Posted by: Owner/President
on Aug 10, 2011
Tagged in: web
, accept credit cards
As e-commerce designer/developers, we are often asked which merchant account is best to use with your e-commerce store. Often times, a bank sales representative has approached our clients and convinced them that the bank merchant account solution is best for them. It is our feeling that bank merchant accounts are not appropriate for at least 80% or more of the e-commerce stores our there, especially the e-commerce start up! When I investigated the overall cost of using a merchant account versus PayPal, the numbers were staggering. See the chart below:
|BB&T Set Up Fee
|Authorize.net Set Up Fee
|Second Monthly Fee
||2.10% with a $0.06
||**2.9% + $0.30 USD (if sales volume
is higher fee goes down to less than
||the set fee with BB&T
As far as ABD is concerned, PayPal is the clear winner in terms of affordability for e-commerce start ups. But let's discuss the pros and cons of both. Bank merchant accounts are great in that they put the money you earn with your e-commerce business directly into your bank account. With PayPal that is an additional step and there are limits on how much you can transfer to your business account per day. The limit is $500 a day and this limit is in place to prevent fraud, which is a good thing, right? PayPal requires no up front investment to get started whereas a bank merchant account costs anywhere from $300-500 or more. There are no monthly charges for a PayPal account where the bank merchant account featured here charges $15.90 a month to use their payment gateway. The only disadvantage we can see for using PayPal is the higher transactional fee but if you have a higher total number of sales, the transactional percentage is lowered for PayPal. Click the *read more* link below to see how much lower it goes based on total sales.
Our biggest advantage we can see with using PayPal versus a bank merchant account is simply this: you are only charged a fee when you are actually making money, ie. on a transactional basis. You might get a merchant account and be out all the investment costs without making one red penny. The biggest advantage we can see with using a bank merchant account is that it is tied directly to your bank account not making you take the additional step to transfer money. If it were me and my e-commerce business, I would not want to take the risk in investing heavily in a bank merchant account before knowing whether or not I would make one sale or not. The additional one minute step of logging into PayPal and transferring money to my bank account would not be worth taking the investment risk.
Bottomline, whatever your choice when choosing who to be your payment processing vendor, ABD's employees have the skill set to tie into whatever system you choose. We have worked with various banks and used their merchant services. We have also used PayPal not only for our clients but for our personal e-commerce sites. PayPal is preferred for e-commerce as far as we are concerned!