PayPal Merchant Account vs All Others

Which merchant account do you use?

[alexandermcgee]

I'm currently using PayPal for all my credit card processing, my merchant accounts are there. I'm really tired of the inconvenience, and the high fees.

I'm considering switching Merchant Accounts, and was wondering which ones you've all used, and liked, or not liked, and what you would recommend.

The other main one I'm looking at is B of A, because my accounts are there. Has anyone tried Bank of America Merchant Services?

So what service do you use, and would you recommend it?

Thanks.

[oliondor]

Not sure merchant accounts are better actually ? (and I am one of the Paypal haters !)

[dpd1]

Typically you are still going to have fees, but just a different flavor. It depends on your volume and what your numbers are, as to which one works out best as a whole. But you're going to pay one way or another. If you're low volume, PP is probably still going to be the better choice.

[HRoth]

Paypal might have higher fees, but you know exactly what they are. When you have a gateway and payment process and merchant account, you have fees for all those things. There's a fee for address verification that is not part of the discount rate. There are fees for declines. There's a fee if you credit someone back (Paypal returns the fee for that). There are usually monthly fees for a bank account and for payment gateway, plus usually there is a fee for the fraud detection on the gateway. There are batch fees for every time you settle and a fee for every chargeback, often even if you win it. Plus I have found that payment processors will do absolutely everything they can to cheat you and to lie to you and hoodwink you about EXACTLY what you are paying, to the point that the only way you really know exactly what you are paying with them is to subtract what turned up in your bank account from what the gateway says you processed. There are so many layers of blood sucking with a merchant account, payment gateway, and payment processor.

In contrast, you see exactly what Paypal takes up front, right on your account. There are no other fees. They don't even charge you a fee for a chargeback. The bad thing about them is if you get on their shirt list, they will cut you off and refuse to even speak to you, like you are in eighth grade. It is not business-like. And they will invent violations that do not exist in their rules. You can almost hear them tossing their hair as they flounce off in a huff.

So a merchant account is like a grifter, whereas Paypal is like immature teenaged girl.

[jrockfl]

I started off using just PayPal. It was easy to get setup.
As my business grew, I implemented credit card processing using Authorize.net as the gateway and Chase Paymentech as my merchant account.

I still over PayPal as an option

[jrockfl]

I still offer PayPal as an option.

[scoopydbc]

"So a merchant account is like a grifter, whereas Paypal is like immature teenaged girl"

Made me laff that one!

Also is there any evidence to suggests that customers are more aware of/trusting of paypal?

[jadebox]

"Also is there any evidence to suggests that customers are more aware of/trusting of paypal?"

I think it's a wash. On the one hand, you have the people who realize it's safer than entering their credit card number on the merchant's web site. On the other hand, there are some people who just don't like PayPal or don't understand that a PayPal account is not required to complete their purchase.

If you sell low-cost items I'd recommend offering PayPal at least as an option. A lot of people think of money in their PayPal account as "play" money and will be more likely to use it for impulse purchases.

[HRoth]

I offer both and I use both myself as a consumer as well. Like jadebox says, some people really like Paypal and others don't want anything to do with it. I use it myself when I feel there is anything the slightest bit dicey about a site or if I don't feel like filling out a bunch of forms. I find that about 40% of my sales come through Paypal.

[dpd1]

I've found that most people are OK with PP, but the people that hate them, really hate them. To the point of being hysterical about it. But I've found that a lot of that hate stems from nothing more than urban myth in most cases. They're easy to attack, because they are so well known. The average person on the net knows exactly who PP is and has most likely heard horror stories, whether real or fiction. But some random authorizing company... Most average people will not even know who they are, or even really see them... since they mainly work behind the scene.

One of the potential issues with PP, is that there's still people who think you have to be a member. This has not been the case for a very long time, but the myth lives on. Plaster it all over your site that they can use a card just like any other site. And if you send a request to somebody, include in the communication that they can pay using PP or a card.

