Recently I was on one of Facebook’s groups that I belong to, the question was asked again. Do you think it is better to use PayPal or a merchant account to run a company? I was a monthly marketing teleseminar with merchant account vendors, and this question was asked in almost every conversation.
PayPal Let’s Take a Look
You’re probably acquainted with PayPal. It’s a third-party processor. You, the merchant, do not have access to your customer’s credit card numbers. PayPal takes it in and deposits the money in the PayPal account. Then, you can use the cash by either paying for purchases using PayPal or using your PayPal debit card in order to use the funds or transfer the money into your bank account, which will take about two days.
You don’t require an online shopping cart to make use of PayPal. You can design buttons directly within PayPal to put on your website or emails. There are several carts that integrate with PayPal, but if you choose to utilize one.
Usually, the merchant is typically charged 2.9 percent of the transaction fee to make use of PayPal. There are lower rates for merchants that have higher annual sales.
What is a Merchant Account?
Merchant accounts allow you to accept debit cards from your credit card directly. You’ll have a connection with a merchant like DirectPay, PowerPay, Stripe, or even your personal bank. Behind them is the gateway, such as Authorize.net or Verisign, which allows online transactions. This is the information about your account for your gateway, which you’ll create in your shopping cart to accept the payment.
Although you can manually input transactions through a gateway for the majority of online sales, you’ll need an online shopping cart that works with an account for merchants.
The fees for merchant accounts are usually quite complex. There will be fees per transaction. They’ll be around 2.6 percent plus 30 cents for each transaction. If you don’t swipe your card, for instance, when you make online purchases, it will be more expensive. There is almost always an annual minimum amount for charges. Suppose it’s $25; for instance, If your transaction costs during the month amount to more than $25, then you’re covered. In the event that they do not, then you’ll be charged the amount they add up to and the amount of $25. There are also monthly statements – typically around $10, as well as a monthly gateway fee typically approximately $10.
Oh my! Pretty confusing, huh? It seems that all the fees have to result in a higher cost than PayPal does, isn’t it? Not necessarily. I’ll go into the subject in a minute.
The funds from the transaction will be transferred to your bank account within two days.
What do you think of the opinions of customers?
Does accepting PayPal impact how customers view your company? Do they hesitate to purchase from you if you just accept PayPal?
When I first started my business over a decade back, PayPal was seen as the less professional option for small-scale businesses that we’re unable to have the money to open the expense of a merchant account. Online companies were just beginning to take off as merchant account enabled the online store to appear more like a real offline business.
The situation is different today. There are large and reputable companies that utilize PayPal. I don’t believe that the image of businesses can be damaged when using PayPal in the present.
How Can You Decide?
It boils down to two factors. The first is financial. Although merchant accounts do have many of these costs, there’s an annual sales threshold at which PayPal’s transaction fees are more expensive and will be higher than a merchant account’s fewer transaction fees, plus the other costs. Make the calculation for a specific vendor and check what it is in relation to the projected sales.
The other aspect is customer service. I’ve had no issues with PayPal; however other customers have. I’ve also heard of online marketers whose merchant account was suddenly shut down during the middle of a significant launch. If you’re a user of an account with a merchant and you’re a merchant, you’ll probably require assistance at some point. I would prefer to call the service for any issues that could be complicated regarding transactions online. If you’re thinking of purchasing a similar account, you should do some investigation or ask your peers to recommend a merchant account with an excellent reputation for customer support.
What account should I use? I had an account with a merchant, but currently, I make use of PayPal. I’ve never experienced a significant issue with either and have never had a customer who was skeptical about using PayPal.
Keep in mind that this is only your next choice, not your final one. You are always able to alter your mind!