Merchant Account vs. Paypal

[newage1952]

I'm getting pressure to obtain a merchant account for my business. My website is not up yet. I thought it would be just fine to use Paypal. As a consumer I have purchased online and used my Visa to make a payment via Paypal. So, why are people trying to convince me to open a merchant account that is going to cost me more money. As an initial business, I'm trying to spend the least amount that I can since I don't have a big financial resource. Seems like people don't see Paypal as being able to pay using their credit card. Can someone shep a little light on this for me?

Thanks,

newage1133

[gailcav]

Some merchant accounts have lower fees than PayPal. It would also be a good idea to investigate the security of the transactions for your customer's sake. What happens if you have questions about the account and how will you insure you get quick answers to your questions? Is there 24 hour tech support?

If you are using QuickBooks, Pay Pal does not integrate with this program and your transactions have to be manually entered into Quick Books. It is a good idea to investigate the programs.

[nevaeh.aaric]

We use our regular merchant account for customers who want to pay with their credit cards. We use PayPal as another option for customers who want o make use of funds that are stagnant at PayPal.

[frdsmth9]

We use our regular merchant account for customers who want to pay with their credit cards. We use paypal as another option for customers who want o make use of funds that are stagnant at paypal. We give our customers the option to choose whichever is convenient for them. So far, it is working well for us.

[nimroid]

The main difference is the minimum sales and rates they charge you. Paypal is usually higher.

[JEccles]

Ahhh...but does'nt Paypal only charge you per transaction? With a merchant account you have the transaction fee along with a monthly processing fee. Business has been so slow on my personal site that I am going to eliminate the merchant account and stick with Google Checkout and Paypal - at least for now.

[tobylee02]

just using paypal allows the customer to use either a credit card or their paypal account. They dont have to have a paypal account to pay by credit card. It was very easy to set up but I expect their commission rates are higher than a merchant account so once volume increases it is probably cheaper to to a merchant account

[Collabora]

It depends how much volume you have. Don't let the debate stall your store deployment. Go with paypal now and then shop for a merchant account after all your other issues are resolved.

[nelsonkist]

Is there a study comparing the conversion rates between paypal and regular merchant account? I would assume paypal users would prefer using paypal, but I don't know about the non-paypal users.
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Website Merchant Account Versus Paypal

[lpalli]

I started with just PayPal but thought it seemed a bit unprofessional. Too "ebay-ish" (nothing against eBay - I do a lot of business there).

When I added the merchant account I had fewer abandoned shopping carts. Nothing to crazy, but definitely fewer.

I just think it is more professional than PayPal. I still have PayPal as an option on my site and since I get a lot of bleed over customers from my eBay selling that option is used about 25% of the time.

My merchant account only costs $25 / month I believe (minimum).

lpalli

link removed.

[sorella]

The biggest challenge for the ecommerce store is to communicate legitimacy and trust. Legitimate retailers don't just accept Paypal. They accept Visa, Mastercard. You can definitely sell online with just Paypal, but you'll be limiting your upside.

[greenandchic]

When I first started, I was tempted to just use PayPal. I decided to only use a merchant account for a while. After a few months, I added PayPal business went up about 25% with those customers using Paypal. My point is, its good to use both. When I shop online, I like to have a choice, unless I'm shopping on Ebay or Etsy where I now Paypal is my only option.

[matta.doors]

I used PayPal and if you have the time to fool with the bad customer support and poor response to inquires it is fine. Oh I also did not like the fact that they are NOT held to the same standards that banks are and can pretty much do what they they want with both you account and the funds held there in.

We switched about 2 years ago to a true merchant account with a Interchange provider and it has been the best move we made when it comes to taking $$. Yeah some have mentioned that it is more professional looking but I think the big changes are in the way the Merchant provider protects your business and it intrest. My only added comment would be to be sure you get a good rate .....

I had a friend that had a Interchange Provider go over his statements recently and got me in touch with them. I was looking at getting a tiered pricing from a Merchant provider, but the Interchange Provider said they could approve me for a "Interchange Flat and a 2 cent Auth fee Program". ( same program my friend got approved for) I did need to qualify and show them some statements proving Volume, types of cards, # of transactions, and things of that nature. They did my friends account and ended up saving him a good chunk of change, so I gave them a shot and have been pretty pleased since.

Hope this helps.

Matt

[tinabrandon]

The advantage of a direct merchant account is that you have greater control over your account, including cash flow and customer service. Additionally, although many people use PayPal, there are lots of people that do not like using Paypal and won’t buy from your site if that is the only way to pay. Payment processing is simply part of the cost of doing business. But, if you are concerned about doing things as cheaply as possible, and won’t be processing more than a few thousand dollars per month, PayPal is a decent option for a start up company.

[i360gov]

You can also try out the company 2Checkout.com as it has a low account setup fee and then is like a merchant account (but technically not one) and also accepts Paypal.