Paypal VS. Merchant Processing for Small Business

Lysa Miller

Lysa Miller

Lysa Miller is the CEO of Ladybugz Interactive Agency in Boston MA. She is the founder of The MetroWest Women's Network and Sales Empowerment Summit for Women. She participates in many roles in her company including sales, strategy, project management, web design and growth hacking for clients. She has been featured for her expertise in CIO, Entrepreneur, Forbes, and various other online publications. She volunteers her time as a guest blogger for and to manage, to help support local businesses and the local region. Lysa is also the mother of 4 beautiful children and lives in downtown Hudson, MA, a West of Boston town noted for its booming re-gentrification and entrepreneurialism.
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What is your preference?

Clients thinking about doing any kind of E-commerce ask me this question all the time. My answer is never the same, as it depends on multiple variables and what you are trying to do on your website. Many of my clients have smaller budgets and few resources, so I have to take that into consideration when recommending a payment platform.



For someone who needs a very easy, simple to setup without any kind of SSL certificate, then Paypal can easily meet those needs.

I find Paypal best for clients who sell just a few items or change only one or two items they sell regularly. An example might be a gift certificate or a ticket for an event, things that don’t really require a shopping cart and an ecommerce gateway.

I personally use Paypal on my website because I don’t handle many transactions and I also use Paypal for purchasing company items and paying my sub-contractors, so I never have to take the money out and I use my Paypal account for those reasons.

Custom Ecommerce Button for Paypal

Some “out of the box” cart programs also use Paypal because it is much easier for the client to setup than an ecommerce shopping cart, SSL certificate and merchant gateway.

You really need a developer to do this unless you are using something like “Shopify” or “Big Cartel” which host the SSL certificate for you and integrate very easily with specific gateways.

Paypal can also be used for invoicing and receiving client payments. Many people use Paypal and feel more comfortable with it’s security than using SSL on service providers servers which have in recent days have had numerous security attacks including DoS Attacks and Brute Force Attacks.

Another reason you may want to use Paypal is that you can charge extra for the processing fee, you can build it into your price and note the processing fee and therefore recooperate that Fee. With merchant processing, you can’t really charge extra for that fee unless you build it into your overall pricing. The merchant processor will always take a percentage along with charge monthly fees.

Merchant processing also has various conditions you must meet on your website in order to be approved to take credit cards. You must state your privacy policy,  terms and conditions set out by the bank, a refund policy and a secure shopping cart (require SSL and dedicated IP) can be added after approval. This process can take extra time and if you are just looking to get started fast and easy, Paypal can be a good immediate solution.

Paypal is very easy to setup. You just enter your bank information, confirm some Paypal deposits and you are up and running.

Paypal also has it’s downfalls. When you are paid on Paypal it takes three days to have money deposited into your account, so if you want immediate access to the funds, it is not possible.  Also their buttons don’t look the greatest so you might want to add your own buttons and this involves designing and implementing those onto your website, which is very easy (we will link to a guide on how to do this shortly) Payment Gateway, Ecommerce sites Boston MA

Gateway/Merchant Processing

If you are doing more transactions and want the money credited immediately to your bank account, then setting up a merchant gateway such as through a merchant processor is a better way to go. Also if you want to auto-debit customers on a regular basis you must also use a merchant processor.

If you are serious about your ecommerce business, you will want to eventually move away from Paypal unless of course you really love it and it works for you. But having a merchant processor has it’s advantages also. It allows you to have a more dynamic and custom shopping cart experience than Paypal does. You can also use it with shopping cart sites such as “Shopify“, “Etsy“, “Big Cartel“, etc. and you don’t need a secure certificate for any of those services as they host the certificate for you. Most of these sites will have a “recommended” vendor they promote but they do allow you to use your own.

If you have a physical business where you take credit cards, you can’t use Paypal for this. You will need a credit card swipe machine. There are many options for that, that I won’t discuss here.

So it is up to you how you want to do ecommerce on your website. We are happy to answer any questions you have to try and point you in the right direction! Give us a call today with questions (508) 439-4781.

We would also love your feedback on the topic and what your experience has been. So leave your comments here for other readers.


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