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Certainly I do not see how anyone doing over $10,000 in monthly volume would want to use paypal as opposed to there own merchant account. Paypal is not even Insured or backed by a bank! And someone doing over 100k a month would trust there money in there hands? Yeah right!
Though after speaking to a fellow member here at WebmasterWorld whom does alot of Paypal transactions, i can see it benefitting them where it counts - in the pocket.
Really? What are you paying? I think it depends what your fixed costs for the merchant account is. I don't think a direct comparison is as easy since merchant account costs will be different for depending on the account you have. Personally, I don't see a big difference between Paypal and merchant account when you include monthly service fees and the cut the merchant processor takes with qualified, mid-qualified, and non-qualified rates.
> PayPal took over $95.
How did you figure $95? Even at 3.9% (regular internaional) it is still only $78. If a transaction that large, you might look into sending a wire transfer. If you trust the recipient, that will end up saving you more money in fees. You can also negotiate a lower price this way as well.
Personally i think paypal should have set % rate's upto a point then get into the personal-company rates for high-turnover organisations. Another way of putting it - is if a company is trading serious money via c/c, then the amount they would pay with paypal may be better spent with a sourced e-comm solution!
I can say the horror stories of the past get me a bit on edge when we're above 3K at a time in paypal. No problems with them whatsoever, BUT.... like posted not being backed by a bank is a shaky business practice in today's business.
I guess it depends on what country you're in.
With reference to PayPal as fun money - absolutely. Many people sell on ebay, get paid in PayPal dollars, and then spend on ebay using that money.
[Added: Still, I think they charge too much for eBay transactions - I'd like to see some concession for eBay/PayPal specific transactions - either a reduction in eBay final fees or PayPal rates - the latter seems more feasible. It's hardly like they have overheads to consider in their negotiations with "each other" - or shouldn't at least.]
the rates are as follows:
Mastercard 1.560 %
Visa 1.560 %
AmEx 2.95 %
Debit Cards 0.2250 GBP per transaction (22 pence)
also a £15.00 a quarter rental
Thats it folks - so from my end - paypal is a more expensive option regardless of whatever level of business we are doing. Until Paypal can seriously compete with the above rates, its not in my companies interests to pursue it, also customers have problems (unfounded) with using the system still. Don't read into this wrong - i don't have any problems with using the system.
These are British rates, also we have had this account for several years and phone every year to hassle on their rates - lets put it this way it will be going down next year!
It sounds like a 'normal' account and you should only accept telephone, fax and person present transactions. If you have not told them that you are accepting internet transactions and someone complains (i.e. a chargeback) and mentions they ordered online, your account will be cancelled and it is likely that you will be blacklisted from opening another merchant account.
If it is an internet merchant account, I am sure we would all be interested to know who it is, or maybe more importantly, how much is being put through this account to get those rates.
P.S. I worked for a company that got Visa and MC for 1.00% just a few years ago (plus monthly rental of £25, I think it was). But we could not process internet transactions on it.
Certainly I do not see how anyone doing over $10,000 in monthly volume would want to use paypal as opposed to there own merchant account.
I can see it because I do it. 95% of our revenue comes from subscriptions (not porn) and we use Paypal for about 90% of those. Their subscription system is abosolutely great and it prevents us from having to worry about keeping credit card numbers on our server.
One thing to note is we withdraw everything but $100 from Paypal EVERY SINGLE DAY. I do not and doubt I ever will allow our Paypal balance to increase to more than $1,000 for any reason other than a really good day. There just isn't any insurance that the money will still be there vs. a bank.
edit:forgot the second o in absolutely and it got filtered.
Their world seller program does have its advantages :)
As for the volume numbers - I definately know a few who easily do $100,000 with PP in a week, much less in a month. They are defiantely going to be happy [as am I :)]
From my experience, paypal has very good rates until now even compare with merchant account, and also i didn't see anybody mentions the business licence, paypal doesn't need business licence, however most merchant accounts need business licence,SSN, more senstive info.
if you have business licence then get merchant accounts, or better choose paypal or 2checkout.
i hope some companies can offer lower rates than 2checkout, that will be a good competitor.
One reason for this increase is probably the lack of competition. Perhaps our loyalty to PayPal is part of the problem?
I've noticed that Yahoo! PayDirect has also added a $5.00 monthly fee to their rates, even though their Standared fee has dropped from 2.5% to 2.4%.
The more competition the better, either by having more than one third party processor on your website, or including a pre-paid card or regular merchant accounts?
I have found that there are more than 35 third party credit card processors that can potentially compete with PayPal and PayDirect or 2Chechout in different ways. There are also several resources on the web to help compare prices between third party processors and merchant accounts.
How does PayPal compare with merchant accounts with regards to chargebacks?
My chargeback rate is exceptionally low. I can say, without question, that I have lost EVERY SINGLE paypal CHARGEBACK (buyer protection claims are different), regardless of the claim or my part in it. I can say, without question, that I have only lost ONE credit card chargeback and that was because that was COMPLETELY my fault.
It is my belief that paypal does not fight chargebacks on behalf of the merchant. Even though people tell you that without a signature, you automatically lose, that is not true as I can testify to winning all but one credit card chargeback.
therefore, I am firmly of the position that with paypal, you can only hope that the chargeback rate is low because you will not win a chargeback.
And, in case you are wondering, the defenses to all chargebacks were similar. And the documentation was similar. HOWEVER, paypal does not allow for such detailed responses as a merchant account does and even if they do, I have my sincere doubts about how that is presented to the merchant bank.
With the normal chargeback process
Customer files complaint with issuer-->issuer sends paperwork to merchant's bank--> merchant bank sends paperwork to merchant-->merchant replies to merchant bank--> merchant bank either accepts or rejects chargeback and notifies cardholder's issuing bank.
With paypal, WHO KNOWS what they do or how they present the paperwork to the merchant bank. I have paypal chargebacks that I KNOW I would have won if they were with a credit card. Even unrecognized charge chargebacks did not get reversed with emails/faxes from the customer saying that they did recognize the charge. I DEFINITELY would have won that with my merchant account.
And that is my experience.
this site has a good comparison of various merchant processors:
it doesn't have the new PayPal fees up yet, but even with the current rate schedule i think it shows PayPal fees are lower than most people realize for card-not-present (internet/telephone) rates. also, many people forget about the additional setup and monthly fees that are tacked on with other processors, or also the foreign exchange fees for international processing.
for folks doing very high volume (>$20-50K per month), it's possible there are a few alternatives that are cheaper, however with the new rates we're rolling out even there i think we're pretty darn competitive.
anyway, not that we're trying to compete only on price -- actually we offer a lot of other value-added services (integrated shipping with UPS/USPS, order tracking and reporting, eBay intergation) in addition to just payment processing.
- dave mcclure