Using PayPal vs. Using Your Own Merchant Account

When you're looking to set up an online business, you will repeatedly be referred to PayPal by well meaning people. Paypal offers many of the same features that having your own merchant account would offer. You are still able to accept credit cards through PayPal’s features but you don't pay a setup fee like you do with your own merchant account.

Overall it seems like PayPal would be the cheaper choice, but in the long run it really isn't. When your customers check out, they will be redirected off your website and taken to the Paypal website where similar items are shown that are sold in Paypal client stores, yes they are showing your competition to your customers before they pay, how many sales this will cost you, is not known.

With PayPal you do not even need a shopping cart to accept payments. A shopping cart is still recommended however to make things easier on your customer. After a customer has made a purchase through PayPal they will notify you via email as well as send an email receipt to the customer for their purchase. Your funds will be held in your PayPal account until you choose to withdraw them or transfer them into a designated bank account.

Many business owners take this option, but don't realize how unprofessional it looks. If you are a fledgling online business, look into setting up one of the small shopping carts that Merchandizer offers, they can be seamlessly intergrated into your website for less than $10-per month, plus you get sales reports, your customers get confirmation emails automatically sent out and you get to shine as a professional store on the web.