While much has been said about PayPal, then I believe there are still some topics which need to be outlined in regards to all the many Online Merchants and PayPal users.
I see many forums which are filled with posts about PayPal and with questions I believe are already answered. However below I will go through of some of the questions which I see most and try to explain it so that also the last user on the Internet can understand it.
One of the most common questions in regards to PayPal and to Accept Credit Card Payments is; Can I use my PayPal account to accept credit card payments? The answer to this is YES you can, in fact PayPal lives from people using their credit card to pay for gods and services available at hundreds of thousands of websites. PayPal only differs from other Merchant Account solutions by converting the money you pay to another PayPal user with your credit card, to PayPal money. Once the money is in any PayPal user’s account, it will and can be moved around and of coursed be used to pay other PayPal users.
The great benefit of having PayPal is that if you live in a country where you are unable to become a Credit Card or a Visa Electron card, then you can pay with PayPal, which is accepted in almost any webstore you can find. Other reason could be that you are unable to become a credit card due to your credit rating, than a PayPal account is the solution for you. Did you know that we still in 2009 have countries where it isn’t normal to have a bank account and where you get your salary in cash? That true, of the countries are Uruguay which have a great banking infrastructure but still most people there are unable to become a bank account!
So back to topic, now you know that each and every credit card holder can pay you if you accept PayPal on your website.
But hey, when one of my customers click on the PayPal button it directs him to login to his PayPal account, how the hell is he able to pay without to open a PayPal account or use his existing account. That’s obviously a sign that you still not get it!
Every time a user is forwarded to PayPal to make a payment for any reason, then there is an option to pay directly with a credit card, PayPal even not hide this, they pull up a site where they tell you that you are now able to pay with your credit card without having a PayPal account!
Now you will ask yourself, why do not all just accept PayPal as payment method? If it is that easy and if you don’t need to go through all the hassle with PayPal as what you need when you obtain your own merchant account then what is the point?
This question has also been addressed many times in all the forums I visited over the years. Sure it is much easier to just go and open a PayPal account and start selling your gods or services, but PayPal don’t accept all countries, or all types of business. Also there is the aspect of looking professional against your customers, if make an example scenario as the following then you will see that it often is a great benefit to Accept credit Card Payments by both to have a PayPal account and your own Merchant Account.
Scenario: A Online Merchant has been trading his products which are boxes for almost 3 years now and he has a stable monthly turnover of about $ 50.000 so far he started with a 3rd party processor like 2CO (which is one of the most common processors to use and which is an good alternative to PayPal).
If we analyze above scenario, then the first impression is, great he is doing well and why worry about to offer more options to pay, it looks like everything works. That’s a fatal error to think in this way and it is wrong. As a expanding business you need to offer more services towards your customers and you need to let them feel comfortable with shopping at your business, also you need to increase your income.
If this business would go and become his own Merchant Account and connect his website with a Payment gateway, then the upfront costs would be (only an example) let’s say $ 800 and maybe he also agree to pay a monthly fee of let’s say $25, those fees will make it up with the costs of transaction processing he safe, since 2Co.com often charge about 5% and more plus a transaction fee, and with your own Merchant Account you might only pay about 3% or even less and a transaction fee of maybe $ .20. Now I hope you can see the point, this merchant will increase his income over the next month and get more capital to extend his business.
Next thing is, as I mentioned in the beginning of this article, there are that many people out there which don’t have a credit card or are unable to become a credit card this people often only have one choice left, and that’s to open a PayPal account, if they have something to sell, then they can load the PayPal account in that way, if they have a regular bank account they can use it to load the PayPal account. So this people might also be interested in the products sold by our Merchant, and if he offers the possibility for people and potential customers to pay with PayPal, then he will increase his income and sales with less effort.
Now you must think, okay, if PayPal can accept credit cards directly and if there are that many people out there which don’t have other options than PayPal, then it must be enough to just offer PayPal as Payment method?! Wrong again, I know it is a bit difficult; however I will also go through this now.
A Merchant Account isn’t more than just an contract which you have with a bank to be allowed to send your credit card transactions and in some cases other payment methods to them. But to be able to do so, you need a payment gateway, often this payment gateways gives you a bunch of great information about each payment transaction, which you can use for marketing purpose. Another thing is, that the most Payment Gateways give you Real Time Transaction overviews and calculate the overall chargeback ratio and a lot of other things. Finally you are able to integrate your website directly with this payment gateway which do that your customer (the credit card holder) don’t need to leave your website, and which again let you look more professional towards the customer.
My conclusion is, that to offer both PayPal and alternative Payment methods is the way to go. For Startup business where you can put in question if they will succeed it is better to start with PayPal until you have built up a stable monthly sales volume. This will save the new business upfront costs and the integration of a payment gateway, which often needs some programming experience or at least a good coded plug-in.
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