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PayPal, Merchant Account, or Both?


By: Chris Malta,

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People often ask me if a PayPal account on their ECommerce Store is all they need in order to collect credit card payments from their customers.

After all, people can pay you through PayPal, using a credit card, whether they have a PayPal account or not. Since PayPal is essentially free to set up and easy to use, why not just go with that, and forget about using a Merchant Account?

Well, there are reasons, and they’re important ones.

In my ECommerce businesses, I use both PayPal AND a Merchant Account. I find that about 30% of my payments from customers come through Paypal, and about 70% through the Merchant Account.

Why the difference? Well, PayPal tends to make it a little difficult for people to pay if they don’t have a PayPal account. That leads to a higher percentage of shopping cart abandonment. For example, if your customer does not have a PayPal account, and PayPal is all you offer them, many customers will back out of the purchase even if you tell them they can use PayPal without an account.

Those that don’t back out have a harder time paying than they should. PayPal will ask them if they have a PayPal account. The customer will have to respond “no”. Then PayPal will ask them if they WANT to have a PayPal account. The customer will have to respond “no”. THEN PayPal will tell them how wonderful a PayPal account is and ask them if they’re SURE they really want to go through life missing out on all the wonderful things a PayPal account will do for them. Again, the customer has to respond “no”.

Okay, that last one was a bit of an exaggeration, but you get my meaning here. When you have a customer who has their wallet out and is trying to pay you, that’s the worst time to start asking them questions about joining this or that or opening accounts with payment companies. For goodness’ sake, just let them pay you without letting PayPal frustrate them into leaving your shopping cart!

A Merchant Account will allow your customer to simply choose MasterCard, Visa, Discover, etc., as their payment method. It allows them to simpy enter their CC info and get the payment made without being pestered and getting frustrated.

The smartest thing to do here is to offer both PayPal AND a Merchant Account for your customers to choose from. Those who have PayPal accounts and like to use them will appreciate the convenience, and those who don’t will appreciate not being hassled.

A Merchant Account does NOT have to be expensive and difficult to set up. In fact, Intuit has come our with an excellent Merchant Account solution that is remarkably affordable and extremely reliable.

The Inuit Merchant Accounts, unlike others, has no setup fee, no contract length, no cancellation fee, no statement fee, no annual fee, no gateway fee, and is very competitive when it comes to rates. This is almost unheard of, and really is an excellent deal. You can find them at if you want to check them out.

So, offer both PayPal and a direct Merchant Account on your site. Your customers will do more than thank you for it…they’ll complete their purchases much more often!

This article has been provided by Chris Malta's blog. Find more great information about your online business on Chris's site. HERE.

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