PayPal or Merchant Account, Which Is Good for You?


If you are in business to make profits just like any business venture, you are definitely conscious of costs. While many entrepreneurs tend to lean towards PayPal as their means for accepting payments from customers, the reality is that this might not exactly be the best payment gateway for your business as a merchant.

PayPal doesn’t have an allocated monthly fee, which gives many businesses the impression that it’s a way to reduce their overhead. This has an underlying irony because its rates tend to be much higher compared to most traditional merchant accounts.

Worse still, PayPal has a characteristically different business model than traditional merchant account services. Thousands of entrepreneurs that do not understand this difference have lost their businesses. This only serves to underscore the inherent danger of using PayPal exclusively.

PayPal Merchant Account
PayPal Merchant Account

The different model of PayPal

While traditional merchant account providers issue different accounts for each individual business, PayPal, in the most basic way, has ONE merchant account which they let millions of people use.

This only means that they don’t know anything about your business or you. Why is this bad for you? They have no idea regarding the likelihood of you disappearing if a customer wants a refund (chargeback, the dreaded part of the business).

So, what do they do? If the slightest thing happens that they consider ‘unusual’, they immediately freeze your account entirely or hold your money as their only recourse. When you have not access to your money, no need to mention: you’ll be out of business.

Notice that:

The main card companies Visa and MasterCard like other card brands normally give users 6 months to dispute a charge on their card from the final point of delivery.

As an entrepreneur therefore, there’s up to 6 months’ time after you sell a product during which you may get a dispute (chargeback). Chargeback means that the money from that particular sale would be pulled from your bank account automatically.

Why traditional merchant accounts?

They have a “One to One” account structure and get to know details on your business and specific situation before they offer you a Merchant Account. They will therefore know you and your business, with the risk levels involved before you can ever start accepting cards.

This means that the likelihood of ever freezing your account or holding your funds is much lower so you can bet on business continuity.

If you need such a merchant account, PayPal is not your option. Consider visiting for information regarding how to get an account.