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Old 10th April 2006, 11:22 AM   #1
Linda
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Default PayPal - A Safe, Secure Option for Small and Medium Businessmen

Here is an overview of the pluses of PayPal.

"If you are auctioning some thing on line, PayPal can take care of automatically notifying the winning buyer of ending of listing with back link to listed item. PayPal also takes care of your shipping needs. It offers you tools to calculate shipping costs, create shipping labels, track delivery, pay for insurance for shipped items etc."

Catch it @ http://www.smallbusinessbrief.com/ar...ce/004638.html

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Old 10th April 2006, 06:58 PM   #2
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Only thing I don't like about PayPal is the exorbitant fees...

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Old 12th April 2006, 11:18 PM   #3
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Cyber, do you use a solution that is cheaper? I've always thought their fees were extremely reasonable - of course, I'm not doing eBay so I'm not getting hit from both sides. I'd love to hear about a cheaper ecommerce solution

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Old 13th April 2006, 08:52 AM   #4
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Their fees are just a little bit higher, but I think it's worth it. I can't wait to see what Google comes out with...

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Old 17th June 2006, 09:01 AM   #5
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Default Paypal Fees

I think paypal is one of the cheapest solutions you can get. Its also the most reliable.

I am confused about you saying they have high fees. If you get your own merchant account it will be much higher. You will have account fees, tranfer fees, gateway fees and so on. You could pay $25 to $100 a month even if you sell $0.

Paypal is a great option. Its cheap, free to keep and you do not incure any extended contracts. Plus they will give you a debit card you can use directly from your paypal account.

I run a hosting company and the majority of my clients use paypal. So much so that I almost don't need to offer any gateway access for merchant accounts.

You really cannot beat it. If you think there is something better, then you probably do not realize the shortfalls of that service.

Also the mass popularity of paypal is unreal. Even stores in stripmalls use paypal rather than aquiring their own merchant account. It's odd to me, but its true.

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Old 18th June 2006, 01:20 AM   #6
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I agree, I just switched to Paypal from my bank's Merchant Services. The fees are good, especially if you do online and over the phone transactions. I love their Virtual Terminal, it's very smooth. With Paypal, I can take more methods of payments, too, which is always a good thing.

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Old 19th June 2006, 01:11 PM   #7
jason.bordeaux
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Default Make the right choice for YOUR business.

Paypal is a valid option for many small business owners - especially e-commerce. For an actual storefront that performs face-to-face transactions, the only reason to use this type of service would be if the merchant in question does very, very, very few transactions or is unable to receive approval (for credit history reasons) to have their own merchant account.

Like any other aspect of your business, though, it needs to be reviewed on a case by case basis. For a very small business, the difference in the one time costs of setting up a personal merchant processing solution when compared to PayPal's free setup can be the single most important factor. For businesses that don't have issues with capital and are able to build for the long haul, a merchant account is quite often the better option. Factors such as rates, fees, annual transaction amount, average transaction amount, services, support, security, etc., must be considered for every merchant. It is important to note that no single processor is the best choice for every business, but every business has a processor who is its best choice.

Visa and MasterCard, the card associations, receive the majority of the fees that merchants pay for their processing services. The remainder of the fees, or the margin, is what the merchant processor receives. The card associations have designated over 240 different card categories that each merchant processor must recognize and process. Every merchant processor, no matter how big or small, is charged the same rates and fees by the card associations and every merchant processor differentiates each card category utilizing exactly the same card category name as designated by the card associations.

The card categories are designated in the following manner:
1.) Industry – Retail, Restaurant, Hotel, Government, Utility, Service Industry, Gas Station, Supermarket, etc.
2.) Type of Card – Personal Visa or MasterCard, Visa or MasterCard Debit, Visa Rewards, MasterCard World, Commercial Visa, Corporate MasterCard, etc.
3.) Method of Processing – Face-to-Face (swipe), Mail Order/Telephone Order, Key Entered, E-Commerce, etc.
4.) Processing Efficiency – Address Verification, Authorization/Settle Match, Timeliness of Settlement, etc.

These categories are as diverse as they seem. If a cardholder uses the same card to buy something from a retail establishment, lunch at a restaurant and pay their electric bill, all three of these transactions will be designated as a separate card and rate category. If a retail establishment accepts two different types of cards (ex. - a Visa Debit Card and a Visa Rewards Card) for a purchase of the exact same amount, both of these transactions will be designated as a separate card and rate category. The same is true for a Face-to-Face transaction as opposed to a telephone order. Furthermore, if a merchant does take a telephone order and doesn’t enter the required cardholder information, the transaction will be downgraded to a higher priced card and rate category than a properly executed telephone order.

