There has been a thrust of retailers who are lining up with online presence in last decade and half, however it is shocking to see not all of the retailers have got the payment facilities online. So what it means, retailer has not really geared to harness to beauty of e-commerce. One of the biggest reason for a retailer to shy away from payments is fear of unknown, apart from other reasons that they probably do not value need of selling online, or may be they just perceive online presence as an enabler for their brick and mortar stores, or perhaps retailer value the need of taking payments online but they believe its  just too costly for them to implement the solution.

As a retailer you do not need to go full board and have all the possible payment methods. You need to understand what your audience is and then map it to the payment options you wish to provide.

If we categorise ways to accept payment online, it would boil down to a handful few, i.e. Merchant Accounts (i.e. Verifone, Cybersource, etc), paypal, google checkout. All these have their own benefits and concerns. i.e. Paypal has a transaction surcharge which is non-refundable, while it has got a higher fee structure as well (compared to merchant accounts). But at the same time it easy to integrate to paypal, rather than to a merchant account.

There is no one solution that solves problem to all retailers, however generally speaking, study suggests that a merchant account is very likely going to be customers choice. On an average if a retailer has paypal, google checkout and merchant account set up as payment options, merchant account adds to more than half of transactions.

If I could think of reasons for merchant account being more popular with customers, I would say:

• Merchant Account offers facility to pay be phone, so indirectly it gets upper hand in terms possible transaction for a retailer.
• Customer sees a good reason to use specific card to earn credit card points. Technically this is possible via paypal as well, however overtime user has to change paypal settings to add/remove cards.
• Customer considers his personal data being shared via mediator sites (paypal).
• Perhaps bad integration with paypal, google checkout, etc. I myself felt gutted using paypal when the integration between paypal and retailer was not very user friendly and I ended up getting goods delivered on my old address (that’s what paypal account had) even though on retailer site I specified the address I wanted goods.

Anyways, as I said above, there is no silver bullet as to which method is best, lot of younger audience like newer payment methods. Important thing to takeaway is having some decent means to accept payment, and that would boost your sales significantly.