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Is it time to consider a merchant account?

by Troy Broussard
15 replies
We've used PayPal for processing for years - both the standard and the pro - and this is not another bash PayPal thread. We've generally had very good results with PayPal but they have certainly caused us some grief along the way as well.

But when it comes to business, if you're doing any real volume of sales per month, I highly recommend that you diversify and give your business an added safeguard. And this doesn't just apply to PayPal, but rather any single solution provider - it's just not smart to have all of your eggs in one basket.

We recently went through the process to get a merchant account and I was very pleased with how straightforward it was and how pleasant the overall experience was. I can't believe we put it off all these years...

Now this is not some plug and there's no links here, but we chose PowerPay for their relationship, direct account representative access and their understanding of Internet Business ebbs and flows. They use Authorize.net as their gateway so it's a simply integration. We had the account approved in 2 days and live that same afternoon.

Anyway, I have to say that having the ability to flip a switch between merchant providers is a very solid business decision and one we should have made some time ago.

We've also found that cart abandonment is lower and conversion rates a bit higher as well just from the simple one-click purchase process rather than the cumbersome PayPal interface.

Lastly there are some shopping cart benefits as well. For example, you can't combine recurring and non-recurring items in a single shopping cart transaction with PayPal but can with a Merchant account (depending on your cart software - we use Premium Web Cart). Also, you can truly implement one-click upsells with a merchant account - something also not feasible with PayPal.

Anyway, just some food for thought...

This is not meant as a bash on PayPal, but rather just an encouragement to consider risk diversification if you have a strong business online and the financials to document it.
#account #merchant #time
  • Profile picture of the author Willie Crawford
    Even if you use Paypal as your primary payment processor,
    you should have a backup... before you need it.

    Nothing worse than having to scramble in the middle
    of a big launch, when a processor shuts you off, and
    you can't just flip a switch to bring another processor
    online.

    Willie
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  • Profile picture of the author Jake Gray
    Don't wait until you need it.

    Have it for a backup at all times.

    It would honestly be catastrophic if you had just launched
    a product and all of a sudden your PayPal account was locked.
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  • Profile picture of the author Chris Cole
    As a thought...

    Would it be adviseable to contact paypal via telephone prior to a launch and inform them of this and to see if they can ensure you are not restricted or cut off for having too much money coming into your account?

    I would be a nightmare for this to happen in the middle of a launch!
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    • Profile picture of the author Jake Gray
      Originally Posted by Chris Cole View Post

      As a thought...

      Would it be adviseable to contact paypal via telephone prior to a launch and inform them of this and to see if they can ensure you are not restricted or cut off for having too much money coming into your account?

      I would be a nightmare for this to happen in the middle of a launch!
      You sure can - Done this before.

      But you never know. It's always good to have a backup.
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    • Profile picture of the author CDarklock
      Originally Posted by Chris Cole View Post

      Would it be adviseable to contact paypal via telephone prior to a launch
      Depends on how paranoid you are.

      Yes, on the one hand, you give them a heads-up to expect certain things that might otherwise worry them.

      On the other, you give them a heads-up to go have a look and see whether they ought to be worried.

      If you're up to something shady or slimy, that's a Bad Idea. If you think PayPal is out to get your industry (some people think IM is in the crosshairs) or the kind of products you sell (I've heard this claim about MMO, affiliate marketing, PPC training, and CPA products), then you probably think it's a Bad Idea.

      For all the advice to do this, I haven't actually seen it make a difference. Plenty of people don't say squat to PayPal and just happily suck $50k into their account in a week. Plenty of other people give PayPal a call and find their account limited or frozen before they make a single sale. I think in the end, PayPal will probably do the same thing whether you call them or not.
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    • Profile picture of the author Lloyd Buchinski
      Originally Posted by Troy Broussard View Post

      I have taken this approach with them before and they told me that it would have no affect because their fraud department wouldn't even see the notations on the account. They are just not setup to work this way.
      I just want to make sure I understand this. It sounds like 'this approach' refers to Chris Cole's question, this one?

      Originally Posted by Chris Cole View Post

      Would it be adviseable to contact paypal via telephone prior to a launch and inform them of this and to see if they can ensure you are not restricted or cut off for having too much money coming into your account?
      If yes, that's the first time I've read that. The opposite view gets posted about once a week. But it does seem to make sense, and if that's what you mean, it's nice to not worry about doing that.
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      • Profile picture of the author Troy Broussard
        Originally Posted by Lloyd Buchinski View Post

        I just want to make sure I understand this. It sounds like 'this approach' refers to Chris Cole's question, this one?

