May 25, 2006

PayPal - Definitely eCommerce for Small Businesses

Today on Fast Company Magazine's Company of Friend's business networking group, there was a discussion about credit card processing. I asked the group about PayPal. I know years ago it was the dog of online commerce, now it's the King, the Queen the darling. Here's comments from the small businesses in the group

Paypal does offer a VT terminal, which allows for phone and mail order. Additionally, they offer a money market account for balances that remain in the Paypal account. It currently earns 4.72%.

What many business owners fail to realize is that credit card processes
charge higher rates for corporate or business credit card transactions. Call
up your merchant, and ask them the rate for a corporate card. It is higher
than a personal card.

Paypal charges a flat rate, regardless of the type of card (personal or
business) or if it's an Amex, Visa or eCheck. If you're doing over 10k a month it's 2.2% plus.30 cents a transaction.

Finally, they offer a transparent module which is handled entirely on your
site. So the customer does not need to sign up to PayPal to make a purchase.

I've had a few chargeback's, all of which were alleviated. I also use Authorize.net, Cybersource, and RBSlynk on various sites.

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PayPal merchant services is quick and painless. Perfect if you are doing low volume. There is no set-up fees and the monthly fees are reasonable.
They also give you one rate. Most of the others only quote you the best rate they give you.

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If you primarily do card-not-present transactions (i.e. you take cards over the phone or web), paypal at 2.9% (and lower) + 30¢ is less expensive per transaction than typical card merchants who charge over 3% (not to mention all kinds of fees). Even for those that are at, say, 2.7% + 20¢, it would take well over 500 transactions per month to make up for the monthly fees (plus, paypal only works via the web).

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