up front is much more accepted.
With regards to the country you are operating in, each country can have one or more highly specific payment methods. For instance, in Germany an up-front bank transfer payment method called Giropay is big, while its equivalents are called iDEA in the Netherlands and Mister Cash in Belgium. If you are selling in the United States, the most important payment methods to arrange are payments made by credit card and PayPal! There are many different payment methods available world-wide and because of that, it's not possible to discuss each one of them within the scope of this chapter.
By default Magento includes these common payment methods, which can be found under System | Configuration | Payment Methods:
- PayPal: PayPal is a company that offers a number of different payment methods. By far, their best known payment method is PayPal Payments Standard and in this chapter we will only discuss this payment method as the other options that PayPal offers are generally not used by starting/smaller online stores. In order to use PayPal Payments Standard, any customer can register at www.paypal.com and when they have a PayPal account, they can use that account to pay for orders on any website that accepts PayPal payments. Making a PayPal payment only requires logging into PayPal with a username and password, which is one of the reasons it has become an internationally popular payment method so quickly.
- Credit card: Using this mode of payment, your customer supplies his/her credit card details, and is charged for the purchase on his/her credit account at the end of the month. Credit cards are issued by companies such as VISA, MasterCard, and American Express.
- Check / money order: This is primarily used in the United States; this payment method involves your customer sending you a check through regular postal mail in order to pay for his/her order.
- Bank transfer: Your checkout displays information about how to wire the money to your bank account. The order is usually only fulfilled after the customer performs the transfer.
- Cash on delivery: In this mode of payment, the customer pays when the goods are physically delivered to his/her doorstep. The manner in which the customer can pay differs as per the fulfillment partner; some only support cash payments when performing cash on delivery shipments while others accept cards.
This payment method involves a risk for the store owner especially when the shipment involves customized goods, as the goods will be produced and shipped before funds are received.
- Purchase order: In stores, a purchase order is a document that indicates that a buyer wants to buy a list of products from the store against the prices listed in the order. Purchase orders are mostly used in business-to-business settings where the buying company has arranged for a purchase order number internally to benefit its financial administration. The seller usually sends the buyer an invoice containing the purchase order number.
The configuration of each payment method listed will be discussed in the upcoming sections. Other payment options that can be found in the Payment Methods section of the Magento configuration are Zero Subtotal Checkout and Authorize.net. Zero Subtotal Checkout is not an actual payment method but a payment option that Magento only displays when a customer's order total is zero. With this payment option a customer is not required to input any payment details. It is advised to leave this payment method turned on as a zero subtotal order can occur frequently when you are running promotions and supplying discount codes to your store.
Authorize.net is a PSP, of which there are many. Authorize.net is a PSP that is included by default; for most other PSPs you will need to install a Magento extension. The process of installing a PSP extension and configuring it will be shown toward the end of this chapter. Like most parts of Magento, the payment processing part of Magento can be adjusted to meet your specific needs. You will almost certainly need a development partner for that (refer to Chapter 11, Maintaining and Administrating Your Store, for further tips on working with a development partner). It's recommended to leave it as close to default as possible.