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Got rich friends and need to look the part? Those that can't afford to buy the latest Fendi purse can still sport it thanks to Bag Borrow or Steal, a designer handbag rental firm that allows customers to pay a monthly fee, pick and order handbags online, and borrow them for as long as they like.

The company added fine jewelry to the mix after its 2004 founding. The service allows style-conscious customers access to the ultra-luxe and high-end products that they otherwise couldn't get their hands on. Monthly memberships range from $20 to $175 a month.

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What You Didn't Know About Payment Systems

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What you don't know can truly hurt your online business. This has never been more true than when you set out to choose an Internet payment systems. It's not so much that making a wrong decision can harm your business irreparably (although, it can); it's that there is so much information to process before you commit to a payment gateway and merchant account provider.

A Quick Review of the Basics
Payment systems — if we may simplify a bit — are the combination of a payment gateway and a merchant account that allow customers to buy goods and services online, and that allow an ecommerce business to process transactions and collect money. If your accounting model is such that your online business must be integrated with an existing enterprise billing system, then payment systems can reflect that need as well.
For our purposes, though, we'll refer to payment gateways and merchant accounts.

According to Webopedia.com, a payment gateway is the "service that automates the payment transaction between the shopper and merchant. It is usually a third-party service that is actually a system of computer processes that process, verify, and accept or decline credit card transactions on behalf of the merchant through secure Internet connections. The payment gateway is the infrastructure that allows a merchant to accept credit card and other forms of electronic payment."

Those payment gateways deliver information to merchant accounts, which in turn provide the structure for your business to receive funds. According to Webopedia.com, a merchant account represents "an industry term for a business banking relationship whereby you and a bank have arranged to accept credit card payments (usually, a local bank can suffice for this kind of relationship). Setting up a merchant account usually involves the bank understanding your business and working with a third-party processor to arrange a mechanism for accepting payments."

Many vendors offer a solution that ties a payment gateway into a merchant account — an all-in-one offering. However, merchants can select payment gateway solutions and merchant account providers separately.

As a general rule, payment gateways aren't an absolute requirement to do ecommerce on the web. You could theoretically take orders from a website and process them manually; entering credit card information into the PoS system you have at your brick-and-mortar store, finalizing the sale and distributing the goods yourself. However, most businesses don't have the time for that type of effort and, therefore, need both a payment gateway and a merchant account provider.

The question is: How in the world does one go about picking a provider for each?

How to Choose Your Payment Gateway/Merchant Account Provider
John Bodine, the vice president of sales and marketing for Authorize.Net, says business owners should choose a provider in much the same way they would any other vendor.

"Get an understanding of who you're dealing with," he said.

Bodine noted that the company's longevity and history should be weighed with as much importance as many other factors. He noted his company has 158,000 merchants that use the Authorize.Net payment systems platform, and has been in business for 10 years — rendering it practically ancient in web years.

However, Bodine also recognizes there is just a ton of information available on the web for businesses to use in the decision-making process. You might start with a basic Google search and then work your way into discussion forums and message boards, looking for recommendations from fellow ecommerce entrepreneurs who have already "been there, done that."

We did just that and came up with a list of common criteria businesses use to make payment gateway/merchant account decisions:

• Does the payment system require a conventional merchant account? Many new businesses without an established credit history might find it difficult to obtain a merchant account quickly.

What type of fraud protection does the vendor offer? Businesses want to protect themselves from charge-backs, the result of a thief using a stolen credit card to make fraudulent purchases.

• Does the vendor make it easy for your business to brand the payment system interface to look like it fits on your website, with your logo, with your colors and design?

• Is it possible to integrate the payment system into an existing billing mechanism?

• Beyond a basic 128-bit digital certificate used for security, does your payment systems provider offer a solution that is PCI-compliant?

• What is the time period between the finalization of a sale and the transfer of funds into your bank account?

• Can your payment systems provider handle global currency?

• Does your payment gateway vendor offer a solution that integrates seamlessly with your existing shopping cart and/or storefront software?

• How much does the solution cost, and how clear is the vendor about the fee structure?

• How easy is it to switch from the vendor's solution to another, should you become unsatisfied with the first offering?

Deciphering Rate Structures
Bodine told of customers who came to Authorize.Net citing dissatisfaction with other vendors' rate structures. Many business owners don‚Aot take a close enough look at the specifics of rate agreements when deciding on payment gateway and merchant account providers.

