This is a guest post by TransFS’s Stella Fayman.
PayPal is an extraordinarily powerful tool which lets business owners accept payments with ease. PayPal manages over 184 million accounts worldwide, making it the dominant force in payments acceptance.
1. Pricing PayPal uses straightforward flat-rate pricing which makes it better than many merchants which use tiered or ERR pricing (huge rip-offs) but not better than merchant accounts that also have flat rate pricing or interchange plus pricing.
2. Cost For many businesses starting out, PayPal may be the cost effective payment processing option. However, once volume gets higher, it becomes more cost effective to switch to a traditional merchant account provider. Use the PayPal Upgrade Calculator to quickly see whether it’s time to consider a merchant account. Learn more about switching to merchant accounts here.
3. Recognition PayPal is universally recognized and can therefore reduce customers’ fears of fraud.
1. Poor Customer Service PayPal has been known to be unresponsive and downright evasive when it comes to customer service. Good luck trying to find a customer service phone number on their site. (We found it on this site.)
2. Customization PayPal has standard options that don’t have many of the features of a traditional gateway. For example, some gateways have APIs with more specialized capabilities like tokenization and/or the ability to qualify for industry specific interchange categories.
3. Rules When you play with PayPal, you play by their rules. They can freeze your account, withhold funds, or take money out of your account for no reason. Also, funds are deposited into your PayPal account instead of a personal bank account which you control.
In conclusion, sometimes PayPal may not be the best choice to meet your payment processing needs. Doing a careful analysis and researching alternatives may save you money in the long run. If you have any questions, please don’t hesitate to reach out to me at Stella (AT) TransFS (DOT) com
TransFS.com is the comparison shopping site for credit card processors. Just like getting multiple quotes for airfare using Expedia, TransFS lets business owners compare top quality processors on an apples-to-apples basis and makes sure they get the best deal by not having any cancellation or hidden fees, and only interchange plus pricing.