How and When to Use PayPal
As a general rule, its best to use PayPal when your monthly sales average less than $1200. Depending on your
industry and the rates you are able to get, it may be best to use a standard merchant account when your monthly
sales exceed $1200.
About PayPal
With PayPal there is no setup fee and no monthly minimum so you have nothing to lose by
opening a PayPal account. Also, there are fewer different types of fees. On the downside, these fees can really
add up. Also, you may find that some customers refuse to pay you using PayPal because they do not trust it as
much as they would trust being able to use their credit cards directly on your site.
About Your own Merchant Account
Having your own merchant account is rarely as expensive as PayPal's web site claims.
Accepting credit cards in your name, without having to use a 3rd party, is significantly more professional.
You will have greater credibility in the eyes of your customers and potential customers. It could also be
less expensive, depending on the rates you are able to negotiate. The downside is that it may be a little
more complicated to integrate with your site, and its harder to keep track of all the different fees. Visa/
Mastercard charge different fees than American Express and Discover. (There is not a flat rate like PayPal.)
In general, you will not pay more than 2.4% average, whereas with PayPal you will pay 2.9% to 3.9%.
The extra 0.5% to 1.5% that you will pay with PayPal can REALLY add up. Yes, there are lots of fees with
your own merchant account, but most of these do not change regardless of your sales volume or number of
transactions. So the higher your sales volume, the better off you will be with your own merchant account.
Making a Decision
A good first step is to analyze your monthly sales. What do you think will be the average amount of each sale?
How many sales will you do per month? Add up those transaction fees (30 cents each),
take out PayPal's standard rate (which can be as high as 3.9%), and make a rough determination of what
it will cost to accept payments through PayPal.
Next, estimate your monthly fees from your own merchant account. To get an idea of what a competitively
priced merchant account would cost, please visit our partner: https://www.e-onlinedata.com/evws. (eVerity used to be an authorized provider of merchant
accounts, but we have decided to outsource this and focus more on our core hosting business.)
Now, look at the two figures in front of you. If PayPal is significantly less, and appearing professional
is not critical at this stage of your business, I'd suggest going with PayPal.
If your own merchant account is less, then go ahead and contact a few different providers (including the link
above) and see what kind of deals are available.
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