paypal vs. merchant account?

11 replies
i have just started a local seo company. this business involves a set up fee followed by monthly payments.

i do not have a merchant account set up at this time. i receive the set up fee in the form of a check and have set up a paypal account to process monthly payments for companies that sign up for my program.

i am just wondering. would i seem more legitimate or credible in the eyes of local biz owners if i set up a merchant account instead?

i would then draft the money directly from their corporate checking account or whatever credit card they wanted the funds to come from.

wondering what some of your thoughts or experiences are regarding this matter. at this point i am leaning towards opening a merchant account because i think i am losing sales and may be seen as less than professional by some potential clients.

what do you think? is paypal mainstream enough these days that it doesn't matter anymore?

thanks in advance.
#account #merchant #paypal
  • Profile picture of the author shabit87
    I think its in your best interest to get a merchant account if and only if you plan on keeping and growing your business. Paypal is great, but it can have its limits. Imagine your account being put on hold, due to an increase of sales...image how that will slow your progression. Don't risk it, if you plan on being big, think big and go with a merchant account. Do your research and get something right for you and your biz.
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  • Profile picture of the author mhdeaton
    I don't know... I do a half million a year with paypal pro, they cut my rates gave me my own rep who doesn't speak English but I get ALL my money INSTANTLY on my debit card.

    I recently decided to try a new merchant account to spread things out and I did $40,000 my first day and in the middle of my sale the merchant shut me down and held my money for 6 months.

    No explanation no phone call no letter. then They treated me like a criminal every time I called them.

    I sell stock market info., its not like Im peddling viagra or something.

    I love paypal I can do $75,000 in 1 single day and they dont even question it.

    Mark
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    • Profile picture of the author shabit87
      Originally Posted by mhdeaton View Post


      I love paypal I can do $75,000 in 1 single day and they dont even question it.

      Mark
      I wish I was so lucky, I did $5000 in a month and they froze my account once.
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      • Profile picture of the author todd40fla
        interesting stuff here.

        i wasn't even thinking about the possibility of my account ever being frozen.

        i was just thinking about paypal as a credibility issue when doing business with companies instead of individuals. and the thought that many companies might not have a paypal account and having to help them set one up could be a roadblock that could cost me some sales.
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  • Profile picture of the author mhdeaton
    I should add that I started with paypal. I went from ZERO to $500 to $2,000 to $5,000 to $75,000. They do a 3% rolling reserve on my account for 90 days and they have never froze a penny.

    I think whatever solution you use make sure your path to big bucks is gradual even if you have to manufacture the gradualness.

    For example any new merchant account I use I will start a sale that might do 50-75K and Ill let 5K run thru the new merchant then shut down the sales page for 10 minutes while directing the sales back to paypal.

    Only makes sense to do it that way to avoid hassle. When my new merchant held 40K of my money i was so pissed and there was nothing I could do.

    I couldn't even do refunds. I had to send check to do refunds to avoid charge backs.

    After 3 months they were supposed to give me my money and i called to get it released and they said sorry you have "excessive chargebacks" - I said how many do I have and they said 1. ONE - I said that's excessive and of course they said it was.

    When they released my money after 6 months I was IN SHOCK. In fact when she said "OK Mr. Deaton we can release the money now it was in my account in 24 hrs.

    This 1 lady had TOTAL CONTROL over that money.

    Trust me I tried managers and only got more grief.

    Merchant accounts can be a burden. If you have bad credit its nearly impossible.

    TAX LIENS?dont even bother.

    Mark

    PS - With PAYPAL PRO you can use any shoppingcart program like Asecure cart and take all credit cards, in fact the cart will show the option of using paypal or a credit card and works perfectly.

    Truthfully even with plain old paypal there is the little option on the bottom left to use ANY credit card. There is only a problem if that card is already associated with a paypal account.
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  • Profile picture of the author Mark Blaze
    It really depends if the business you are doing the work for already have paypal or not!

    If most of them don't then this is going to be highly annoying and another 'barrier' for them to cross before they can get your service and can often lead to a lost sale which is never good.

    Evaluate your market and see if you really need that merchant account or if paypal is a good option for now.

    Mark Blaze
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    • Profile picture of the author lerxtjr
      There is a group of people (can't give a percentage, maybe 15% or so?) who won't buy anything through paypal, period. Paypal is one of the biggest targets for hackers on the Internet so people squeamish about using their card online will pay through virtually any other source other than paypal.

      There's also another group of people (maybe 25%?) who will ONLY buy if a paypal option is offered because that's where they store money for anything they buy online.

      The best solution is to offer both choices. The way to work up to that is start off with paypal until you have a budget and some purchase history and then go after your merchant account to get lower rates by proving your expected monthly sales.
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  • Profile picture of the author AdzMedia
    Some good replies in this thread.

    todd40fla, why don`t you consider 2Checkout also? They offer a first class service.
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    • Profile picture of the author todd40fla
      i am reading everything and thanks to all who have posted. this is GREAT info for me. gives me some things to look into.....and some REALLY solid advice here.

      this is the type of information that is truly invaluable....and that makes this forum such an amazing place.

      thanks again to all!

      todd
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  • Profile picture of the author Adam Nolan
    Originally Posted by todd40fla View Post

    i have just started a local seo company. this business involves a set up fee followed by monthly payments.

    i do not have a merchant account set up at this time. i receive the set up fee in the form of a check and have set up a paypal account to process monthly payments for companies that sign up for my program.

    i am just wondering. would i seem more legitimate or credible in the eyes of local biz owners if i set up a merchant account instead?

    i would then draft the money directly from their corporate checking account or whatever credit card they wanted the funds to come from.

    wondering what some of your thoughts or experiences are regarding this matter. at this point i am leaning towards opening a merchant account because i think i am losing sales and may be seen as less than professional by some potential clients.

    what do you think? is paypal mainstream enough these days that it doesn't matter anymore?

    thanks in advance.
    I have the exact same business model and I'm in the process of setting up a merchant account. The other benefit is you'll have much lower attrition rates if it's coming off a credit card automatically.

    Good luck

    Cheers
    - Adam
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    • Profile picture of the author mgkimsal
      My business isn't exactly the same, but I offer both paypal and google checkout, and I'm not sure I'm losing too many sales by not having a 'real' merchant account.

      The 'real' merchant accounts have enough extra overhead and fees that unless you'll be pulling in more than $1000+ month via that gateway, it's a loss compared the paypal or google setups (which have no monthly fee, just transaction fees).

      When I started, I wasn't sure when I'd hit that $1k/month, so I went with PP only,then added Google a few months after that. I've been past the $1k/month mark for a long time, but haven't gone to a regular merchant account yet, and probably won't. As an earlier poster said - there's some people who will never touch paypal - for those people, I have google checkout. Others will *only* buy from paypal, so they're fine. The third group doesn't care, and just wants to use their debit/credit card. They can use either one without signing up for google or paypal, so they're covered too.

      You're dealing with local businesses, so foreign cards aren't an issue. My local banks actually had pretty bad rates when dealing with non-US-based payment cards - worse by far than paypal and google, so I'm in no rush to deal with 'real' merchant accounts yet.

      Yes, the idea of accounts 'frozen' is a bit off-putting, but I don't keep much money in the paypal accounts anyway, so it's not a huge issue. I can always direct all new purchases to Google if need be as a backup anyway.
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