According to an article on Ourshop.com, there are three basic components of payment gateway fees:
• One-time fees
• Recurring monthly fees
• Transaction fees

The same article cites three components of merchant account fees:
• One-time fees
• Recurring monthly fees
• Transaction-related fees, accrued either per transaction or per an order total

Fee variance is significant, depending on the vendor you choose. For example, customers who select the Authorize.Net platform can obtain quotes from a number of resellers whose rates vary widely. A savvy shopper can find resellers offering rates significantly below a standard market rate. Other vendors, such as PayPal and Cybersource are pretty consistent in terms of fee structure.

An Alternative Payment Solutions Perspective
While Bodine cited Authorize.Net, Cybersource and VeriSign as the big three in the payment-systems marketplace, vendors such as PayPal and Google have made significant headway into what experts call the alternative payment-solution marketplace. In fact, Google has decided not to charge processing fees through the end of 2007 in order to help its Checkout product reach critical mass.

Google's Checkout system allows consumers to enter billing information one time in order to make online purchases a one-click process on ecommerce sites that have made themselves Checkout-capable. While Google has seemingly eliminated the need for a merchant account with its solution, Bodine cautions that it's not the same as an all-in-one payment gateway/merchant account solution.

"We see it as a can't-have-one-without-the-other solution," he said. "They go hand in hand."

What If I Decide To Switch Vendors?
Switching from one payment gateway or merchant account provider to another doesn't have to be difficult. They key is in the provider's customer service capabilities combined with the product's ability to integrate with your existing ecommerce website.

"What is the integration change that will need to occur? That is the key question," Bodine said.
He noted that Authorize.Net has thousands of integration partners and has converted thousands of customers over the years in as little as a couple of days. Bodine said that business owners can gauge how tough it would be to make a change by examining the complexity of the existing ecommerce website: Is there a lot of custom scripting/coding done in your e-store? What sort of conversion tools might a new vendor have to enable an easy switch?

One note, though. Bodine cautions merchants considering a vendor change to remember that moving from one payment gateway provider to another can result in significant information loss. Once the switch is made, valuable sales information history can be lost forever.

To counter information loss, Bodine recommends that merchants "download as many of the reports and details‚" of their transactions with the previous provider as possible before finalizing a changeover.

How to Protect Yourself from a Bad Deal
In addition to plenty of research about services and features from various payment gateway and merchant account vendors, business owners should scour the web for complaints about them. You can be sure that if somebody has had an issue with a payment gateway or merchant account provider, his or her frustration has likely spilled over onto the web in the form of a message-board complaint.

Bodine says most merchant frustration stems from not understanding the fees charged by a provider. As for other payment-systems horror stories, he cautions against believing everything you might find on the web.
"How many of them are true?" Bodine asked.

However, if the business owner understands the fee structure, how the system integrates into the website and is comfortable with the provider's business history, customer support capabilities, fraud protection and payment timeliness, it's likely that he or she will have made a wise payment gateway or merchant account provider decision.

Go to source.

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10 Pointers for Crafting an Effective Advertorial

Love's Good for Business

There comes a time when all small businesses must pay for their publicity. They've exhausted their use of the press release. They've used up all of their feature story ideas. They've depleted their finances for direct-mail packages. Now they're left with one final marketing tool to generate hot leads and push their profits to the next level. It's advertising.

When you reach that point, it's not the time to think fancy. It's time to think response. Instead of the typical ads that you see in most publications--newspapers and magazines--think advertorial, the kind of ad that actually looks like a real news story or other editorial matter.

Advertorials generally have a good track record. They are to print what Infomercials are to TV. They may be corny to the uninformed but, like the TV informercials, they work just the same.

A Tip from Reader's Digest
In his classic advertising primer Tested Advertising Methods, John Caples rightfully noted that editorial-style ads get high reading. As an example, he referred to a test conducted by Reader's Digest, in which an ad for Adolph's Salt Substitute was designed to look like a magazine article. Here's what he said:

A split-run test of two mail order ads showed that an ad that looked like a magazine article pulled 81 percent more orders than the identical copy, set in ad-style.

Incredible, isn't it?

Copywriter Joe Vitale observed that "readers are up to 500 times more likely to read an advertorial than a straight ad." Results like that would compel me to at least try the advertorial.

Although much has been said about advertising in print media, it goes without saying that most of the concepts provided here will also apply to the Internet.

