PayPal vs. a bonafide merchant account

[Bubzeebub]

What do you experienced online merchants have to say when it comes to comparing a paypal checkout vs. a real merchant account?

How do you think customers feel about a site using PayPal vs. a direct merchant account?

[GaryS622]

I think PayPal is a fine solution for facilitating the occasional eBay transaction or maybe a store you're doing as a hobby, but I think it's a little expensive comparing to a CC merchant account if you're really running a business - compare all those transaction fees to those charged by a CC merchant account (just disable Discover, as they rip you a new one).

As a consumer, I'd rather use my CC than my PayPal because it's just so much simpler. PayPal is a whole other website you have to visit and manage their control panel. And that's me talking as a relatively web-savvy guy. PayPal confuses the heck out of some people.

In short, if you're running a business, I think you need a merchant account/gateway setup and accept MC, VC, and AMEX.

[ngentot]

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.

So assuming you have 2 identical online stores, one using PayPal and the other a regular merchant account, which one is more likely to have higher conversions?

[Brett_Tabke]

> vs merchant

Depends on the sector and target audience.

I've seen paypal beat a standard merchant account 3-4 to one in conversion rates.

I've also seen it go the other way on higher ticket items.

That is not the benefit to me - the real winner, is in the fraud control. I've watch our own and friends put millions through PayPal without so much as a few hundred -- maybe a thousand total -- in chargebacks or fruadulent translations (well under fractions of a percent). Tradiditon cc processing runs about 2-4% fraudulent or chargeback based (eg: you get taken).

[harj]

hi! ummmm...

how many different types of methods are there for online payment?

obviously paypal, theres SSL.. are there any others? if there are loads, what are the main 3-5?
anyone know please?
cheers!

[ichthyous]

I had 2Checkout for my store. Their solution seemed to fit my needs perfectly, until I actually started to have transactions to process. I sell high value items (between a few hundred to a few thousand dollars) and they simply couldn't/wouldn't release my funds. In the end it got **VERY** nasty between us. i have never dealt with more unprofessional people in my life. I now use Paypal...no worries about fraud, I get paid immediately, and it goes firectly into my account. Not sure about those comments about Paypal fees. yes, they are high, but so are everyone else's. Paypal charges 3% while 2checkout charged 5%. The major drawback with Paypal is that people do not want to set up an account. This has never killed any of my transactions, but I do wonder what impression it makes and if they will think twice next time.

[coolmacguy]

This has never killed any of my transactions

I have wondered about this. How do you know that it hasn't cost you transactions? Like if someone wanted to buy something from you but then decided not to because they didn't want to sign up, how would you be aware of that? Some kind of tracking/logging?

[ichthyous]

Well you cant ever be sure. I sell art online so my customers can't find what I sell anyplace else. if they want what I have they have to buy with Paypal. By the time they have found something they like, negotiated a price, etc. they have done so much work that they arent going to back out just becuase of paypal. Also, Payapal is the very last step in the whole process...so they dont know that they will have to go through signup until the end. I do wonder what impression it makes on people though. I think Paypal may still be seen as being "cheap"

[Bubzeebub]

I know I, as a customer, would always see PayPal as cheap. I mean...I would ask myself 'Do established, legitimate business use PayPal?" If not...then I shouldn't be using it either (at least not as a primary payment option).

[ScottM]

Selling high-ticket items I noticed about a 10:1 advantage of a traditional merchant account vs. Paypal. I've never had one chargeback. Not even one. Perhaps the industry I am in just isn't interesting enough.

The one thing that annoys me about using Paypal on MY end is the phishing emails. That's not Paypal's fault, but with the steady stream of them coming my way it makes each transaction (both in and out) a little worrisome. I can ignore the Citibank emails because I don't have a Citibank account.

[CernyM]

We offer PayPal as an option in addition to regular checkout. 10-15% of our customers take advantage of it. It is not at all uncommon for women to have a bit of "fun money" in a PayPal account that they use to purchase just the type of goods that we manufacture and sell.

We also use PayPal for payment processing on all orders that we accept from outside of the US and Canada. My basic assumption is that PayPal has better automated anti-fraud capabilities than I do. (Obviously, I don't accept orders that don't pass the smell test.)

[rfung]

Considering that Paypal now has the ability to allow your customers to pay without signing up, does this change anything? I just didn't see anyone comment about this on this thread.

At godaddy they now accept paypal. I still prefer to pay through their regular credit card processing scheme.

[ichthyous]

Paypal's "automatic" signup feature doesn't really work. My store is fully integrated with Payal and customers still have to sign up. I called Paypal customer service to ask why this was and they said that any transaction over a certain dollar value (I believe it was $1K) wasn't eligible for auto signup. it may work for smaller transactions.

[elguapo]

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.