So what does all of this mean to merchants?

For many merchants, the hardest thing to do is accept the fact that the merchant processing system, to some extent, simply is what it is. There really are that many card categories. There really are that many different rates and fees. Your merchant processor deals with and manages this system – they do not have the power to change it. Any merchant processor who claims to be dealing with a better, cheaper or more advantageous system than other processors isn’t being honest.

Sure, some merchant processors offer a simplified statement format with bundled categories, but only to keep from disclosing individual rates. The simpler the statement format the less a merchant knows about what their true credit card processing costs are or should be. A simple statement also makes it very difficult to perform an accurate comparison to other programs. For many merchant processors, their most successful customer retention tool is their customer’s complete inability to understand their services.

Every merchant should insist that their merchant processor identify and define the rate category of every type of card they receive so that there is a better understanding of what fees are being paid, why the fees are paid, whether their processing can be done more efficiently and if their processor offers truly competitive services. Any processor that will not assist a merchant in achieving these goals either has something to hide or is not able to offer the services that any customer has the right to expect.

So what does this have to do with PayPal?

PayPal offers a single rate to its customers that may or may not be competitive depending on your processing criteria. Although they have the same rate and fee considerations to contend with as any merchant processor does, they do not distinguish between these categories when they pass these fees along to their customers. Obviously, they decide on rates that will allow them to profit. They're a business, they're out to make a profit and there's nothing wrong with that. What it means, though, is that the rates they assess their customers may or may not be competitive depending on the specific circumstances of each business. What it also means is that each PayPal customer is unable to fairly compare the full scope of their processing costs using PayPal's statement information because the information is not detailed to the extent it needs to be to do a fair comparison.

One example of how difficult it is to perform an accurate comparison comes from PayPal's own website. At https://www.paypal.com/cgi-bin/websc...fee-calculator, Paypal offers a simplified price comparison tool for prospective customers. This tool uses two specific rate categories to compare Visa and MasterCard transactions, "Discount Rate" and "Rate for Interchange Downgrade Transactions". The "Rate for Interchange Downgrade Transactions" is autopopulated at 0.6% higher than the "Discount rate" - an extremely uncompetitive assumption. If this rate is changed to a more reasonable difference the rate is automatically changed back to the 0.6% difference when the user presses the calculate option. Also, lower priced debit cards are not factored into the equation. Basically, an uninformed user is comparing PayPal costs to what PAYPAL SAYS the competitors will charge for similar services.

Lastly, Paypal takes on some of the responsibilities and revokes some of the rights that a merchant would have with their own merchant account. A good example of this is a quote from the article that Linda referred to earlier in this posting:

"Though, PayPal has loss rate of less than 0.5% which is remarkably down when compared with Master Card or Visa, PayPal has good number of critics as well. Major reason for the grouse is that with PayPal you lose your rights under consumer protection laws. PayPal would not allow you to issue charge back in case any unauthorized activity happens from your credit card or PayPal account. They also complain that PayPal has inserted a term to take funds form your bank account to ensure a recovery against you.

Worst charge against it is that if someone pays you with a stolen credit card, your account is immediately flagged as being "criminal behavior" and any money in that account is confiscated!

In fact in a lengthy public trial, PayPal opted to settle out of court and pay $9.25 million and walk away from the entire allegation as it feared that judgment may force it to change its questionable practices."

What information like this means to any individual merchant depends on the characteristics of each merchant. There are dozens, maybe hundreds, of things to consider when deciding how to process transactions. Be sure not to make your decision on what works for someone else, but on what you find will work the best for you and your business.

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Old 19th June 2006, 02:49 PM   #8
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I don't sell merchant accounts. It's not a big deal to me.

BUT, it really gets my goat when people continue to talk about such high fees for a merchant account. They are almost always lower than PayPal, and you don't have the risk of having your funds frozen or your account suspended because someone said they did not receive something.

I've had merchant accounts since the 70's, online accounts since the mid-90's and I have ZERO horror stories.

Here is a recent reply I made to another of these wild, exagarated posts on the cost of merchant accounts.

Pagebuzz, pay particular attention to the fact that if I sell nothing in any given month, there are no fees at all. With the PayPal virtual terminal, you still pay their pound of flesh, even with no sales.

Part of the problem is that with the latest addition to PayPal's offerings, many are still using figures from their regular business or premier accounts. The virtual terminal / gateway type account is different.

