Businesses run on payments, and it only makes sense that one of the first things that you get set-up when starting a business of your own is your ability to accept and process said payments. And with how prominent PayPal is, it’s pretty understandable that it’s one of the first services that you consider when it comes to getting things done.
It’s a name-brand. And certainly, trustworthy in most respects.
Counting that, and the fact that you can set up an account with PayPal without going through a bunch of hoops—making it a truly quick and painless solution—and you’re probably sold on the idea! BUT PayPal is actually a lot more limited than you think.
We go into this in more depth below by comparing it with the more traditional and respected way of processing payments with Merchant Account Providers:
How to Accept & Process Payments? | OVERVIEW
Before you even consider which payment processing provider (PSP) you want to use to accept and process your transactions, you need to answer a couple of questions:
- What kind of transactions are you thinking of accepting? (Online, credit card, over the phone, mail order, etc.)
- What kind of store do you run? (Brick-and-mortar or e-commerce?)
- Do you have plans on pursuing growth that can majorly affect your business’ transaction volume?
Answering these questions first will help you out a lot when it comes to figuring out whether a service is right for you. As you’ll find that PSPs will have their own unique sets of services up for offer (and different rates to go along with that, of course) to address different needs.
PayPal Payment Processing
PayPal has been a widely respected method of sending money to friends and family online for a while now. It was only recently that they began offering merchant services that enable retailers to process both online payments and Card-Present payments.
To be clear, PayPal is a third-party processor that aggregates all of the sellers in its account into one large merchant account. That means that, if you were to sign up with them for your processing, you wouldn’t actually be getting a merchant account of your own. Instead, you’ll be signing up as a submerchant under PayPal’s merchant account.
This, as you might expect, comes with both advantages and disadvantages:
The Advantages of PayPal Payment Processing
- PayPal is a well-respected name-brand that is known worldwide. So, it is easier to trust them with handling the money that will keep your business going.
- PayPal offers several methods of accepting payments — allowing for maximum ease of use, no matter what kind of transactions you want to handle. (PayPal Checkout for online payments, PayPal Invoicing for billing for services rendered, etc.)
- Setting up with PayPal is also a lot quicker and easier — as you won’t actually be signing up for your own merchant account (which usually involves a lengthy underwriting process.)
- PayPal has set processing fees for credit card payments that are competitively priced (Card-Present Transactions are 2.7% + $0.30 & Card-Not-Present Transactions are 2.9% + $0.30).
PayPal Limits | The Disadvantages of PayPal Payment Processing
Although the lack of the lengthy underwriting process requirement may seem like a bonus at first, it can actually be a pretty big disadvantage based on the needs of your business.
You see, PayPal, unlike popular Merchant Account Providers like Platinum Payment Systems, does not vet the sellers that they take in as clients upon entry.
Instead, they wait until you start accepting and processing payments. This leads to an increased risk in held funds or, even, entire account terminations — as even the most reputable of business can be put on hold for even just a single potentially fraudulent transaction.
Merchant Account Providers | Why Are Merchant Account Providers like PlatPay Better than PayPal?
The PayPal limit we described above is really the big BUT in this whole affair. There is no arguing that PayPal can process payments for you. This much even Jed Morley, the CEO of the Merchant Account Provider, Platinum Payment Systems, attests to, when he said:
“Anyone can process payments for you. It only takes the right equipment, after all. BUT the same cannot be said for their ability to provide the level of support that you’ll need while those payments are being processed.”
Jed Morley goes more in depth on the subject in an interview about merchants, saying: “There are big companies out there that can set you up quickly – nice and easy. But, after that? They might as well have forgotten that you exist. You just become another number to them. Another cog in the wheel of endless processed payments.”
The difference then, between the ease of use that PayPal’s limited processing can offer, is the personalization — or rather, the connection that you get when working directly with a merchant account provider like PlatPay — who can help you get your Merchant ID set up and who is right there on the journey with you as you grow and is there to pick you up when you falter.