Taking little steps like that can make a big difference with any of the potential PP haters. Every once in a great while you will still get a die hard hater, but you have to weigh the cost of having a whole other system, just to make those minority happy. Probably not worth it when doing low volume. You would lose less money just letting those people go.

That said, PP is certainly not perfect. You will have issues now and again, but you will with most others as well. It's kind of like... Go find a bank that you won't have issues with once in a while, in this day and age... Good luck.

[particleman]

Confusing what this thread is about. Paypal offers web payment standard which is extremely easy to implement utilizing the button. It also offers a web payments pro solution which is a full blown gateway API.

I've used both, I still believe web payments standard integration and more importantly implementing express checkout offers a worthwhile convenience to your customers. A lot of ours use them both.

If we're talking about Web Payments Pro, I've had positive experiences with it for many years and is the primary way I implement credit card processing. This is transparent to the customer as they don't know how the card is processed directly on your site.

The biggest downside to paypal in general is using their administrative portal/ web back end. It is a mess of new and old UI from years past. It is frustratingly slow if you do any quantity of shipping labels from there. Shipping labels at the very least should have a notification api similar to IPN. Bugs are common in the portal from my experiences. Pro accounts also have an additional portal which yet again is a totally different UI experience, very confusing. Overall those are my complaints as a merchant member.

[votrechien]

Unfortunately we're not eligible for a PayPal merchant account due to the fact we're Canadian, but if we were American I'd switch to PayPal in a heart beat. PayPal is about as transparent as you'll find in a merchant provider for fees.

There's reasons to hate PayPal but fees IMO is not one of them.

[oliondor]

Use Stripe and Paypal.

Web Payments Pro is still boring as customers can still make a dispute.

I cannot stand these paypal disputes that customers open with no reason.

Cannot send US customers chargebacks also.

Lukily I make so huge profit on their axx that it helps me to accept the few monkeys that every online shop has to fight with.

[DancingBayLLC]

I started out with a merchant account with Authorize.net. After 12 months, not one customer used it, they all used PayPal, so I dropped it. The other thing is that as someone else said, there are a bunch of other fees with a regular merchant account, the least of which is a minimum monthly charge. I think my was $25 or $30/month. I did a cost comparison and found that I would have to have something like $3000 in sales per month for the merchant account to break even with PayPal.

[CardWhisperer]

First and Foremost when you get a Paypal account you are not actually getting a merchant account. You are getting a piece of Paypal's merchant account because they are an aggregator. As a result, they are able to inconvenience you in any way they see fit. This includes delays in payment as well as super high fees.

B of A gives decent rates but will nickel and dime you on monthly fees, gateway fees, and per transaction fees. If you are doing international transactions they stick it to you on those as well. Lastly, B of A is actually a third party processor. They are sending all of their accounts through First Data who is the bank actually setting you up with an account. First Data is pretty solid, however, depending on the risk level of your business there can be some unforeseen problems down the road. If the chargebacks are too high they will stick you with a 25% reserve and then start asking questions. Usually does not happen the other way around. The gateway of choice for them is Authorize.net but there are many others that they are compatible with as well. Just know if you elect to sign up for a gateway through them directly they are going to charge you quite a bit unless you get tough with them.

[Mr Bo Jangles]

I've used 2checkout for more than a decade, and have had little pain. Total fees are 5.5% or thereabouts currently. I don't have a merchant accout and so it's a bit like PayPal - you virtually use theirs.
They transfer payments into my bank account weekly.
I wouldn't change from 2checkout unless I got similar type service and features for half the price - and that's not likely to happen.

[jsinger]

The other main one I'm looking at is B of A, because my accounts are there. Has anyone tried Bank of America Merchant Services?

We just dropped BOA after using them for many years. Their fees were once good but skyrocketed in late 2011. I could shoot myself for not catching it sooner. Yes, they are masters of nickel and diming.

Two months ago I complained to BOA and they lowered our rates somewhat. But too late. They lost a damn good account by gouging us.

I did consider using PayPal for all processing. Their rates were fair. We just started accepting PP itself at our ecommerce site and I'm surprised how many orders are paid with it. Their telephone people were extremely helpful in getting us set up. You certainly won't get that kind of service from Bank Of America.

