Training Resource Reduces Direct Merchants’ Struggle With Credit Card Fees | Alternative Payments Fees
Alternative Payment Methods: Fees

Given that claimed benefits surrounding sales uplift with APMs are so significant, and that on average the associated fees are orders of magnitude lower than these sales increases, fee savings only come into play in marginal situations.  The following Chart depicts pricing from three popular brands

Payment Method

% Fee

Per Item


Credit Card[1]











> $100K Sales

Google Checkout[4]



> $100K Sales

Assume that we are examining a merchant selling $50 items whose base annual sales were $110,000 .  This merchant experienced an incremental sales lift of 10% due to an APM resulting in sales of  $121,000 The transaction saving on this incremental $11,000 would amount to only $132 (1.20%) for BML, and  $22 (0.20%) for Google Checkout.  Even if the uplift were not incremental, the merchant would still save the same amount of money on transaction fees with these APMs.  So, although savings are touted as a benefit, only the largest merchants would see any meaningful benefit in absolute terms.

The only caveat lies with APMs that include relatively high per-item fees.  This portion of the rate has a negative impact on merchants selling products with low average ticket values.  Using the rates above PayPal and Google customers would have zero cost savings selling items at $25.00  Those selling items at $10.00 would see an increase transaction cost of  $66 (0.60%) on incremental sales of  $11,000  Again, this is meaningless given the magnitude of incremental sales.  This would only have an effect on very large merchants where the APM uplift came at the complete expense of cannibalized credit card transactions.  So, as it turns out, claims regarding lower fees should not be overly scrutinized.

To some things up, there is no general advice regarding APMs that will apply to all merchants save due diligence and testing.  Merchants should focus on incremental sales uplift, while measuring cannibalism rates.  Merchants should also pay attention to conversion rates and benefits related to integrated keyword advertising programs.  Certain features like paying over time, security, privacy, and ease of use will appeal to certain customer demographics.  It’s up to the merchant to understand the claims, know its customers, and seek advice from others who have successfully implemented APMs.

[1] Representative nominal credit card fees for $100,000 merchant

[2] Burrows, Peter; “Big Plastic’s Online Challenger”; Business Week; November 30, 2005.

[3] Published prices as of May 26, 2009,

[4] Published prices as of May 26, 2009,