When opening an online business you have two main choices for accepting debit and credit cards available. The first is either a Merchant Account or a PayPal account. Choosing the best one for your online business will depend on a few factors, one of which is the number of transactions you will have, how customized you want to make the checkout process and the budget that you are working with.
Here are a few differences to a Merchant Account vs. PayPal:
When a customer makes a purchase through your website and you have set up a PayPal account then they will be redirected to PayPal to complete the process. They simply enter in their card information and PayPal then uses their own merchant account to process the payment. One set back to this method is the fact you do not have total control over the checkout experience. PayPal also charges a percentage for each transaction instead of a monthly fee. While it is true that more people that choose to shop online are accustomed to use PayPal, extra steps required during the shopping checkout can lead to purchased being left behind. PayPal is also unable to calculate specific shipping and depending on your business type this can become an issue. Should PayPal suspect any fraud they will lock your account while you work to resolve the issue and you will not have access to your funds.
When setting up a merchant account this is done at either a bank or another type of financial institution and a payment processing company is used as well. There are financial institutions that provide both merchant account and credit card processor as well like IBS. The payment processor works like PayPal in that they take customers credit card information through your payment gateway on your website. Once the processing has been completed then the funds are added into your bank account. This process takes typically two business days. In a merchant account vs. PayPal you get your money faster. With PayPal you have to wait for the funds to be added to your PayPal and then transfer those funds to your bank account which can take as long as a week. It is true that a normal merchant account will charge a monthly fee, however, it is more flexible and PayPal is unable to match it. Merchant accounts also offer a way to set up your shipping options the way that you want.
A merchant account will also give you peace of mind by giving you a secured payment gateway and customer’s data is protected because their information never leaves your website. PayPal on the other hand has policies that are different in regards to customer’s privacy. PayPal is open in stating that they share customer information with eBay, their parent company, and third-party market research companies.
PayPal is the most common payment solution for small businesses that are looking for a faster way to accept credit cards and a merchant account is ideal for those that want and need a more flexible solution and options for their business. These are the options that are available to you with a merchant account vs. PayPal.
There are several merchant account providers that offer comprehensive merchant account services and secure payment gateway system like InstaBill, International Bank Services (IBS), WorldPay, Sage Pay, etc. Choose the right one for you and let your business flourish!