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How do I pay for AdWords and What Billing Options do I have?

Prior to Q4 2013, new Advertisers had two main payment options when signing up for AdWords - they could pay before they received clicks (Prepay), or pay after clicks have accumulated (Postpay).  Beginning in Q4 2013, Google removed the option for advertisers in the US to use their Prepay option.  In my opinion, this was a welcome change as there were challenges and drawbacks to the Prepay option, such as having your Account run out of money and your Ads going offline.  Removing the Prepay option now gives advertisers one less option to consider when signing up.  Let’s dive into how Postpay works.

 

Postpay Billing

 

Essentially the AdWords Postpay method allows advertisers to go on “credit” terms with Google.  Advertisers enter in a valid payment method (details below), submit necessary data, such as name and billing information, and then their Ads launch.  Advertisers are then billed 30 days from the date of their first click cost, or whenever their billing threshold is met.

 

What is a billing threshold?  Since Google essentially offers advertisers “credit,” advertisers first have to build up a successful payment history with Google.  First time Accounts are allowed to accrue $50 in click costs and then Google automatically bills them.  After successful payment, advertisers are allowed to accrue up to $200 in click charges before they’re billed.  The process repeats at $350 and is then capped at $500.  Every time an advertiser spends $500 in AdWords click costs, or every 30 days (whichever is first) they are billed.

 

Payment Method Options

When signing up an AdWords Account, advertisers have three payment options –

 

  1. Credit Card  - submit a valid credit card
  2. Debit Card – submit a valid debit card
  3. Direct Debit – link an AdWords Account with a valid bank account

 

Submitting a valid payment option is necessary for Google to be paid for their click costs, and for the billing process to be automated.

 

What Payment Method is Best?

Which payment method to select is a matter of personal preference.  Some consumers like to keep their credit/debit cards reserved only for certain types of business expenses or prefer not to deal with the hassle of being invoiced from their credit card company so they’ll link directly to their bank account.  My opinion: link your AdWords Account to a credit or debit card that offers you reward points.  This is a great way to accumulate rewards for yourself or your business, while still effortlessly paying for your marketing activities.  If you do elect to use a card, be sure to take advantage of adding a back-up payment method.  Adding a second card will ensure that your Account stays active.

 

Final Thought on Payment

While Google AdWords provides advertisers with the ability to automate the billing process, advertisers should be aware of, and monitor their billing invoices.  Whatever method an advertiser selects, he/she can log in to their AdWords and review their invoices.

about Brian Valentini

Chicago-based husband and father who likes sports, traveling, and laughing. Excited about the field of Digital Marketing, especially Paid Search. Work-life = Vice President/Director of Search Marketing at DigitasLBi, a global digital marketing and technology agency.

Comments
Mini-CM Community Manager
February 2014

Thanks for posting this Brian. 

Penchala P
December 2015

WHAT IS Authorization failed: No reason provided by your financial institution


vkore91 wrote:

Prior to Q4 2013, new Advertisers had two main payment options when signing up for AdWords - they could pay before they received clicks (Prepay), or pay after clicks have accumulated (Postpay).  Beginning in Q4 2013, Google removed the option for advertisers in the US to use their Prepay option.  In my opinion, this was a welcome change as there were challenges and drawbacks to the Prepay option, such as having your Account run out of money and your Ads going offline.  Removing the Prepay option now gives advertisers one less option to consider when signing up.  Let’s dive into how Postpay works.

 

Postpay Billing

 

Essentially the AdWords Postpay method allows advertisers to go on “credit” terms with Google.  Advertisers enter in a valid payment method (details below), submit necessary data, such as name and billing information, and then their Ads launch.  Advertisers are then billed 30 days from the date of their first click cost, or whenever their billing threshold is met.

 

What is a billing threshold?  Since Google essentially offers advertisers “credit,” advertisers first have to build up a successful payment history with Google.  First time Accounts are allowed to accrue $50 in click costs and then Google automatically bills them.  After successful payment, advertisers are allowed to accrue up to $200 in click charges before they’re billed.  The process repeats at $350 and is then capped at $500.  Every time an advertiser spends $500 in AdWords click costs, or every 30 days (whichever is first) they are billed.

 

Payment Method Options

When signing up an AdWords Account, advertisers have three payment options –

 

  1. Credit Card  - submit a valid credit card
  2. Debit Card – submit a valid debit card
  3. Direct Debit – link an AdWords Account with a valid bank account

 

Submitting a valid payment option is necessary for Google to be paid for their click costs, and for the billing process to be automated.

 

What Payment Method is Best?

Which payment method to select is a matter of personal preference.  Some consumers like to keep their credit/debit cards reserved only for certain types of business expenses or prefer not to deal with the hassle of being invoiced from their credit card company so they’ll link directly to their bank account.  My opinion: link your AdWords Account to a credit or debit card that offers you reward points.  This is a great way to accumulate rewards for yourself or your business, while still effortlessly paying for your marketing activities.  If you do elect to use a card, be sure to take advantage of adding a back-up payment method.  Adding a second card will ensure that your Account stays active.

 

Final Thought on Payment

While Google AdWords provides advertisers with the ability to automate the billing process, advertisers should be aware of, and monitor their billing invoices.  Whatever method an advertiser selects, he/she can log in to their AdWords and review their invoices.


 

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