I used to recommend PayPal Website Payments Pro until they screwed me recently. I assumed the people that were abused by PayPal were few and far between until it also happened to me. Now I tell everyone to get a real merchant account. It's just not worth gambling with your ability to process transactions.
We switched from a merchant account to PayPal because of fraud and a dramatic increase in fees during the time we used the account. By the time we moved we were paying over 4%, plus flat fees! We were also dealing with several fraudulent orders a week, and the process for dealing with them required faxing documents back and forth, which is just idiotic.
The fraud protection stuff at PayPal is better, though not great (too many false positives to call it great), and our rates are much lower.
I do have a fear that someday they'll just decide to screw us and close our account, since it has happened to so many people. That'd be a bad day, for sure. But, in the meantime, I'm spending less money and have a dramatically better UI for managing things like chargebacks and refunds.
Do get back to us in about 6 months to let us know how your merchant account is performing in regard to chargebacks. In my experience, we never win with our merchant bank, yet almost always win with PayPal.
According to this PayPal becomes more economical somewhere between the $15 and $30 mark. However, I am not sure my comfort level with PayPal increases with larger transactions. If I am dealing with larger sums of money I want access to live customer service people and the regulations that banks have to follow. I do not want random email support, weeks of poor communication, a company that has a history of complaints when dealing with high dollar and high monthly volume transactions, and a company that acts like a bank but is not held accountable to banking regulations.
EDIT: For that added peace of mind I will pay the extra couple hundred a month.
If you have a PayPal Business Account (which doesn't cost anything), you get the business support phone number. It's answered on the first ring by a real person.
I get payments daily from as little as $1.95 to as much as $3000, with volume in tens of thousands a month. I've never had my account frozen/limited/whatever or had any trouble getting in touch with support.
PayPal is also registered in all 50 states as various types of money transfer agent, and in several countries operates as a registered bank.
They're not perfect, but I don't find them worse than your typical bank, which has the same rules as PayPal for freezing accounts, holding funds after an account is closed, etc.
If you find you "must" use PayPal, be sure to keep as little balance in there as possible at all times.
Also, close the original bank account you tied to the PayPal account ASAP, because they can and will withdraw reversed charges and fees without notice, at any time on their whim.
There's a way for PayPal to deposit money into your bank account every night at midnight. I forget how I stumbled upon this, but we use it at Carbonmade now.
I have to say it isn't for my case though. I'm using Paypal's website payments pro for my current app, and that comes with a monthly fee not factored here.
Also when I looked at using a real merchant account, these fees vary greatly and no one I was looking at was as cheap as 1.8. All the merchants I looked at were more expensive than Paypal percentage wise. I also feel like this doesn't account for some batch fees I saw.
Not to mention that many times with merchant accounts you are paying a merchant fee and a gateway fee.
I think the point of the calculator is to get you to request a quote for another merchant provider from FeeFighters if your rates aren't as low as those in the calculator.
Amazon Payments is often overlooked as a fine alternative to Paypal, for those who have had issues with Paypal's... inethical business practices. Moxie Marlinspike uses it to accept donations for example.
Another awesome thing about Amazon payments is that they don't charge you anything to send an invoice and accept payment with a personal account. I think paypal takes something like 3%.
Hmm... So if I want to have $0.99 payments, it will cost me 32% to go with paypal or 26% to go with setting up my own merchant account, and both are only for domestic payments.
Suddenly Apple's 30% for payments from ~100 countries sounds like a bargain.
PayPal has micropayments. 5%+$.05 fee, so it'd be ten cents to process your .99 example.
I haven't figured out how to actually get these rates yet, but I've just started looking into micropayments options, and PayPal looks like one of the best.
That's true for $0.99 app purchases. Apple has a lot of power in that they can pool the transactions and actually charge your credit card not for $0.99, but for all your purchases over a certain time period. This is something an individual app maker couldn't do and makes perfect sense for Apple to do.
Where I think Apple is egregious is in their subscription pricing... for example, 30% is a lot to take on a $15 kindle book or $8 netflix subscription
Paypal has a micro-payments model that makes it so that it is SIGNIFICANTLY cheaper to use paypal for transactions under <$12 as opposed to a traditional merchant processor.
Yeah, the website also does not take into account monthly fees if you have PayPal Premium (or whatever it is called) account, which I would assume most larger volume merchants are paying.
