Paypal As A Merchant Account

I’ve been asked about using Paypal and Google Checkout as a method of payment in a store. I’m happy to give my thoughts, but first a disclaimer. I’ve never used Google Checkout, so I don’t have any comments about it. I would assume that many of my thoughts about Paypal would also apply to Google Checkout, but I really don’t know.

As I’ve mentioned before, I own and run two separate online stores. Both of them have Paypal loaded as a payment option in addition to a regular merchant account. Here’s an interesting tidbit, my first store, which has been open for almost three years, gets a Paypal payment almost every day. My second store, which has been open for around six months, has never gotten a Paypal payment. I have no earthly idea why this is. Both stores are hosted by Yahoo, have the same checkout procedures, and sell similar (but different) product. It’s very interesting to me that customers would use Paypal on one, but not the other. Any ideas?

I think that having a Paypal option on your site is really important in this day and age. EBay and Amazon both offer it, so why not you? It’s free and simple to set up a business account. Plus it gives consumers a little more confidence as they don’t have to type in their credit card number into your site.

I don’t notice much difference between the fees of Paypal versus my merchant account. One drawback is that Paypal does not automatically deposit funds into your checking account like your merchant account does. If you want that money moved to your bank, you’ve got to manually do it. Not a big deal to me, but some might find that to be a pain.

Paypal gives consumers the option to verify their shipping address, and their bank account; plus they protect the merchant if you sell to consumers who have taken the time to verify both. Unfortunately, many consumers fail to complete these processes even though they are terribly easy. Many complete one and not the other. This gives you a decision to make. If they’ve failed to verify anything, I handle it just like an AVS mismatch on my merchant account. If they’ve done one, I usually look at the order and make a decision.

There can be lots of hassles and paperwork involved in setting up your merchant account, in which case Paypal can be a great alternative if your store is new and you just want to get your feet wet. However, I do feel that it is a mistake to use Paypal exclusively for the long haul. An overwhelming percentage of my customers DO NOT use Paypal for their purchases. So I feel I would miss out on a great deal of purchases by not offering a credit card option.

All in all, I think Paypal is a great service. It’s certainly mainstream, and can lend some credibility to your store. Just make sure it’s a payment option, not a requirement, if you want to be a serious retailer.

4 Responses to “Paypal As A Merchant Account”

1. Tiffany Says:
   April 17th, 2008 at 4:44 pm

   I was talking with a friend with a site that does about $300k/month & has accepted PayPal for years.

   He told me something very surprising – in the past year google checkout has gone from being smaller than PayPay to now being 3 times larger than PayPay.

   Together, Google Checkout and Paypal are about 15% to 20% of his business.

   As a shopper, I like using PayPay – for me, its faster & easier than using a credit card.

   T

2. Justin Says:
   April 18th, 2008 at 2:04 am

   WOW, I am absolutely shocked by that. Maybe Google Checkout has caught on quite a bit. Maybe it deserves more attention.

3. Sophie A. Says:
   June 11th, 2009 at 1:41 am

   Great site! I am loving it!! Will come back again – taking your feeds also, Thanks.

4. Kelly Brown Says:
   June 12th, 2009 at 3:37 pm

   Hi, very nice post. I have been wonder’n bout this issue,so thanks for posting

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