[piatkow]

I wonder how PP usage compares across countries?

In the UK I have never had a request for PP and don't know anybody who has admitted to keeping a balance with them.

Their charge per item is high but when I investigated them that was all you paid, no set up fee, no monthly fee. I use a UK based company with the same charging model but had the advantage of not charging a chargeback fee which PP did at the time. That didn't prove to be an issue as I have never had a chargeback.

[Planet13]

I've offered the "standard" paypal payment along with visa / mc / amex / discover through my gateway / processor (RBS worldpay, formerly Lynk), for about 5 years now. I would say only about 10% of our customers use paypal.

We have two sites: one sells women's clothing, another sells home decor.

[jsinger]

I would say only about 10% of our customers use paypal.

What country are you located in? We're approaching 20% PP (in the USA). That is for percentage of orders, but PP orders tend to be smaller than other cards, especially Amex.

[dpd1]

We just dropped BOA after using them for many years. Their fees were once good but skyrocketed in late 2011. I could shoot myself for not catching it sooner. Yes, they are masters of nickel and diming.

Two months ago I complained to BOA and they lowered our rates somewhat. But too late. They lost a damn good account by gouging us.

I did consider using PayPal for all processing. Their rates were fair. We just started accepting PP itself at our ecommerce site and I'm surprised how many orders are paid with it. Their telephone people were extremely helpful in getting us set up. You certainly won't get that kind of service from Bank Of America.

Wasn't that right around the same time BoA also tried instituting the infamous 'fee for debit card use' deal?

I have always said that I think PP gets a raw deal. I'm not going to say they're perfect, because they aren't. But they are not nearly as bad as what some in the public think. I think they have just become one of those typical 'rage against the man' type of companies, that some people love to hate. But in most cases, when people talk about the negative things... it is usually something they picked up from some website or "heard" from somebody... not an actual first hand account.

In the negative department, I have found the one major thing, is that they are really lazy with their development. With how much they make, their site should be WAY better, and offer way more features. Also... Every once in a great while, you will have a payment denied. What they will do is tell the customer that it was because of you. Then they will tell you, that it was because of the customer. To be honest, I don't think it's deliberate... I just think that, very few people working there have access to see what is actually going on. When the system does something, they literally have no idea why in some instances, and no way of finding out. I've found that the best thing to do, is look in the API and see what the code is for the error, then look up the code to see the possible reason for denial. Then when you call them armed with that, it gives you more leverage to get an answer.

On the positive... I have sold countless items to some of the least progressive places on earth, and never had a problem. Something I would have great difficulty doing with most other systems. And I have talked to people there, who are far above the typical robo support that you get with a lot of orgs. Sometimes you have to dig to get them on the phone, but they are there.

[piatkow]

What countries are all these posts from? As a Brit I can't see the point of having a PP account. I already have debit and credit cards and an associated bank account, how would I, as a purchaser benefi, from having a PP account as well?

[jsinger]

I'm from the US. One nice thing about PP is their rates, which vary with 3 or 4 volume tiers, are simply stated on their site:

[paypal.com...]

For example, the $10,000 to $100,000 monthly web tier rate is 2.2% +30 cents a transaction. There can be some additional charges, but not many.

Their American Express rate is 3.5% which is a little on the high side. I believe all processors charge more for Amex which is worthwhile. Our Amex average transaction is probably 15% larger than with Visa or MC.

While PP rates are about as simple as they can be, they do have confusing payment plans: Paypal Express, PayPal Payments Advanced, PayPal Standard and more. And those seem to change occasionally.

PayPal also offers a service called Bill Me Later that allows credit worthy buyers to get 6 months interest free to pay for a purchase.

We've only used PP for PP, not for general CC processing. We've used PP for a few years for our small amount of EBay selling. We just started using it on our website about 2 months ago, so I'm certainly no expert. But so far, I have zero complaints. We've had no chargebacks, no fights with customers, and just a few normal refunds. So as far as the common merchant gripe about PP always siding with customers, we have no experience with that yet.

