M5Media, Inc. –

Merchant Account or Paypal?

by on Jun.23, 2009, under Ecommerce, Newsworthy, Programming

It often comes up in the development phase of an ecommerce website… How do you want people to pay you?  The majority of customers have no idea what the pro’s and con’s of using Paypal vs. a Merchant Account and Gateway are so here it is:



  • Easy to setup
  • Cheaper for a startup business with low volume sales
  • Some people trust Paypal more (owned by EBAY)
  • No SSL needed (paypal handles payments)


  • May cost more depending on the rate you negotiate with a MA
  • Takes customer off of your site
  • Some people trust Paypal less (to each his own)

Merchant Account (MA)


  • Often appears more professional
  • Keeps users on your site during the payment process
  • Can be cheaper if you are doing a lot of volume
  • Better customer retention and success rate


  • More programming overhead to setup
  • Have to pay a % + a transaction fee
  • Often a monthly fee to keep the MA open
  • Need an SSL certificate (for scrambling of CC numbers during transmission to the payment gateway)


It’s a mixed bag really, in my experience few people want to pay the overhead of setting up a merchant account with the fees and trouble.  However, customers seem to prefer that method and your success rates (from surfer to purchaser) are usually higher.  I usually recommend starting with Paypal, then when you are getting a lot of sales, switch to a MA.

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