Many merchants are familiar with PayPal. Typically, for merchants accepting less than $5,000/month in credit cards, PayPal offers an easy way to accept credit cards online, and may be the perfect solution for certain merchants. Paypal's service allows you to create an online account along with an easy method of capturing sales on your website. Paypal's method of processing can also provide drawbacks that may not be acceptable for many different organizations. Below we'll discuss what types of merchants are best suited for Paypal, followed by merchants who are best suited for Dharma:
Merchants Better Suited for Paypal
PayPal is designed to work in place of a merchant account and gateway combination. They provide simplicity for the online merchant, however, their solution for card-present payments is expensive, at 2.70% and $0.15/transaction. As such, PayPal is a solution that will work best for eCommerce merchants. The simple pricing model is attractive for small merchants with low volumes. At volumes of about $5,000/month and higher, it starts making more financial sense to have a merchant account.
- Start-Up, Online-only Merchants: PayPal is typically best suited for merchants who do not need to physically swipe credit cards. New businesses are attracted to the simple pricing model.
PayPal's services are inexpensive to start out with - no monthly fee, and no long-term contracts. That can be fantastic. However, many merchants find that once they're processing at higher volumes, it becomes important to have a partner who can help out with your payment processing needs. PayPal is not designed to be consultative or responsive for customer support issues. That's not the same at Dharma. We're here to walk you through the proper procedures when accepting payments, and help you find the best solution for your needs. We're also here when you need help down the line. It's nice working with a partner whom you can trust for reliable service and expert advice.
- Merchants with Limited Support Needs: PayPal offers a broad, "One-size-fits-all" solution. That can be perfect for small merchants with limited needs, but may not be great if you have questions or service needs.
PayPal is very advantageous to merchants who are not processing high monthly volumes. That's due to the fact that PayPal has no static monthly fees. However, PayPal does charge $30/month for a Virtual Terminal - so if you're in need of a Virtual Terminal, PayPal is probably not your best option. In our experience, we've found that PayPal's lower static fees are best for merchants processing less than $2,000/month online. At volume levels higher than that, PayPal's higher percentage fees and Virtual Terminal fees start outweighing any advantages to a low monthly fee.
- Low-Volume Merchants: Since PayPal has no monthly fees, merchants who process sporadically may benefit. Don't count on getting paid quickly, though - PayPal can take up to 30 days to fund your account.
PayPal may not offer all of the bells and whistles of a standard merchant account, but they might be a great solution to figure out what your needs are as you start processing credit cards. Since there is only a basic initial setup, there's little commitment to get started.
- New Merchants: Since Paypal has no monthly fees, (if you don't use a Virtual Terminal) PayPal can be a great way to "get your feet wet" with payment processing.
Merchants Better Suited for Dharma
Merchants who are processing at higher volumes expect a transparent and fair pricing model. While the simplicity of PayPal's pricing model is appealing, that simplicity is not cost-effective at higher volumes. PayPal offers a flat rate of 2.9% and $0.30/transaction - much higher than what you'd find on the average Dharma transaction.
Shopping cart abandonment is a very real problem that online merchants are forced to deal with. PayPal, while providing an easy checkout experience, fundamentally promotes using their own payment services as opposed to credit cards. This means that your customers will be pushed to pay directly with their PayPal account, and may not know how to pay with their credit card. This is confusing, time consuming, and frustrating - all which can lead your customer to "give up" on the sale. Going through a merchant service provider and payment gateway avoids this issue altogether.
- Established Online Merchants: As an online business, you're likely aware of shopping cart abandonment, an issue where consumers get all the way to the checkout page with items in their cart, but then leave at the last moment. This often happens when consumers realize they'll have to utilize PayPal.
- Merchants with High Volume: Many merchants are drawn to PayPal for the simplicity in their pricing. While simplicity is great, it comes at a cost.
Having a dedicated terminal is sometimes an absolute necessity. Processing through a smartphone is perfect for certain merchants, but is not ideal for others. Typically, organizations who do not wish to share a smartphone, or be dependent on cellular service opt against PayPal's method of processing. Since PayPal only allows card-present transactions through a smartphone, dedicated retail processing is not recommended with PayPal.
- Retail Merchants: PayPal is great for low-volume, online business. But they don't offer extensive support or hardware options for the true retail merchant.
Having a dedicated payment gateway gives you access to features that PayPal is not able to provide. As merchants grow into higher credit-card volumes, they typically find that they outgrow PayPal's entry-level services. Many mercants find themselves in need of more advanced reporting, gift/loyalty programs, or inventory tracking tools. An external gateway can provide these tools, whereas PayPal cannot.
- Merchants with Advanced Needs: If you need to process recurring payments, store your customer's data, or maintain inventory levels, then PayPal will not have all the tools you need.
Get hassle-free Reporting, amazing service, and a partner who shares your values.
Partnering with Priority Payments allows us to offer MX Merchant . You’ll have detailed access to your account so that you can view the cards you accepted, fees you paid, when funds deposited into your bank account, and more. In addition, you can count on the amazing customer service that Dharma is known for. Plus, we’ll be donating 50% of our profits back to the non-profit community! This is payment processing the way it should be.
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