Find a bank that offers a free checking account, that you don’t need to keep much of a balance in. You want to do this for business reasons (mostly book keeping at first). You can accept credit cards through PayPal.
It depends on your type of business and how much in sales you will be doing. Sometimes Paypal does not work if you have a lot of transactions or customer who don’t want to sign up with them to enter their payments. Sorry no easy answer because there are so many variables.
It is always best to offer as many possible payment options for customers as possible. Here are reasons why you need to accept both:
1. Not everyone on this earth has a Paypal account, and not everyone is willing to sign up for one. If you don’t have a merchant account, you will lose the sale of majority of the people who do not have Paypal accounts. Unfortunately, there is no data how many people actually abandon their shopping carts upon seeing that only Paypal is offered for payment processing.
2. If you can get a good merchant account provider, transaction fees of Paypal is way higher and more expensive. This is true especially if you are selling high ticket items.
3. Paypal is good if you are selling on ebay, or majority of your buyers are on ebay, or you are doing your online selling as a hobby.
4. You don’t get victimized by phishing schemes with your merchant account. There are tons of phishing emails on Paypal around, so you need to be careful on that one.
5. Fraud controls. This depends on the industry – some are more prone to fraud than others. Unless you can put addons in your payment gateway (e.g. get Verified by Visa or some other controls), Paypal takes care of this on their end. So with a merchant account, the more fraud controls you put, the transaction costs becomes higher and keeping it becomes more expensive.
I suggest give customers the option of using which is most convenient for them — both. If they want to use their credit card, then you have the merchant account to process it. If they want to use their stagnant funds in their Paypal account, then let them do it.
Then review how many of your customers actually use Paypal vs. merchant account, and estimate the cost for each. If only 3% of your customers use Paypal, then you can reconsider and use only your merchant account
Comments on In starting an e-commerce small business, is it an advantage to open a merchant account?
Find a bank that offers a free checking account, that you don’t need to keep much of a balance in. You want to do this for business reasons (mostly book keeping at first). You can accept credit cards through PayPal.
It depends on your type of business and how much in sales you will be doing. Sometimes Paypal does not work if you have a lot of transactions or customer who don’t want to sign up with them to enter their payments. Sorry no easy answer because there are so many variables.
It is always best to offer as many possible payment options for customers as possible. Here are reasons why you need to accept both:
1. Not everyone on this earth has a Paypal account, and not everyone is willing to sign up for one. If you don’t have a merchant account, you will lose the sale of majority of the people who do not have Paypal accounts. Unfortunately, there is no data how many people actually abandon their shopping carts upon seeing that only Paypal is offered for payment processing.
2. If you can get a good merchant account provider, transaction fees of Paypal is way higher and more expensive. This is true especially if you are selling high ticket items.
3. Paypal is good if you are selling on ebay, or majority of your buyers are on ebay, or you are doing your online selling as a hobby.
4. You don’t get victimized by phishing schemes with your merchant account. There are tons of phishing emails on Paypal around, so you need to be careful on that one.
5. Fraud controls. This depends on the industry – some are more prone to fraud than others. Unless you can put addons in your payment gateway (e.g. get Verified by Visa or some other controls), Paypal takes care of this on their end. So with a merchant account, the more fraud controls you put, the transaction costs becomes higher and keeping it becomes more expensive.
I suggest give customers the option of using which is most convenient for them — both. If they want to use their credit card, then you have the merchant account to process it. If they want to use their stagnant funds in their Paypal account, then let them do it.
Then review how many of your customers actually use Paypal vs. merchant account, and estimate the cost for each. If only 3% of your customers use Paypal, then you can reconsider and use only your merchant account