Would you recommend a regular merchant account or pay pal?

[biomutant]

Should i use a regular ol Merchant Account (eg: merchantexpress.com) or Paypal as my sole merchant account. What are the pluses and minuses of each on average?

I notice that paypal seems to have a somewhat hefty transaction fee compared to the other guys, but i dunno if there is a monthly fee, etc. (i say hefty because the price of the goods going up for sale are going to be around $5 or so)

[FavoriteU]

In a word: both.  PayPal is great for small sites, especially when people are not familiar with you yet... they feel safer using PayPal as the minuteman sometimes.  STILL, if I could help it, I wouldn't use PayPal as my only source for a few reasons (I use both):

1. It doesn't take much searching to find many people claiming horror stories with PayPal if a shopper makes a claim or attempts to make a chargeback.  Chargebacks are expensive for anyone, but PayPal seems to have a history of being more heavy-handed here.  I've never had any problems myself (knocks on wood), but haven't had any chargebacks or complaints at that level either.  Do a search and make up your own mind on this one.  But don't keep a large balance in your PayPal account because if you do have trouble they can freeze your funds.  Generally speaking, Merchant Accounts don't hold your funds, they EFT into your bank account within a day or two.

2. Merchant Accounts present legitimacy.  Its not that easy getting a merchant account... verification/application is much more detailed than with PayPal.  That means every website may not have a merchant account and thus there seems to be a bit of credibility attached when you process cards directly.  Again, others have their own opinions on this and it depends heavily on your product and market... but its something to consider.

3. Some users don't like PayPal.  I use both, and my customers use my merchant account about 95% of the time.  I have to believe I would have lost some of those sales if I only offered PayPal.


With that being said, I'm not sure transaction fees with PayPal are much more expensive than a merchant account.  Your actual transaction/processing fees with a merchant account will almost certainly vary from what is advertised.  There are many different levels of credit cards and with each will likely come a different transaction fee.  It costs more to process a rewards card than it does a regular visa... It costs more to process a platinum card than it does a gold card.  Why? Because the card providers charge more to offer the benefits and they pass it along down the line.  Once you become a large store with tons of transactions, you can likely eliminate some of this, but its next to impossible to do it when you are first getting started, and I doubt anyone eliminates it completely... its just a cost of doing business.

Your processing/transaction fees will also be effected by the average ticket sale and your volume.  Something to think about it you are starting small.

With all of this in mind, do your own research.  And there's nothing wrong with starting with PayPal with a plan of adding a Merchant Account in your 3,6, or 12 month business plan.  I think the sooner the better, but to each his/her own.

[WebMuse]

I'm currently looking for an alternative to PayPal.  I have a small shop for one of my businesses (as do several of my web development clients) and was drawn to PayPal because they offer an option that is free of monthly fees while charging 0.30 plus 2.9%, which I can live with.  You will need a Business account, which is also free, you just need to input some additional information into the PayPal system. 

Why I'm looking?  The PayPal Website Payments Standard comes with some unexpected and undesirable side effects.  Eventhough you have said you want to accept credit cards from people without a PayPal account, if the same person, using the same credit card meets one of 2 criteria, they are FORCED to open a PayPal account:
  - the total charge is over $4,000.00 (which is probably unlikely for small businesses)
  - it is the second (or possibly third) time using this credit card to make a payment via PayPal   
Thought that other would want to know about this restriction, especially if you expect return customers.

Their only other option is to upgrade the account to a PayPal Pro account, but this comes with a $30 per month fee.  Currently my sales are far too low to afford this.   

A few years back I was able to create my own page (non-Joomla site) which used PayPal for processing of the credit card, but had no mention of PayPal being the processor.  I really liked this and expected this as an option with Joomla also.  I know so many people who refuse to have their credit card processed with PayPal.  I also have had problems paying via PayPal with my credit card because after asking PayPal to reverse charges on something I purchased via eBay where the eBay seller shipped something other than what I ordered, and then had to force reverse charges thru my credit card company, PayPal now refuses this card number for any transaction.

Can someone recommend a method of receiving payments via credit card that has no monthly fee and is NOT paypal???  One of my web clients has a client in South Africa who we've been trying to get a payment from for 2-3 weeks now.  Please help!

[yerg]

Remember your business isn't about you it's about your customers.

What is their view of the payment options you choose?
Just becaue you like one system doesn't mean they do.

Set up a choice of 2 and see which get's the most usage.
Survey your customers about which they prefer and why.

Paypal is a dead issue in Australia ... especially with the debacle with the eBay issue as well.
We provide direct via out bank = VISA/MC and Paypal options and they are about 50/50 in usage.

[clockwood]

I've been selling via PayPal for several years. Haven't had a single customer complain about me only taking PayPal. The closest I've heard was from people with no credit card at all.

