eCommerce Websites
Whether you are going to use PayPal vs. having your own merchant account depends on a few variables. You have to consider how much volume you’re going to have during a 30 day cycle. In this article I’m going to explain the perks of each account and how either PayPal or having your own merchant account on your eCommerce website can be beneficial for your business.
Variables to consider
- How often do you have transactions?
- What is the typical amount of the transaction?
- Do you have a licensed business with a tax id # or are you freelancing?
One of the main reason besides the cost between the two is the appearance and professionalism they both give. You always want to make your customer feel secure when they are shopping on your eCommerce website so if that means investing a little more into the shopping experience than so be it. No matter the price of your product you always want to put the best foot forward in presenting your business to the world.
Pros of using PayPal
One of the coolest feature about PayPal is that it offers more than 1 way to collect your money.
- Pay using the card swiping called “PayPal Here”
- Invoice through the eCommerce website.
- Customer can transfer money directly from there PayPal account to yours.
- PayPal offers a business debit card.
The money is available immediately which is very convenient to keep the business flow going. They offer an invoicing system to provide your business with organization and of professionalism. If your business provides a service to your customer and you need to send out invoices before/after work is completed PayPal provides that option. You can have your customers sign up for a PayPal account to make it easier to get paid.
With the account the customer is able to save multiple forms of payment to make it convenient for the customer. They don’t have to search for payment when it’s stored on the eCommerce website already.
PayPal Debit card provides an enormous amount of convenience to the business account owner. When getting paid through PayPal your money is made available to you immediately. With the PayPal debit card you can shop any Visa, MasterCard is accepted.
PayPal Fees
Be aware of PayPal transaction fees on your eCommerce website. For sales within the U.S. it will be 2.9% + $0.30 per transaction. Which can add up and if you process over $2500 within 7 days they will hold the overage for 30 days. for an example if you sale $2,575 in 7 days they will hold $75 for 30 days. They say it’s a security protection against fraud which is weird. I think if I was doing some fraud, I think I could live without the $75 for 30 days.
Lets go back to the percentages and this how it can get a little pricey with using PayPal and may not be as beneficial as you think.
The PayPal debit card is a cool feature as well, but that comes with fees as well. To withdraw from the ATM there is $1.50 charge to withdraw plus whatever the cost of using the outside ATM. So not only are you paying to the 2.9% + $0.30 per transaction, but now you have to pay extra to physically get your cash. When using the ATM you can only withdraw $400 at a time.
You can have it transferred to your account for free, but that’s going to take anywhere from 3-7 business days to get to your account. Now that’s where the inconvenience comes from and makes PayPal not so great to use.
Cons of using PayPal
PayPal doesn’t always give the best presentation of professionalism when it comes to showcasing your business. You want to appear invested and that you are to be taken serious as a online store. When I go to eCommerce websites outside of Ebay & Amazon it makes me think twice about shopping there if PayPal is their primary payment system.
Having PayPal as primary payment system it makes customers unsure and unwilling to buy from you and on the other hand there are customers that are OK with using it. It affects your brand at the end of the day because when a customer gets ready to checkout they are then transferred outside of your eCommerce website to an external website to process the transaction.
If using the ATM you can only withdraw $400 at a time.
Using Your Own Merchant Services
If you were to have your own payment processing system I would recommend you to use authorize.net. Authorize.net is the leading online payment processors in the world.
They provide:
- Free Mobile App
- Free Website Payments Seal
- Free Fraud Tools
- Free 24×7 Support
The way that authorize.net works is with a merchant services. Merchant services is what delivers your money to your bank account. Generally the deposits are next business day. Having a merchant service provider gives you the ability to negotiate your rates depending on the volume of transactions.Ralph Walker Designs provides merchant services and our rates are in favor of our clients.
After 6 months we do a rate review to see if we can save you money. The more money you make the more you will save. our rates start at 2.5% + $0.10 per transaction.
Having your own merchant services on your website provides the security and protection to your shoppers without tarnishing your brand with redirects. It lets your customer know the following:
- They are protected while shopping.
- Your providing the best shopping experience as possible.
- You’re competing with bigger retailers.
Fees
Here’s a list of fees that come along with having your own merchant fees.
- American Express (per AMEX transaction).
- Statement fees (monthly $5 – $10).
- Transaction fees (1.99% – 2.5% +$0.10).
- Batch Fee ($0.10 – $0.25) per batch.
- Payment Gateway fee (monthly $15-$25).
- SSL Fee (Yearly $69).
Conclusion
Which credit card provider do you choose? That depends on business needs and volume of business. If you have low transactions per month I recommend PayPal. If your needs are greater and you need more control, my recommendation is merchant services. To have more reliability and professionalism Merchant services is going to cost you more money.
One thing you don’t want to do is get into a situation where it’s costing you more money to run your business than you are bringing in.
