My Merchant Account Blog

Should I have my Own Merchant Account

Tuesday, August 29, 2006

It has often been said that if you are in the United States and doing about $1,000 a month, usually a merchant account is better than Paypal. But is that exactly true?

The Standard rate with Paypal is 2.9% with a $.30 transaction rate. Let's say that you are doing 100 transactions a month at $10. With Paypal, you are going to be charged about $60.00 and a merchant account is going to cost around $80. If we increase that to $20 per transaction at 50 transactions, that is $44 going to Paypal and about $39.00 with a merchant account through Mile High Merchant Accounts. And then increasing that to 100 transactions, Paypal is going to be about $90 while a merchant account provider will be about $50.00.  With a merchant account, you will receive your money faster and you do not need to have to worry about going through a third party processor.

So why $1,000? Or where does it actually become beneficial? Well the thing with Paypal is you need to sign in and get your money. And this can take a about five business days. And with a merchant account - the money is automatically deposited into your bank account in two - three business days. So now you are also looking at time and money.

Create a simple spreadsheet to compare - you can use this as an example. It has the basic charges to get you started. Once you go through and figure out where your cutting point is, now you know what might be better for you in the long run. Keep in mind that most gateways charge for a transaction fee - Quantum Gateway does not - the do not even charge a monthly fee, something you will not find in any other electronic payment gateway. So you might need to add $.10 to this as well if you are going to use Authorizenet.com as your electronic payment gateway. Verisign's Payflow is a bit more expensive but gives you 1,000 free transactions, so that is cheaper that Authorizenet.com. Authorizenet.com can make your costs increase your costs probably by at least $10 or so each month since you might have to pay $25 or so a month for their gateway, while Quantum Gateway is free with no extra transaction or monthly costs and includes fraud prevention tools to help protect you from chargebacks.