Charlesju, that is an entirely different service offered by PayPal, that does not make the website wrong! This is comparing to a standard PayPal account, which is by far the bulk of what people use.
Furthermore, it's inaccurate that PayPal's digital goods would be cheaper if you're doing <$12 transactions. They charge 5%+$0.05, so thats $0.55 on a $10 transaction. With a decent processor like one you'd find on FeeFighters, you'd pay ~2% + $0.23, or $0.43 on that same transaction.
That being said, it makes sense for digital goods companies with <$5 transactions.
It looks like for many businesses (including mine), the fee difference between PayPal and a merchant account is fairly small. Given that, what I really want is a service with:
1. a good API
2. good customer service
neither of which PayPal has in my opinion (we've used PayPal for over a year). PayPal's API works fine most of the time, but occasionally it returns a 500 HTTP error on a successful charge. This has caused several customer problems for us, and we've taken the ridiculous step of considering a 500 error a success and manually following up in those cases. We've pretty much given up on trying to work with their customer support, and are looking for alternatives. Anyone have recommendations on service with a great customer support?
As always gotta love the feefighters design and graphics.
But I would have just preferred to see a 2D plot with average transaction and monthly volume along the X and Y and regions shaded as blue/red for paypal/merchant account.
The design's beautiful, but I can't help wondering why they didn't stick a PayPal affiliate link below the PayPal fees table and a "sign up to compare merchants" link below the merchant fees table
it gets to be a little complicated, especially with the advanced options.
interestingly, it looks cheaper to use paypapl if you have a really low monthly throughput (not surprising), or a really high one (kinda surprising). but never by that much.
This doesn't take your market into account. For example, my Dutch debit card isn't compatible with international credit-card numbers. My paypal-account is directly connected to my bank account (direct debit), so it practically works like a credit card, but I can only use it online. This means that I'll only order stuff at websites which support Paypal.
Fee differences are such a small piece of the puzzle. There are so many other differences between PayPal and merchant accounts that can make or break your business. And good luck escaping once you're locked in one way or another.
It seems odd to me that charging business credit cards would cost you more with a merchant than charging normal consumer credit cards. Are businesses really more likely to incur chargebacks or generally be problematic than consumers?
Did anyone notice the relationship changes as you scale both options. The slider almost always shows paypal winning for transactions under $100 except at the $5,000 level and the million level. I'd love to see this in graph form.
If I ran a brick and mortar business, I could see how Square would be useful. But the source link and every discussion thread here are discussing e-commerce solutions, not Paypal's virtual terminal [1].
[+] [-] drm237|15 years ago|reply
[+] [-] SwellJoe|15 years ago|reply
The fraud protection stuff at PayPal is better, though not great (too many false positives to call it great), and our rates are much lower.
I do have a fear that someday they'll just decide to screw us and close our account, since it has happened to so many people. That'd be a bad day, for sure. But, in the meantime, I'm spending less money and have a dramatically better UI for managing things like chargebacks and refunds.
[+] [-] originalgeek|15 years ago|reply
[+] [-] keltex|15 years ago|reply
If your going to choose a credit card processor exclusively based on saving 0.2%, then I don't know how the hell you got to $20K in monthly sales.
[+] [-] RickHull|15 years ago|reply
I believe that default was chosen to illustrate the 'inflection point'.
[+] [-] SriniK|15 years ago|reply
Micropayments - 5% + $0.05 Regular - 2.9% + $0.30
[+] [-] jeffmould|15 years ago|reply
EDIT: For that added peace of mind I will pay the extra couple hundred a month.
[+] [-] dangrossman|15 years ago|reply
I get payments daily from as little as $1.95 to as much as $3000, with volume in tens of thousands a month. I've never had my account frozen/limited/whatever or had any trouble getting in touch with support.
PayPal is also registered in all 50 states as various types of money transfer agent, and in several countries operates as a registered bank.
They're not perfect, but I don't find them worse than your typical bank, which has the same rules as PayPal for freezing accounts, holding funds after an account is closed, etc.
[+] [-] ck2|15 years ago|reply
Also, close the original bank account you tied to the PayPal account ASAP, because they can and will withdraw reversed charges and fees without notice, at any time on their whim.
[+] [-] spencerfry|15 years ago|reply
[+] [-] sammcd|15 years ago|reply
I have to say it isn't for my case though. I'm using Paypal's website payments pro for my current app, and that comes with a monthly fee not factored here.
