Online Billing System - A review

From the Washington Post...

Buying things online can make a simple thing absurdly complicated.

Different sites sell the same product online or claim to find the lowest price, and the varying delivery options offered by these retailers can make the search for the perfect deal so confusing that you wind up buying nothing.

For years, there's been no real choice in how to purchase stuff online: Either you cough up a credit card number or you get nothing. But now a few money-transfer services want to carve out a bigger chunk of the business for themselves. And they're holding out some attractive incentives to make that happen.

None of these three services -- eBay's PayPal, Google Checkout or Bill Me Later -- can save you money on their own. None will let you spend a cent without linking your bank account to one of the online services; they only provide a different path for your money to flow to an online merchant.

(They can provide a little more security, in that merchants don't see your account numbers, so you can't lose them to hackers in the event of a data breach.)

It's the retailer, not the customer, who has the real motivation to encourage the use of these payment services: They come with lower transaction fees than most credit card purchases.

So to get users into the habit of using them all the time, not just for the occasional auction or person-to-person transaction, online shops and these services are kicking back some of their proceeds to consumers. It's the sort of freebie you might have thought had vanished in the late 1990s dot-com implosion.

PayPal is making one of the most aggressive marketing efforts this year. It's offering 20 percent rebates on purchases at a variety of online stores, including Barnes & Noble, eBags.com and Overstock.com, through as late as Dec. 10. PayPal's offer doesn't specify an expiration date and caps the total rebate at $50 per account; see http://paypal.com/holiday/ for the fine print.

These rebates, unlike the ones we've grown to hate in physical stores, don't require mailing any paperwork. But you will have to wait until as late as Jan. 31 for the money to appear in your PayPal account, the company says.

Using Google Checkout, a newer and less popular competitor, provides a different array of discounts: Dozens of retailers accepting Google Checkout have agreed to knock $5 to $50 off transactions with this PayPal rival. The usual discount, however, is $10, and you have to buy by Dec. 17 (http://google.com/checkout/promotions.html).

Many of these retailers are also providing free shipping. Google is offering frequent-flier miles in a handful of airline programs to customers through Dec. 31.

Bill Me Later ( http://billmelater.com), the smallest of these three services, has about the same promotions. A handful of merchants, including some of the same firms participating in PayPal's rebates, are offering discounts to users of this service.

Many other merchants are providing free shipping to Bill Me Later users; at other sites, customers of this service can have up to $15 of shipping charges on a purchase reimbursed.

Bill Me Later is also letting people wait up to 90 days to pay for purchases at about 150 retailers; at a few dozen more, you can go six months without paying. You would, of course, be unwise to indulge in either of these last two options without having the money you'll need in the bank and earning some sort of interest.

Before you get too swayed by any of these promotions, though, remember that none of them create money out of thin air. In some cases, you're better off ignoring them entirely.

For instance, if your credit card will double the term of a manufacturer's warranty on a new laptop or HDTV, that should be worth a lot more than getting $10 back two months from now.

It's also a mistake to think that any one good deal will last in a market as competitive as retail. Next month and next year may bring different promotions; it may not bring any deals that come close to this season's offers.

The trick with these promotions is to treat them as the temporary distortions in the market that they are. In other words, let yourself be bribed -- but don't stay bribed.