In this third in a series of webinars, Chris Reddick (President and CEO of Clarity Ventures) and Ron Halversen (Vice-President of Sales and Marketing at Clarity) give examples of the most common payment types used in online auction exchanges.

Part 3 of a 7-part series (Return to Part 2)

RON: Some of the payment types for eAuctions that we're talking about here, let's dive into a few of those. I'll just mention them, and then if you want to go into the actual integration of those and how we integrate those and deal with those, that would be a good idea. When we start getting into multicurrency and international, these can make a big difference, right? 

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RON: The payment types that we want to accept on these auction platforms: Is it a certified check? Do we allow checks? And then what's the governance around a check? Do they just know that there's going to be at least a week's delay of the shipment of the item until the funds clear? And then what happens if the funds don't clear? What's the governance and what are the repercussions? And do they still have to pay if their check doesn't clear? How do you go through arbitration or mediation to fix that stuff?  You have to think through the governance of the payment types you expect. 

[There are also] wire funds, ACH transaction transfers, e-checks, purchase orders, credit accounts. Sometimes you can be forced to put money in a credit account and have a balance with the clearing house. Then you go in and you can pay and buy things against, and up to, whatever your credit account is. So you might want to come in and register funds ahead of time and put it in a credit account. And maybe that's how you enforce the funds. Now, that's a pseudo escrow, isn't it? It's almost like an escrow account, or do we deal with escrow? 

Let's talk a little bit about just the integration of those different payment types, because, if you think about it, if I do a debit card and pay with the debit card, there's a 0% fee collected on a debit card. If I pay by credit card, there's 3%. If I switch to American Express or PayPal, it's 4%. If I switch to escrow, it's typically 15%. So just knowing the fees that are captured with each of these, and who's going to pay those fees or who has to eat those fees, can be a big deal in knowing just the types of payments you're going to collect, correct? 

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CHRIS: That's a great point. And this is something that we've seen whenever we get to a point with clients where they're collecting a lot of revenue. And this matters at scale. And frankly, whenever you get to the even 3% to 4%, that begins to matter pretty quickly. It certainly matters for the end-user too, they're going to need to know if they're going to be paying extra fees, and it needs to be very visible to them. 

If you just look at it technically, a lot of the payment hub providers, they may not offer these options, or have these options with terms that are favorable. So there may be a favorable set of terms for one of these options, like paying via credit card and paying via a debit card. So we get an optimized payment provider in the eAuction software for that, and then we probably will end up recommending a slew or myriad of different payment providers for an escrow type of model that are separate from the credit card and debit card payment provider.  

So how do you seamlessly integrate that? Putting that into the checkout process, into the actual “you've won the bid, now you need to actually make a payment” workflow. Really, it ought to be seamless for the end-user. They see a nice visual, very intuitive UI, using icons to our advantage, taking advantage of industry best practices for what different icons typically mean and brief text description. Then like more detail as needed. But behind the scenes, and deep inside of the actual eCommerce platform, there's a lot of nuance to getting some of these different models to work. 

Like you were talking about, Ron, once we process a payment with multiple different payment providers—let's say there's one for debit and one for credit card, one for check-based payment, and then one for escrow payments—we may also have additional payment providers for different countries. Because, depending on the payment provider, they may not serve all countries.  

We can wire all of this together behind the scenes using a modular capability of an auction platform, like the Clarity eAuction platform, but then you also have all of the integration to the back office. So how are we then taking that and drilling into that data and pushing it out to the sellers so they have what they need to operate their accounting? And similarly, for your business as a whole, for your eAuction company, integrating that back to your ERP system or accounting software. 

These are all key considerations for payment solutions on all types of auctions. And frankly, one of the biggest challenges that can happen here is— whenever something doesn't go through properly, maybe there's a refund or somebody wants to process something with a wallet or reuse payment information, et cetera, any of these types of scenarios—you're going to want to think through all the edge cases with each of the different payment gateways or payment providers, and consider all of the nuances of these as well.  

We typically go through all of this in discovery when dealing with an eAuction platform, right, Ron? And it's fascinating how much detail you can get into quickly. The magic here is picking and choosing based on what's best for the business and being able to prioritize so that we get the highest payoff or the lowest upfront costs. 

Continue to Part 4 to learn about integrating back-office software with auctions.