Merchant accounts — especially those sponsored by your bank — can be very costly. But if you have an online store (and if you don’t have one, you should!!), you need some type of online credit card platform.
In case you are not familiar with the term, online credit card platforms are a service that allows you to accept credit cards for online purchases.
Back in the earlier days on the internet, we used Authorized.net. Their service allowed us to link from our website to their interface to accept credit cards. Likewise, we had access to their website to manually input credit card info.
But the downside of this type of service was the fees. When using Authorized.net (which is just the gateway/processing service) we were charged a per transaction fee, a percent of sale fee, a monthly fee and a statement fee (if we wanted a printed statement). And that did not take into account the fees required by the actual merchant account that hooks you up with Authorize.net. Sounds confusing? It is!!
By the time we were done, we were paying $60 a month for the service before we even made a sale (NOTE: This may be different now, as our experience was several years ago.)
About four years ago, we switch to PayPal for all our online product transactions. PayPal worked well — especially after they allowed non-PayPal members to input their private credit card information rather than opening an account. Had this change happened sooner, we would have switched our merchant account plan to PayPal much earlier.
PayPal was slick! No more monthly fees — just a small percentage of each sale and a small transaction fee. The interface was easy to connect with our websites, the money was deposited in our business PayPal account immediately, and could be transferred to our bank account within days — or in our case, we acquired PayPal debit cards and paid lots of our inventory and operating expenses directly out of our PayPal account.
The downside of PayPal was that it was confusing to some of our customers. When buying our products, they were taken to the PayPal payment website and many folks complained because they did not have a PayPal account! Even with detailed instruction on how to use their own credit card with the PayPal interface, we were still losing sales.
Also, there is no interface with the free PayPal option (I understand the paid option has this feature) to directly input a customer’s credit card. But PayPal does have an option to email an invoice to the customers with instructions on how to submit their credit card information.
This year we added Stripe to our merchant account options. Stripe proved to be easier for our customers as the interface was accessible right from our shopping cart page and did not take them away from our site to complete the transaction. And we are able to also keep PayPal as an payment option for those who still wanted to use it.
Here is a shot of our check-out page:
Stripe does not charge a month fee and has no hidden fees like so many merchant accounts. We are charge a percent of sales. The downside — Stripe takes a few days to transfer funds to our bank account. But, it does the transfers automatically once the money has been collected.
Using both services seemed like a win-win for both us and our customers.
To learn more about credit card platforms, check out the article on The Mogul Mom: To PayPal or not to PayPal: A Review of Online Credit Card Platforms