In my last post, we talked about things you need to be aware of when considering which company to choose for your merchant account.  Today, let’s look at what PayPal has to offer and in my next post we’ll look at what Merchant Warehouse has to offer.

PayPal

Yes, PayPal offers more than just an account to pay for things with.  PayPal in fact has a wide range of services.  They offer two types of merchant accounts – standard and pro.  With both accounts you are charged a percent of sale and a transaction fee.  These two fees are pretty standard with all merchant accounts.  The requirement for the standard account is that your customer must leave your site to go to PayPal to complete the transaction.  With the pro account, you are charged a monthly fee in addition to the other two fees.  The advantage with this account is that your customer stays on your site and completes the transaction through your shopping cart.  PayPal claims to easily integrate with about 200 different shopping carts which will give you flexibility in choosing the shopping cart that is appropriate for you.

If you have your merchant account with PayPal, use of their gateway is included in the price of the merchant account.  All of the other companies I have researched also charge a monthly fee for the gateway.  Remember though, that you have to take all the fees into consideration prior to choosing a company to go with.  The fact that they do not charge for the gateway does not automatically make them cheaper than other companies.

PayPal also offers services such as recurring payments (something you would need for membership sites), fraud prevention, reporting and management, backend integration and several others.  Make sure you understand the fees associated with the add-ons they offer.  If you are unsure of whether you need an add-on or not, go ahead and get it but if you find you do not need it, cancel it immediately.

Another requirement when doing business with PayPal is that you have a business PayPal account.  All payments from PayPal’s merchant accounts get deposited to your business PayPal account.  What I am unsure of at this point is what the fees are for the business PayPal account.  Is there a charge for transferring money out of that account to your bank account?  If you use that account to purchase goods or services, is there a charge for use of the account?  These are all things that you would have to take into consideration when choosing PayPal as your merchant services provider.

I like the flexibility with PayPal to be able to use it on a “pay per use” basis.  This is a great feature if you are just starting out and want to “test the waters” so to speak.

PayPal claims that you will save as much as 16% on your merchant account fees when using their services.

If you have any experience with PayPal merchant services or any additional information, we’d love to hear from you.

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Several months ago we were in the market for a merchant account for another site that we have been working on.  The site build was taking much longer than it was supposed to and I felt pressured to make sure that we didn’t do anything to hold up the process.  As a result, I made some hasty decisions with regard to our merchant’s account.  Decisions we’ll be paying for monthly for over 3 more years.

While I am sure that most of you know what a Merchant’s Account is, there may be a few that do not, so let’s first talk about what it is.

What is a merchant’s account?

A merchant’s account is what allows you to accept credit cards in payment for goods and services.  Along with a merchant’s account you also need a gateway and a bank account.  A gateway is like a clearing house for credit cards.

Who needs a merchant’s account?

Anyone that wants to accept credit cards for payment will need a merchant’s account.  I would have to say that all offline businesses have a merchant’s account.  I can’t imagine any that do not accept credit cards although I am sure there are some.  Not accepting credit cards does not make good business sense though.  There are many people these days that do not carry cash.

Things to consider when researching merchant’s accounts

First, don’t assume that your banker knows anything about merchant’s accounts.  This is the first lesson we learned.  We went to our bank and spoke to the commercial banking representative.  She told us that she didn’t know a lot about merchant’s accounts but explained that they regularly worked with a specific company (which shall remain nameless for now).  Little did we know, she did not really have a clue about merchant’s accounts.

Second, if you learn that you have to sign a contract for any length of time – RUN!  Any merchant services company that wants you to commit long-term is probably doing so because their service is not what it should be or they are very over-priced.  Locking you in is the only way they can keep customers.  There are many reputable companies out there that work on a month to month basis.  These companies are going to be highly motivated to provide good customer service in order to keep your business.

When evaluating companies on prices, be sure you have all the facts.  All of the companies that I have researched charge a percent of sale as well as a transaction fee.  Some companies also charge a monthly fee and a fee for the gateway.  Some companies (like the one we are with) have an annual fee that can be quite steep, especially when you are not expecting it.   When trying to determine which company to go with, be sure you know all the fees associated with having an account with them.  Don’t be surprised by hidden fees.  Believe me, the fees can break the bank if you are not ready for them.

In my next post, we’ll talk about a couple of different merchant services companies.  Either one would have been a much better choice for us.

What’s your merchant’s account story?

photo credit Andres Rueda