I think 99% of customers would feel safer giving their card info to PayPal than to some seller like us who they don't know.

So many people ALREADY have a PayPal account that the bit about them "needing" to open one is trivial- again no complaints about this, and why would someone want to manually enter their info every time?

Also I don't get the complaints about PP fees, which are about the lowest around, especially for low-volume sellers. Merchant accounts almost always have non-cheap monthly fees even if you make no sales.


> Chargebacks are expensive for anyone, but PayPal seems to have a history of being more heavy-handed here.

It's just the opposite. PP at least attempts to fight chargebacks on behalf of the merchant (you), unlike some companies such as Clickbank which just roll over and pass on the fees. I've won at least half the PP chargebacks I've seen.

If you knew anything about merchant accounts you'd realize that it's the credit card issuer who ultimately decides whether a chargeback sticks or not.

Keep in mind I'm in the US, so attitudes on some of my points may vary in other countries, but again I've had no complaints about PP from any customers anywhere.

[FavoriteU]

The question is not whether your customer's complain because you take PayPal, the question is whether they just quietly move on to somewhere else because you only take PayPal.  Big difference.

> Chargebacks are expensive for anyone, but PayPal seems to have a history of being more heavy-handed here.
It's just the opposite. PP at least attempts to fight chargebacks on behalf of the merchant (you), unlike some companies such as Clickbank which just roll over and pass on the fees. I've won at least half the PP chargebacks I've seen.

Sorry, but a quick look around the internet will tell that this isn't the case for everyone.  The horror stories of PayPal FREEZING people's accounts before you have a chance to respond are numerous.  I've never heard of a merchant account taking more money than the actual chargeback (plus a chargeback fee), but I've read stories of PayPal effectively doing this by freezing an account that had more money in it that the one in question.

Personally, I haven't had any trouble with either, but you should do your own research and make your own decisions.  There is ton of information out there.

I'm in the U.S.  I offer PayPal as an option and most of my customers choose my merchant account.  Do what you want, but I firmly believe you are leaving money on the table if you only offer PayPal.

[yerg]

clockwood you shot yourself down when you said ... Keep in mind I'm in the US

There is no Australian support for Paypal, they do not comply with Australian Financial Services Laws but hide behind them they are under investigation for restraint of trade type activity and belive it or not people here in Australia will use any other system before Paypal.

They still owe me $2000 from 4 years ago by constantly removing funds from my credit card by way of verifying who I was and refused to speak to me when I fronted their US offices with all their emails.

Paypal are the lowest of low life in OZ if you are serious about doing any sort of internet business then you don't go anywhere near them. PERIOD!!

There are so may alternatives in OZ that offer more security, lower costs and are so much more professional
</end paypal rant>

[WebMuse]

Can anyone suggest a credit card merchant account company that has either no monthly fees or very, very low monthly fees?  Until my biz grows, my credit card sales may easily be less than $30 per month, and I'd like to avoid paying more in monthly fees than I have coming in (thru credit cards).  I am willing to pay a much higher percentage of the transaction in fees (at least until the revenue stream grows larger).

Who are you using?
And what are your monthly fees / transaction fees?

Hearing who others are using will assist me in a starting point for my research on who I might want to setup.

Many thanks in advance for your input.
GK

[FavoriteU]

WebMuse, if you are trying to process automatically with a gateway, I don't think you'll find anything for less than $30 as you have to pay both the gateway and your merchant account provider.

If you are processing "offline" you might find someone with no monthly fee, but I doubt it... the smaller your volume the more they need to charge you a monthly minimum or monthly fee in order to recover their costs.

[Gary]

We've been using PP for over 5 years selling highend natural products without any issues surrounding PP.

We even had a merchant account but the fees and holdback charges we're outrageous. We've never had any product returns ever so never experienced anything like that of others.

We took the time to personalize every step of the pp process to keep it uniform with the look and feel of our site.

The other point is that one does not need a pp account to pay via the pp process and we have many clients that purchase this way.

In the early days, pp yes had it issues and horror stories, but I assure you, so does every other system and merchant account out there and the only reason we have or here less of the bad on the others is because of their share of the market use.

Ever read some of the issues around worldpay, internetsecure, moneris and I can name a lot of others.

So, rather then dog pp, why not see how you can make it more of a better experience for the user in the way you use it.

We even include an aticle explaining the benefits and use of pp plus tricks and tips for security. We show our clients we have looked at everything every step of the way. In other words, we handhold them through the process and live help is always available.

So, while other spit on a good system, some of us, like me, have no issue or quarrels with a system that has treated us well and not to mention funds are in our account in under 5 days. Most others take a min 2 weeks and hold back part as holdback fees.

My 2 cents worth...