Online and other payment options
credit cards, dedicated accounts, downloads

Mobile payment

When I started this site the big headache for DIY was taking credit card payments online. Now there are tools for almost every kind of payment, including by cellphone, but this picture is changing almost daily.

Selling by mail order online

You can sell CDs through a third party (Online music distributors or local independent shops) but it will cost up to 50%, less for downloads. If you sell CDs on your own site or at gigs you don’t pay that retail markup. You could accept cheques by post but here’s how to accept payments online.

Most online music sales are still CD mail order (downloads account for about 35%). Online mail order works like traditional telephone and postal systems; the only difference is the browser. There’s a lot of hype about new ways of paying (micro-payments, digital cash and so on) but debit and credit cards are the standard today, just like ordinary mail order.

Online payment services

Credit card payment gateways

Web payment is rather expensive to set up and run, and not very flexible. Cash used to be the most expensive kind of retail money (it costs about 6% to handle) but online card payments can cost the same or even more. They should be cheaper and hopefully prices will come down.

The benefits of credit cards are:

• most buyers have a credit card or access to one (Mum and Dad!);
• buyers feel safer using a credit card (generally insured for fraud);
• it’s a mature system with a good global network;
• payments can be taken in most major currencies without much fuss;
• they’re cheap to operate (not usually the 4% plus we see online).

Small online retailers normally use a virtual swipe system to accept credit cards. This ensures they don’t handle card data or transactions directly. These card systems are called secure payment gateways and there are many suppliers. Unless you’re selling in volume you won’t want a separate business account or a merchant account. Business account charges are high and some gateways make things worse by requiring a merchant account (on top of high fees). This forces you to pay higher bank charges.

Here are some popular credit card gateways for small businesses.

Online payment solutions such as iTransact and DataCash are aimed at bigger businesses.

Dedicated seller accounts

Dedicated seller accounts are an alternative to credit card gateways—the most common in the UK are eBay PayPal and NoChex. These allow you to accept credit card payments.

PayPal Payloadz supports payments for downloads online and is more suitable for direct music sales.

Some questions for payment services

Terms and conditions for online payment services have become a lot simpler but they do change frequently. Here are some angles you might want to check.

• Is a merchant account provided as part of the package?
• Is there a set-up fee?
• Is there a monthly, annual or transaction volume fee?
• Are there any threshold volumes that affect pricing?
• Does the package include debit card payment?
• Are there different transaction fees for debit cards?
• Is there a charge for withdrawals?
• Is there a minimum withdrawal amount?
• Is there a charge for withdrawals outside the USA?
• Is there a minimum transaction amount?
• Is there a minimum transaction fee?
• Are there charges for handling multiple currencies?
• Are there charges for Verified by Visa?
• Are there charges for Mastercard security?
• Do buyers require any kind of account?
• Does the package cover payments world-wide?
• Is there an email payment option with the package?

The supplier sites are very good these days and I recommend you browse the 6 above as an introduction to online payment services.

The main ways to sell your music

This is a summary of the main ways to sell your CD online and offline.

You might think some of these options are beyond you, but artists who made their own records have used them all. High street shops sometimes take CDs from local bands. It helps if you’re well-known locally and friendly with the staff but if it will sell they’ll probably take it (generally charging about £5/disc). The last three are pro distribution but DIY artists have broken through with their own CD, as Damien Rice did. You need to have a solid CD with wide appeal to sell in the mainstream.

The main ways to take payment

This is a summary of the main ways to take payment for your CD online and off, with links to more information. Obviously, if a third party retailer collects payment you won’t need these.