For instance, veteran copywriter Clayton Makepeace has been extremely successful in writing advertorials for the Internet. In an interview published in his newsletter, The Total Package (May 23, 2006), he surmised that effectiveness on the web was because people are used to receiving free information on the web. He explained:

If you begin a promotion that says, ‘Hey, here's my product. Isn't it beautiful?' You're really saying, ‘Hey, you know, if you read this I'm gonna try to sell you something.' Whereas, on the other hand, if you go in with an advertorial appeal and you talk to the person about fulfilling their desires or assuaging their fears or eliminating their frustration, by the time you get around to the sales copy, you're their friend and advocate instead of a salesman trying to get them to sign the dotted line.

A Good Example
When was the last time you saw a good advertorial written for a small business? In my own case, I see few on the local level but dozens on the national level that appear primarily in business opportunity magazines.

However, there was one I saw a while back that caught my eye. It was for a nonprofit organization, Food For The Poor of Deerfield Beach, Fla. The advertorial appeared as a full-page ad in Christianity Today (December 2000). While I don't know the results of its response, I'm willing to bet that it was a good one.

You see, the ad looks and feel like the other articles appearing in that magazine. It has two strong headlines, a byline, three photos, and a NO logo. And that's the secret. To look like an article, your advertorial must be of a size that's similar to the actual editorial copy.

Would you like to try your hand at developing a good advertorial? Then remember these factors:

1. Study the publication in which your ad will appear. Get a sense of its style. Check out the competition--the kind of ads they use. Look at the typeface and size of the type. Study the headlines and graphics. Then, as much as possible, try to model your ad after those articles.

2. Inquire about the policy on advertorials. Some publications frown on ads that look like their editorial copy. As a result, they insist that ads have some noticeable differences. OK, that's understood. If you must use a different typeface or font, so be it. But you can still make your piece look like an article.

As a rule, most publications will require the word "advertisement" printed in small letters at the top or bottom of your ad. Some will only use such ads in special sections.

3. Determine an appropriate size. To look like an article, your advertorial must be of a size that's similar to the actual editorial copy. Ideally, you'd want it to be a full or half-page in magazines. In newspapers, consider nothing smaller than a quarter page (unless, of course, you can only afford something smaller).

4. Write a suitable headline. Unlike the headlines in your brochures and direct-mail pieces, a suitable advertorial headline is one that is newsy or very similar to those in the publication in which it appears. In the typical newspaper, you won't see a headline loaded with fluff or superlatives that brag about an organization. Instead, you see headlines that are simple and straightforward. Food For The Poor used: "Poor Families Rely On Trash For Food Clothing-- Survival."

At the bottom, another headline appears: "Food For The Poor's Outreach Creates Hope Among Riverton's ‘Dump Dwellers.'" You might consider borrowing headlines from your press releases.

5. Use a byline. That gives it credibility, particularly if the name is recognized by readers. Pen names also are useful. Even if it's not well-known, the appearance of a byline will suggest that the piece was "authored." Food For The Poor uses "Special Report by Geraldine Hemmings."

6. Use photos with captions. Captions do not appear in the Food For The Poor's ad. But typically, an advertorial is stronger when its photos have some kind of caption written underneath, like those you see in newspapers. As with the "article," include a byline for the photographer.

7. Open and close with a bang. As with all forms of good communication, your lead paragraph should hook the reader--just like the articles in the publication you've chosen. Don't forget to close with something that moves the reader to action.

8. Sprinkle with quotes. Enliven your piece with quotes from real people, real experts. Use the quotes as testimonials or to back up certain claims. Insert them throughout your copy. Use them the way a typical journalist would.

9. Break up copy with subheads. Depending on the length of your copy, subheads can make the material more reader-friendly. Use them to draw attention to crucial parts in your ad.

10. Include the "call to action" and contact information. Your piece may look like an article, but it still is an ad. For that reason, don't slack in calling the prospect to action. Create a sense of urgency and tell them exactly what you want them to do--and when!

You may or may not use a coupon (and you probably shouldn't), but if you do, include contact information on both the coupon and in the copy of the ad. That way, if the coupon is torn out and another person reads the publication, he or she may still have access to your organization.

With these ideas in mind, you should be able to create a winning advertorial. Examine your budget and see if you can't test an idea. Start small--with small publications or small ads--and work your way up.

To learn more about other direct-response advertising tools, read Direct Response Advertising Made Easy from EntrepreneurPress.com.

