Payments onlineMore than 350 million people reportedly use the services of PayPal to do online commerce, for personal or business use. But there are various other online payment services that might better suit your needs or those of your small business.

An online payment service is a facility that manages the transfer of funds from a customer to the merchant of an e-commerce Web site. In order to use an online payment service, the buyer and seller usually have to set up accounts that allow them to make or accept payments. While most online payment services charge a fee to the seller to receive the funds, some payment services also charge the buyer.



Many people are still wary of doing business via the Internet, but online payment services tend to offer protection to buyers if the seller fails to ship the goods that are not as described or damaged.

Here are some of the services offered:




PayPal
PayPal, founded in 1998 and acquired by eBay in 2002, has more than 153 million accounts worldwide and is available in 190 markets and 24 currencies. The service allows anyone to pay in any way they prefer, including through credit cards and bank accounts.

•    Pros: PayPal offers a variety of services, such as bill paying. It is time tested and is the most widely-known and widely-used payment processor for Internet marketing. It is easy to set up a merchant account with PayPal–there is no credit check and you can withdraw your money via an ATM if you have their debit card. They also allow international transactions.

•    Cons: PayPal charges 1.9% to 2.9% plus $0.30 per transaction. They will randomly hold your money under review for no specific reason, especially when doing international transactions. When doing international transactions, especially from Africa, your account will undergo even further scrutiny, often resulting in having your account blocked for an unspecified amount of time. PayPal has a long list of restricted activities that may result in your account being closed, suspended or limited. Your money could be held for as long as six months during the investigation. PayPal also puts holds on the money in your account in its sole discretion, if PayPal believes there may be a high level of risk associated with you, your account, or any or all of your transactions. PayPal will also not accept payment methods such as Google Checkout.

WePay


Founded in 2008, WePay allows users to sell items, sell tickets, accept donations, and send bills to collect money.

•    Pros: You don’t need to set up a merchant account; you can use immediately. It is a great option for organizations to collect money, though open to individuals and groups as well.

•    Cons: Only available in the U.S. There are fees: 50 cents for bank account transactions or 3.5% of the total credit card transaction.

Dwolla


Also founded in 2008, Dwolla describes itself as a cash-based payment network system. It allows you to pay for goods and services on a payment network, like Visa or MasterCard, while also letting you send and receive cash with whomever via their peer-to-peer payment platform.

•    Pros: It works like PayPal, with the high fees. But the big plus is its accessibility: With Dwolla, you can use your phone, computer, even your social networks and physical locations to send and receive cash. They have apps for iOS, Android, and Windows Phone 7. If you have a problem you cannot only email them but you can actually call them.

•    Cons: While sending is free, there is a small fee–.25 cents–to receive. You cannot use for international transaction.

Paydivvy


Launched in 2009, PayDivvy calls itself the “first and only social bill pay solution.” According to PayDivvy, users can manage bills by allowing them to pay, send and split personal and group bills via web or mobile.

•    Pros: You can collect money from multiple individuals or businesses. You can pay bills via the service via web or mobile.

•    Cons: If you use a debit or credit card there is a small fee. For back account transfers, it is free. Only available in the U.S.

Amazon Payments


Founded in 2006, Amazon Payments offers a set of payment and checkout solutions that enables Amazon customers to complete purchases on your website using the same information in their Amazon.com account. A subsidiary of Amazon.com, it allows users to process transactions online.

•    Pros: It makes it easy for online merchants: Customers never leave your website, yet they access their Amazon address book and Amazon payment methods via widgets you install in your checkout process. Checkout By Amazon provides seller protection and the fees are about the same as other payment processors.

•    Cons: They may hold your money for 14 days.

Amazon WebPay

Amazon Webpay lets users send, receive, and request money from other users from the Amazon Payment’s website.

•    Pros: It is a free service. It won’t cost you anything to send or receive funds. It also allows you to make online payments via your mobile phone.

•    Cons: The service only allows you to withdraw amounts of $10 or more.  They will not accept payment methods such as PayPal and Google Checkout.

Square


Square made it easier for merchants to accept payment on the spot–anywhere–with the introduction of a small credit card reader that works with either its Android or iOS app.

•    Pros: It is totally made for mobile–You can use your phone to receive payments using the special reader. It is available for both businesses and individuals.

•    Cons: Square charges a standard 2.75% for all transactions. It’s only available in the U.S. and only works on iPhone and Android (not on Windows Phone 7 and Blackberrys). Unlike PayPal, it doesn’t let you do an instant transfer from your bank account.

PayPal Here

PayPal recently introduced PayPal Here to rival Square. Like Square, merchants are equipped with a small credit card reader that works on their mobile phones.

•    Pros: It makes doing business easier for merchants, while having the PayPal history behind them.

•    Cons: Like Square, they also charge 2.75% for all transactions. The reader works only with Apple iOS and Android products.

Serve
Serve is a digital payments platform that helps you organize your money, send and receive funds, and manage payment requests — all from a single, unified online account. Serve makes paying and being paid simple.

  • Pros: Serve is provided by American Express, which means Serve uses American Express security, technology, and data protection. It’s like having a bank account on Android or iPhone. You add money to your account via credit/debit card or bank and can send and receive funds with other Serve users from your phone. Unlike PayPal, users are allowed to move money from one account to another. You can also create sub accounts for family and friends. 

  • Cons: It does not allow you to pay for purchases over time; PayPal does. Also, unlike PayPal, you cannot earn rewards. There is a fee for funding your Serve account with a credit card (2.9% of the amount transferred + $0.30 per transfer). The first withdrawal from an ATM is free, but after that, it’s $2.00 per month.