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Is A Merchant Account Necessary?

by Knowledge Kick
14 replies
I have a site set up that takes payments through First Data. I can also accept payments through PayPal's free service.

Do I even need the First Data merchant account? I plan on owning multiple accounts and was told I needed a merchant account.

Would I be better off just using PayPal on all my accounts? That would save me money because I wouldn't need to pay First Data anymore.

What are the pros and cons?
#account #merchant
  • Profile picture of the author David Keith
    Relying on PP for your only method of accepting payments is very risky. I certainly would not want to own a business that only relied on them.

    At the very least you need a backup solution. If you can get approved for 2checkout, that might be a solid backup solution that is more affordable than a true first data merchant account.
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  • Profile picture of the author Alexa Smith
    Banned
    Originally Posted by Knowledge Kick View Post

    Would I be better off just using PayPal on all my accounts?
    Just possibly, but as David says, it would also be terribly risky. Very unwise not to have a back-up in place.

    Depending on your products and customer demographics, it may be hugely useful for you to be able to take PayPal as well as credit-cards, because doing so can give you a bigger market.

    2Checkout and Plimus are interesting alternatives to look at, both potentially very useful because customers can pay them by PayPal without you needing to use your PayPal account to receive payment from 2Checkout/Plimus. So they can maintain your flexibility and still effectively serve you as a PayPal substitute.
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  • Profile picture of the author WebMarketingDiva
    I'm torn when it comes to Paypal...

    Pro: Almost everyone has a Paypal account, so it makes the transaction much easier for the buyer.

    Cons: If Paypal doesn't approve of your site or business for any reason, they will shut you down and lock your account. This happened to me and many another marketers. They are very difficult to deal with and it takes time to get your account unlocked. Their customer support sucks! Also - You need to manually go into your Paypal account to withdraw the funds. Whereas a merchant account automatically deposits into your account in a few days.

    I like using my Merchant account! :-)
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  • Profile picture of the author Merchant National
    You need to ask yourself some questions first:

    1. What is your business type? Is PayPal a good long term solution?

    2. How do you anticipate scale? PayPal is limiting toward scale, in various ways.

    3. Did you know a true merchant account v.s. PayPal increases conversions? Fee's can be made to be relative to one or the other, but increased conversations means sales you didn't have.

    4. Do you understand the fee structure of a merchant account v.s other merchant accounts v.s PayPal?

    5. Do you know your MCC code and if you were classified right with your merchant account?
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    • Profile picture of the author constructioncontractors
      Here is what you need to ask yourself:

      * such an account will lead to growth in conversions. But, is the cost balanced?
      * Define your business, better not be a high risk one.

      :-)
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  • Profile picture of the author Thomas W
    I sent you a PM as well. The key is to use multiple billing cascades. It helps you manage declines and also load balances between your billers. One thing you should always do is create redundancy,, especially with billing.

    This way if you ever get shutdown, or limited you a work around. For instance, a good gateway can store your customer's data. If your current biller went belly up or termed your account, you can just roll over everything to your new MID
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  • Profile picture of the author walksonthebeach
    Banned
    Depending on the age of your paypal account and how much you received altogether will greatly play a role on whether or not your account will get limited once you start receiving payments.

    It's good to have another payment processor other than paypal when it comes to selling things online.
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  • Profile picture of the author Affiliate Sidekick
    Paypal is not a great solution due to the fact they have shut down many accounts for whatever reason. Mine has never been shutdown but if you are going to run a business that is forward facing to the public then go with authorizenet or a similar processor.
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  • Profile picture of the author Randall Magwood
    You should know that 2checkout doesn't allow the sale of internet marketing products. So if you're planning on using them, pick a difference niche.
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  • Profile picture of the author Tony Dean
    Why would you not use a merchant account for business? Most big corporations out there doing sales on the net don't use Paypal.
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    • Profile picture of the author Alexa Smith
      Banned
      Originally Posted by Tony Dean View Post

      Why would you not use a merchant account for business?
      No great mysteries there, I think?

      For many people (and perhaps especially Warriors?) that will be because a significant proportion of their customers need to pay by PayPal as they can't use credit-cards, Tony. So, even with a merchant account, they'd still need to take PayPal payments, too, in order not to lose a lot of potential business?

      For some, it will surely be because their low transaction-volume doesn't warrant the expenses of setting up and maintaining a merchant account, which characteristically involves a minimum monthly fee?

      And for others, don't you think it will be because they have great difficulty getting any financial institution to extend them a merchant account facility?

      Originally Posted by Tony Dean View Post

      Most big corporations out there doing sales on the net don't use Paypal.
      Many don't, indeed. But they're not selling WSO's and this sort of thing. (And some do - and they give themselves a broader reach for online sales if they do, of course).
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  • Profile picture of the author FrankWellington
    It's very possible you are in NO position
    to listen to any of the advice given.

    Ask yourself... Do you really have time
    to read the wonderful stories, comments,
    views, and hyperbole?

    Or... Would it be in your best interest to
    find a good mentor who will train you
    properly, so you NEVER have to ask
    another Merchant Account / PayPal
    question again.

    STOP listening to 50 great minds with
    50 conflicting solutions.

    Find one good mentor and let that person
    coach you to world class IM status!

    Much success,
    Frank
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    • Profile picture of the author Bill Hugall
      Originally Posted by FrankWellington View Post

      It's very possible you are in NO position
      to listen to any of the advice given.

      Ask yourself... Do you really have time
      to read the wonderful stories, comments,
      views, and hyperbole?

      Or... Would it be in your best interest to
      find a good mentor who will train you
      properly, so you NEVER have to ask
      another Merchant Account / PayPal
      question again.

      STOP listening to 50 great minds with
      50 conflicting solutions.

      Find one good mentor and let that person
      coach you to world class IM status!

      Much success,
      Frank

      I agree a mentor is good however one of the main goals of a "community" is to help people when they need it. As a community member it is our goal to make sure any intelligent question gets the response it deserves. This is a good question.

      The merchant account is not mandatory for running a good business . You can scale everything in your business up. Traffic, payments, SEO. All of it. When the time is ready and you feel as though you need more of, or something better. Simply make it happen.

      I would pay close attention to some of the comments made by those who have been here a while.
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      • Profile picture of the author FrankWellington
        Sir,

        You are absolutely correct! I strike my statement from
        the record. Please disregard my previous post.

        Thank you, kindly,
        Frank

        PS I will heed your advice as well... I will "pay close
        attention to some of the comments made by those who
        have been here a while."

        Originally Posted by bilkat19 View Post

        I agree a mentor is good however one of the main goals of a "community" is to help people when they need it. As a community member it is our goal to make sure any intelligent question gets the response it deserves. This is a good question.

        The merchant account is not mandatory for running a good business . You can scale everything in your business up. Traffic, payments, SEO. All of it. When the time is ready and you feel as though you need more of, or something better. Simply make it happen.

        I would pay close attention to some of the comments made by those who have been here a while.
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