Successful bidders usually pay by credit card, debit card, personal check, cashier's check, money order, or cash on delivery. Credit cards may offer buyers the best protection in that they allow buyers to seek a credit from the credit card issuer (also known as a "charge back") if the product isn't delivered or isn't what they ordered. Typically, sellers on business-to-person auction sites accept credit card payments. In contrast, most sellers in person-to-person auctions require a cashier's check or money order before they send an item.
In many cases, an online payment service or an escrow service is used to facilitate payment.
Online Payment Services
Online payment services are popular with both buyers
and sellers. They allow buyers to use a credit card
or electronic bank transfer to pay sellers who may not
be set up to accept credit card or electronic bank transactions.
They also may protect buyers from unlawful use of their
credit cards or bank accounts because the online payment
service, not the seller, holds the account information.
Many sellers prefer online payment services because
payment services tend to provide more security than,
say, personal checks.
In online payment services, both the buyer and seller set up accounts that allow them to make or accept payments. Buyers provide payment information, such as bank account or credit card numbers, and sellers give information about where payments should be deposited.
To complete a transaction, the buyer tells the online payment service to direct appropriate funds to the seller. The seller then has immediate access to the funds, minus any service fee.
The best known service of this type is Paypal.
Online Escrow Services
Online escrow services operate differently. Their primary
purpose is to protect buyers and sellers from fraud.
Escrow services accept and hold payment from the buyer
- often a wire transfer via check, money order
or credit card - until the buyer receives and
approves the merchandise. Only then do they forward
the payment to the seller. The buyer pays the fee for
an online escrow service - generally a percentage
of the cost of the item. Online escrow services usually
are used for big-ticket items, like computers, cars
or jewelry.
If you are interested in using an escrow service, check with the auction site to make certain that is a payment option. Most auction sites will have a preferred escrow service company that they work with.
Internet Auctions:
Auction Rules
Payment Options
Types of Fraud
Tips for Buyers
Tips for Sellers