Also when I looked at using a real merchant account, these fees vary greatly and no one I was looking at was as cheap as 1.8. All the merchants I looked at were more expensive than Paypal percentage wise. I also feel like this doesn't account for some batch fees I saw.
Not to mention that many times with merchant accounts you are paying a merchant fee and a gateway fee.
[+] [-] runako|15 years ago|reply
[+] [-] pitdesi|15 years ago|reply
Apparently, when you were looking for a merchant account, you weren't using FeeFighters to bid down your fees ;) or you would've gotten a better rate.
Try us out!
[+] [-] chopsueyar|15 years ago|reply
[+] [-] lolfoo|15 years ago|reply
[deleted]
[+] [-] burgerbrain|15 years ago|reply
[+] [-] schwabacher|15 years ago|reply
[+] [-] kmfrk|15 years ago|reply
[+] [-] antihero|15 years ago|reply
[+] [-] YooLi|15 years ago|reply
Suddenly Apple's 30% for payments from ~100 countries sounds like a bargain.
[+] [-] SwellJoe|15 years ago|reply
I haven't figured out how to actually get these rates yet, but I've just started looking into micropayments options, and PayPal looks like one of the best.
[+] [-] pitdesi|15 years ago|reply
Where I think Apple is egregious is in their subscription pricing... for example, 30% is a lot to take on a $15 kindle book or $8 netflix subscription
[+] [-] charlesju|15 years ago|reply
Paypal has a micro-payments model that makes it so that it is SIGNIFICANTLY cheaper to use paypal for transactions under <$12 as opposed to a traditional merchant processor.
https://www.x.com/community/ppx/xspaces/digital_goods
[+] [-] jeffmould|15 years ago|reply
[+] [-] pitdesi|15 years ago|reply
Furthermore, it's inaccurate that PayPal's digital goods would be cheaper if you're doing <$12 transactions. They charge 5%+$0.05, so thats $0.55 on a $10 transaction. With a decent processor like one you'd find on FeeFighters, you'd pay ~2% + $0.23, or $0.43 on that same transaction.
That being said, it makes sense for digital goods companies with <$5 transactions.
[+] [-] MrAlmostWrong|15 years ago|reply
[+] [-] jasonlotito|15 years ago|reply
While people like to blast PayPal, they all to often forget that merchant accounts are controlled by banks who can be even more uncaring.
[+] [-] wiredd|15 years ago|reply
1. a good API
2. good customer service
neither of which PayPal has in my opinion (we've used PayPal for over a year). PayPal's API works fine most of the time, but occasionally it returns a 500 HTTP error on a successful charge. This has caused several customer problems for us, and we've taken the ridiculous step of considering a 500 error a success and manually following up in those cases. We've pretty much given up on trying to work with their customer support, and are looking for alternatives. Anyone have recommendations on service with a great customer support?
[+] [-] jayzee|15 years ago|reply
But I would have just preferred to see a 2D plot with average transaction and monthly volume along the X and Y and regions shaded as blue/red for paypal/merchant account.
[+] [-] notahacker|15 years ago|reply
[+] [-] noodle|15 years ago|reply
interestingly, it looks cheaper to use paypapl if you have a really low monthly throughput (not surprising), or a really high one (kinda surprising). but never by that much.
[+] [-] JCB_K|15 years ago|reply
[+] [-] MicahWedemeyer|15 years ago|reply
I cover it a little here: http://peachshake.com/2010/06/15/saas-subscription-billing-o...
[+] [-] alex_h|15 years ago|reply
[+] [-] pitdesi|15 years ago|reply
[+] [-] rapind|15 years ago|reply
[+] [-] nphase|15 years ago|reply
[+] [-] tjmaxal|15 years ago|reply
[+] [-] iwwr|15 years ago|reply
[+] [-] afterburner|15 years ago|reply
[+] [-] jason_slack|15 years ago|reply
Did I mention Square?
http://www.sqaureup.com
My life is much easier for sure. No Paypal Bulls*it.
[+] [-] martey|15 years ago|reply
[1]: https://www.paypal.com/vtswipe
[+] [-] whatusername|15 years ago|reply
No US Only Bulls*it.
[+] [-] OstiaAntica|15 years ago|reply
[+] [-] pitdesi|15 years ago|reply
Square works great for some people (if you are swiping a card), it's pretty expensive, but really cool to not need a merchant account.
We're working on a new version of the square calculator, will post it on HN when we're done.
Also, the link is http://squareup.com (you have a small typo)