CASE STUDY

Identify at least three (3) payment processing options that might be suitable for TMH. Include explanation, advantages and disadvantages for each payment option selected.

Case is as followed

Rod and Martha Nelson started The Moose Hut (TMH), a gift shop in Calgary, Alberta, more than 15 years ago. The Nelsons have capitalized on the tourist trade drawn by the Calgary Stampede, which is one of the largest rodeos in the world. The shop sells a wide range of Canadian-themed items to rodeo fans and other tourists who visit central Alberta throughout the year. TMH's offerings range from inexpensive food items, such as pure Canadian maple syrup and smoked salmon, to much more expensive handcrafted gifts, including Inuit and First Nations artwork. The company's trademark product, the Moose Mug, is one of its biggest-selling items. Many of TMH's customers return to the store whenever they visit Calgary. TMH's line of Canada Day Party Favours is especially popular with homesick Canadians who have moved to other countries, and TMH has been seling those products by mail order for the past several years. After reviewing the sales numbers for these mail order items, Martha has decided that it might be a good idea to expand the mail order operation and begin accepting orders through a Web site. Many of the store's items have a high value-to-weight ratio and would be easy to ship to customers around the world. TMH currently accepts only checks denominated in Canadian or U.S. currency in its mail order operation; however, taking orders on a Web site will probably require the company to be more flexible in accepting multiple payment methods. Rod and Martha asked you to help them examine payment processing altematives for TMH's new Web business. To be acceptable, a payment processing method needs to handle all major credit cards, perform currency conversions, and be available to a Canadian merchant Most important is that the payment processing method must be reasonably priced. The margins on most gift items at TMH are between 10 percent and 30 percent of the selling price, but the extra costs of shipping and handling items sold through the Web site reduce those margins by another 5-10 percent of the selling price. TMH would like to keep overall payment processing costs below 4 percent of the selling price, if possible