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(Business 2.0 Magazine) -- Brian Prins is an affable salesman who touts the benefits of his prepaid collect-calling service in a distinct Long Island accent. He's also an ex-con who served five years in a Pennsylvania state prison for aggravated assault and possession of stolen car parts, so when he explains that he's simply helping families stay in touch, stay together, and stay out of debt, you might want to listen.

"I know how much phone calls from prison cost, and how much an inmate needs to talk to his family and friends," says Prins, who himself racked up $1,000 in monthly phone bills from behind bars.

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The Problem With Unplanned Growth

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This is a true story, although the names and places have been changed. Everything ended up OK, but there was a lot of unnecessary stress--all of which could have been easily prevented by just a minimum of business planning. This kind of problem happens all the time, and it's so easily preventable, it’s a shame it happens at all. The lesson: Don’t be a victim of unplanned growth.

The story takes place in a midsize university town on the West Coast, during the mid '90s, as the internet boom took off and most everybody in business and education was getting connected. The main players are Leslie and Terry, co-owners of a consulting business offering computer and network services mostly to local businesses.

At the beginning of this story, Leslie and Terry had a small but comfortable office a few blocks off Main Street, near the university, and a comfortable business, averaging about $20,000 in sales per month with a few steady clients and not a lot of seasonal variations in sales. They had one employee who did the bookkeeping and general administration tasks, maintained office hours and made appointments.

Then came the big, wonderful new job--a contract with a large and fast-growing company to install new internet facilities in offices on its corporate campus, 10 miles up the freeway. This was a $200,000 contract that had to be delivered quickly and opened up an important new relationship with a potential business-changing client. There was great celebration. Leslie and Terry and their spouses started with a fancy dinner in the best restaurant in the area.

Both partners readily got going on fulfilling the contract, delivering the network, connecting the systems, making good on their promises. To make sure the new relationship would be a permanent increase in business, they took on five contractor consultants to deal with the needs of installation, training and the general increase in business demands.

Within two months, it seemed clear to both partners that they’d made the leap. Systems were being installed, clients were happy, and they were on the road to doubling their business volume in a very short period of time. The contractors were doing good work, and four of the five were happy to consider becoming permanent employees. Leslie and Terry decided they could celebrate more, so they both went to the local car dealer and leased new Mercedes sedans.

Then things started going bad. Like a television loosing its connection, things got fuzzy, then blank. Though sales and profits were way up, jobs were done and invoicing was underway, Leslie and Terry had no money. The contractors--good people who Leslie and Terry wanted to keep--needed to be paid, but there was no money. They rushed to their local bank, waving their increased sales and profits, but banks need time. The business suffered the classic problems of unplanned growth. Just as the accounting reports looked brightest, the coffers were empty. People were barely done celebrating, and suddenly they were looking at the disaster of unpaid bills and, much worse, unpaid people.

What happened? Unplanned cash flow problems happened. The new, larger client had a slow process when it came to paying bills, so the jump in sales didn’t mean an immediate jump in cash in the bank. Leslie and Terry were more concerned about delivering good service than delivering necessary paperwork, so their own invoicing process was slow. They were owed about $85,000, but they couldn’t go straight to their new client to get the money--she said she’d already authorized payment and sent them to the company’s finance department for answers. The people in the finance department were slow to respond and not particularly concerned about vendors getting paid quickly; their job was to pay slowly, but not so slowly as to get a bad credit rating.

Leslie and Terry had a bad case of “receivables starvation"--money that was owed to them was already showing in sales and profits, but not in the bank. It would have been predictable, and preventable, with a good plan.

In this case, fortunately, the two partners had enough house equity to get a quick loan and pay their contractors. The business was saved and grew, but not without a great deal of stress and strain, and even second mortgages.

The worst moment is worth remembering: One of the partners' spouses was particularly eloquent about the irony of taking on a new mortgage while driving that “[profanity omitted] Mercedes.”

The moral of the story: Always have a good cash flow plan. Never get caught not knowing the impact of a sudden rush of new business. Get to the bank early, as soon as you know about new business, and start processing a credit line on receivables. And never lease a Mercedes until you’re sure you won’t have to take out a new mortgage a few weeks later.

Tim Berry is the "Business Plans" coach at Entrepreneur.com and is president of Palo Alto Software Inc., which produces the industry's leading business planning software, Business Plan Pro, as well as other popular planning applications for businesses.

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