When to Make the Switch from PayPal to a Merchant Account

0 Comments | Rating: 0 | |

For many people and even small businesses, PayPal (or PayPal alternate) is sufficient for accepting payments. There comes a point, though, when a person or company has been blessed with growth and it becomes more feasible to consider other payment acceptance options.

A merchant account is usually a good option once a person or business has reached the $2000 per month mark in credit card revenue. This is incoming money from credit cards only, not counting cash, checks and gift cards.

The fees for PayPal are high and most of the alternates are not much different. A merchant account, while still requiring fees, starts becoming a better business choice around this point. A merchant account has a higher set up fee than a PayPal or PayPal Alternate but has lower operating costs so you end up paying less in the long run.

There are many fly-by-night independent representatives out there but your local bank or credit union, are most often your best choice. You already have an established relationship and a good history with them which may be reflected in slightly better rates for your merchant account.

It won't necessarily be as cheap as one of those fly-by-night independents but you have the assurance they will actually be there when (or if) you need help.

You'll get improved rates as your monthly credit card income increases. This improvement could literally be a fraction of a percentage per transaction but it all adds up nicely. And since your rates will most likely be lower than you'd pay to PayPal or a PayPal alternate, you're already better off than you were.

There is the added benefit of problem resolution that is actually resolved instead of the "my account was frozen with no explanation" or "they kept my money for 8 months and I still can't get it" that is becoming more and more common with PayPal. Your bank or credit union may hold or freeze funds if there is suspected fraud or another problem with your account but the fix is usually within a few days and not months of wondering what's going on.

Another point to consider is ease of use for your clients/customers. If you are selling to businesses, it can be more difficult for them to utilize PayPal or a PayPal Alternate. If more than one person in a company has purchasing power, it's often difficult to coordinate a PayPal account or multiple accounts and a simple merchant account and gateway is much easier for a business to use.