        If yes, that's the first time I've read that. The opposite view gets posted about once a week. But it does seem to make sense, and if that's what you mean, it's nice to not worry about doing that.
        Yes, sorry, I should have quoted who I was responding to. I was referring to the approach of contacting PayPal first before a promotion.
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  • Profile picture of the author Troy Broussard
    I have taken this approach with them before and they told me that it would have no affect because their fraud department wouldn't even see the notations on the account. They are just not setup to work this way.

    That's why we added the second processor... PowerPay, on the other hand, recommends you do just this. They want to know about your launches and will work with you ahead of time to be prepared.
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  • Profile picture of the author coach
    It's the "not putting all your eggs in one basket."

    Have at least 5 ways to accept payments online.

    Also get that check over the telephone software.

    Also, get at least 3 bank accounts, 1 online.
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  • Profile picture of the author Alex Copeland
    I have heard on good authority that they have two different departments for the fraud side of things and the 'notes' side of things and they don't talk to each other... meaning that even if you tell them you are planning to get a flood of payments it won't actually get picked up on if the flags are raised by the fraud department.

    Anyway, as you said this isn't a PayPal bash, I actually came on here to see if anyone knows of a UK equivalent to PowerPay? Just I always hear these being mentioned as the best option but I have contacted them and being in the UK they are not available to me. Anyone have any suggestions for the UK guys? Thanks!
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    • Profile picture of the author Troy Broussard
      Originally Posted by RockstarMedia View Post

      I have heard on good authority that they have two different departments for the fraud side of things and the 'notes' side of things and they don't talk to each other... meaning that even if you tell them you are planning to get a flood of payments it won't actually get picked up on if the flags are raised by the fraud department.
      Yes Rockstar - this is exactly what they told me and I was saying above. It's two different departments and they don't talk to each other, etc...

      Sorry I don't have any advice for you for a UK option...
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    • Profile picture of the author CDarklock
      Originally Posted by RockstarMedia View Post

      I have heard on good authority that they have two different departments for the fraud side of things and the 'notes' side of things and they don't talk to each other...
      They have to do it this way, or they'd be accused of playing favourites when someone got done for fraud and someone else did "the same thing" (read: "I don't understand the difference") without a similar finding.
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  • Profile picture of the author towels
    Moneybookers look like a good Paypal alternative available in the UK -- easy integration/multiple cards supported etc.
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    • Profile picture of the author Alex Copeland
      I actually use these already as a backup but I am also looking for a full merchant account if anyone knows of one? Or does MoneyBookers do that and I just haven't looked hard enough?

      Either way thanks for the suggestion.

      Originally Posted by towels View Post

      Moneybookers look like a good Paypal alternative available in the UK -- easy integration/multiple cards supported etc.
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  • Profile picture of the author Robert Mangan
    I had issue getting a U.S. merchant account (as I'm a non-U.S. resident and live in Australia) and had to make do with a PayPal business account for a while. I sell physical products so I have to pay my suppliers when I place an order with them. Problem with PayPal is that after the customer pays me it takes a further 5 business days to withdraw the money to my business bank account.

    This created a real cashflow problem for me.

    Also, a lot of customers wanted to pay using their credit card and didn't realise that they could do so via PayPal. The PayPal checkout interface is really bad and does its best to 'hide' the fact that you can pay by CC rather than PayPal.

    I'm convinced I lost order because customers wanted to pay with a credit card but only found a PayPal button on my cart (I use Magento).

    One more thing: shortly after taking my first orders, PayPal 'froze' my account. I could still accept payments but I couldn't withdraw money to my business account. I had to provide trackingID for shipment of goods and invoices from my suppliers etc. Once I uploaded these documents my account was restored but it took about 10 days to get this done.

    This very nearly put me out of business.

    Since having a merchant account (I use Authorize.net) as the gateway, nearly 99% of sales are done using a credit card.

    Another great thing about having a merchant account is that when I capture payment on the CC, funds are transferred to my bank account overnight, whcih has greatly eased my cash flow.

    I would definitely recommend that anyone in business get themselves a merchant account.
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