One other thing: I adore the idea of NOT using one of our Too-Big-To-Fail banks, ESPECIALLY the arrogant BOA. If the government won't break up the biggest banks, the free market should do it.

[Planet13]

I'm in the US (and only about 10% of our shoppers pay with paypal).

On the other hand, because I get better rates, I have paypal listed on the bottom of my payment list that visitors can choose from.

And I think I am SUPPOSED to have a paypal logo on my checkout page to make it EASY for customers to see that we accept paypal. It may be that I forgot to put that paypal logo on the checkout page... several times.

And it may be that once or twice or more like 7 time a paypal employee called me and said I was out of compliance by not having the paypal logo on the checkout page and I said back to them that maybe I should just stop taking paypal because it was kind of a hassle and they then they eventually stopped bugging me about it.

this is all theoretical, of course...

[jsinger]

There are two ways to check out with PP. We have PayPal listed in the payment dropdown along with Visa, Amex and about 5 other options.

But the great majority of PP merchants show that ugly overpowering yellow separate button. That visibility gives PP an edge.

We have the typical row of CC icons at several site locations and on our cart. We also mention in text that we now take PP. The text is mainly to feed G searches.

Before adding PP, I did a quick survey of PP use by about 20 of our largest competitors. Maybe 8 of them accepted PP.

What you stated reminds me of when MC or Visa reps would stroll into our B/M stores years ago and try to glue their decals on our windows. I'd usually toss the jerks out. Such stickers were often prohibited by mall leases, and sometimes by municipal sign ordinances.

Preliminary Bottom Line: Even with all the new PP orders, I haven't seen any overall increase in site revenue this past two months. A few of the PP users bought from us previously with CCs. Most of PP buyers are new names, tho. Needless to say, I'm puzzled.

[dpd1]

I think some people view the money in their PP account, as 'mad money' in a way? They maybe sell stuff themselves here and there... they have people pay them for trades in hobbies... what have you. Say you've got a guy that trades baseball cards. He unloads some cards... Now what? He looks at other stuff to buy. If he puts it in the bank, that will just make the wife happy, and that's no fun. It probably isn't rational, but spending money often isn't. Having the money in that account, may be some people's excuse to just spend it on something, rather than transfer it into the bank.

You can also get listed in PP's own biz listing. I can't recall if I ever did, but it might be a way to catch a few extra sales.

[HRoth]

In the past, PP was about 40% of my sales (I am in the US). Now they convinced me to put an Express Checkout button on my site, and they are 60% of my sales. And frankly, I am glad, because I too hate the Too Big to Fail banks and their devil-may-care attitude about us merchants. I used to hate PP in their early years, when they would do such quasi-legal stuff like double authorize a purchase on a debit card. But now? They are fine with me. I have way less problems with PP buyers than I do with the regular buyers who go through authorize.net

[HRoth]

I also like being paid IMMEDIATELY instead a 2-4 days from now.

[DancingBayLLC]

I have a PayPal MasterCard which allows me to take my money out right away if I want to.

[xncrman]

I have read many pro & con postings for PayPal, and if you are a user and have never had any issues and your demographic clients use PayPal then it sound logical and makes business sense to keep using PayPal.

On the other hand, PayPal can and does write their own rules without the Government oversight regulations and regulators. And although many people are "Big Bank Haters" PayPal is no small mom and pop business.

I like many others that once used PayPal long ago for many years until they played games with transferring money and increased their fees, they no longer became legit in my eyes.

I do use Chase Paymentech and have for the past 6 years with eCommerce site, largely because of their customer rankings. For my consumers they offer absolute protection using Visa, Master Card, Discover and Amex. For myself and the business they do the same protecting me from money lenders like PayPal from completing the money transaction.

If the service level and the ability to actually talk to a REAL PERSON isn't reason enough, the total fees are 2.77% as of my last statement is a whole lot better than PayPal. And I don't need a special debit card just to get your money if they will let you have it!