Often the first tool new online merchants use is PayPal. It’s easy to setup, there are no monthly fees, and you can package up an order and send it over to them for payment. However, once you get to a certain level of business most people graduate to a full online merchant account for several reasons:
- The PayPal discount fee of about 3% is higher than normal accounts
- Most shopping cart systems require more than provided by PayPal
- It won’t integrate with Google Analytics e-Commerce reporting
- The reporting on the credit card statements misses your name & phone
eConsultancy has a good overview of the various components of an online merchant account. One thing excluded from the conversation about other merchant accounts is the “integration”. Prior to going to your bank or other providers you first need to identify the needs that you have for the data management. To me this is more important than the fees, discount rates, etc.
When looking into integration it gets pretty technical so you may need to consult with your marketing agency or web development firm. Basically, you’ll need an API to communicate between your shopping cart software and the bank. Your cart will not work with all systems. Those that do work are not all created equal. Before reviewing merchant accounts based on price you should find out that it is:
- Compatible with your cart system
- Fits your processing needs like recurring monthly transactions
- Has reporting and search tools work well
- Great reputation for their customer support and documentation is solid.
Start with your needs and work backwards. The price can be re-negotiated as your volume grows. However, a bad fit is only going to get worse as you grow.
[Note: PayPal acquired VeriSign in 2005 and has since offered full merchant account services. Yet, most people when talking about PayPal do not mean full merchant account services]
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Lots of good information Paul, I’ll be ‘bookmarking’ it for future reference.