Anyhow, here is my other recent reply -

Originally Posted by patkelly0
I noticed a lot of questions regarding merchant accounts, and accepting credit cards and whatnot. Although thats what the business I just started does, this is just an FYI for everybody. [of course if something appeals to you, you can email me at [address removed]... i mean come on.. who would turn down an interested person ]

THE BOLD are my replies - pete

what to look for in retail processing (face to face swiped into terminal) :
1.8% or less discount rate

1.74%

$0.30 swipe rate

.25

$1500 or less equipment purchase (leases are priced differently)

$ 500 or less

$0.60 or less debit (0% transaction rate)

.45
24 hour merchant support

Yes

low minimum volume fees ($40 or less)

NO MINIMUM

$95 or less application fee

$ 95 one time

$45 or less annual fee

NO ANNUAL

$100 or less registration or setup fee

NONE, just the $ 95 above

$15 statement fee or less

NO STATEMENT FEE

ONE MONTHLY FEE of $ 9.95 (swiped only).


**** make sure you ask about these fees. These fees DO exist, even if they're not mentioned. many times they can be waived. trust me, just ask***


what to look for in MOTO (mail or telephone order[card not present manually imprinted]) and internet processing
2.5% or less discount rate

2.34%
$0.35 swipe rate or less

.25

$1000 or less virtual terminal purchase (leases are priced differently)

FREE V/T
FREE GATEWAY, too


24 hour merchant support

YES

All these same as above -

low minimum volume fees ($40 or less)
$95 or less application fee
$45 or less annual fee
$100 or less registration or setup fee
$15 statement fee or less

Can have one account for both. One monthly fee of $ 19.95 covers swiped and online. Single $ 95 to open both.

Also included at no charge - FREE WEBSITE, FREE ONLINE ECOMMERCE STORE, 3 FREE CHARGEBACKS per month, FREE ONline CHECKS, CHECK GUARANTEE, FREE GATEWAY - $ 19.95 covers all of this, including hosting for wesite/on-line store.

PLUS - for just starting or seasonal businesses - No transactions at all in any given month and there is no charge at all - not even the $ 19.95 monthly fee.

I don't sell this, I am not a rep, and agent, an affiliate or anything else - just a satisfied user. For $ 19.95 a month I have a swiped account, an online account and two totally free, hosted online shops. I get my online sales approved, but not finalized, so I can come in and add shipping, correct for out-of-stock items, etc.


basically for retail you should be able to do around $3000 - $4,000 in sales a month for under $125 including lease, under $150 for the same amount of sales for MOTO.

hope this helps some. feel free to ask any questions, if i know, i'll give you the ugly truth

Again, I am not selling, just comparing.

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Old 19th June 2006, 04:52 PM   #9
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As I said in the posting you referred to, Pete, you have a plan that works well for you - and that is fantastic.

What patkelly0 did in that post is a perfect example of everything that is wrong with merchant processing today. He listed a few things that he felt were his merchant processing service's strengths and laid them out there hoping to attract customers. In this case, the pricing was just as bad as the method, so you called him out ASAP.

(By the way, sorry for bashing on you, patkelly0. I'm sure that you just signed up somewhere on the internet to "start your own business" doing contract sales and thought you would be "offering the lowest rates". Live and learn. For all of you merchants out there, you should make sure that you speak to an experienced professional. This service is NOT a commodity.)

PayPal is very easy to use. Paypal does not help you understand your merchant processing environment. For some merchants, it offers competitive rates. For others it does not. It takes away some of your processing risk. It takes away some of your processing rights. With a merchant processor you abide by MC and Visa regulations. With PayPal you abide by MC, Visa and also PayPal regulations. Pro. Con. Pro. Con.

The fundamental problem with choosing a merchant processing option is that most merchants don't understand the criteria for choosing. There's more to it than collecting fees, folks. It's about YOUR business profile and how it relates to processing options and not just a list that a merchant processor hands to you with their rate and fee information. Get educated and then make a solid decision just like you would with any other aspect of your business.

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Old 29th June 2006, 11:34 AM   #10
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Quote:
Worst charge against it is that if someone pays you with a stolen credit card, your account is immediately flagged as being "criminal behavior" and any money in that account is confiscated!
Can you back that up?

I've had two chargebacks on my Paypal account since I began using it (as a merchant) and it was quite easy to manage. They didn't freeze all of my funds. They froze the one payment that was in question. It was handled w/in a matter of a week and business continued uninterrupted as usual.

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