Hi, UK here, I've been tying myself in knots for the last week between banks and merchant accounts and payment processors, and maybe it was all for nothing.

I'm about to launch a hosting service for my own brand of ecommerce software. As a new business, I've found that banks don't like to give merchant accounts without an established trading history.

But I talked to Cardnet from Lloyds this morning, and althought they would still take me on they are not happy with the thought of recurring billing. Obviously, I want to charge my customers on a monthly basis.

Am I going about this all wrong?!?

Perhaps I should just be invoicing my customers on a monthly basis and letting them pay be by bank transfer.

How do you take your money?

- Direct debit?
- Monthly invoice?

If it's an invoice, what are your payment terms and penalty charges?

And if you're taking monthly credit card payments, how did you swing it with your bank? And what mechanism do you use every month to generate the payments? Hope you guys can help, this is currently a huge mystery to me. ;)

Thanks in advance.

Find a merchant account provider that specializes in internet merchants. I'm not sure if cdgcommerce.com is USA only, but they are very good. Traditional banks generally don't have a clue about online transactions and internet services.

--Tina

As I say to the Mrs, I'll take it anyway I can get it! :D

I've learned to be a tad more flexible when folks want to give me money. So I'll take just about anything, where the end result is $$$ in my bank account - that being paypal, credit card, cheque, money order, two dozen eggs every week. :)

My latest venture had no trading history, when I successfully applied for a Merchant account. I did write up a huge thing about my previous experience in the hosting business, so I think that might have helped the application along.

I manually run the billing batch (in my modernbill) at the start of the new mth, and auto charge all credit card payments, and then invoice all PayPal and other clients who chose their payment method. I don't have penalty rates for late payment. I'm flexible with that, and don't think charging penalty rates is a way to build a positive connection to your clients.

i think u need to consider the number of clients you are going to have? i am looking to launch my hosting company early to mid 2006, as im only just starting out and dont know how popular my hosting is going to be im intergrating paypal into the site and subscriptions are carried out on a yearly basis.

Once my business grows (hopefully) ill look at changing to worldpay which seems to be a better long term solution especially when dealing with larger client numbers. Obviously you can integrate this into a shopping cart or even better modernbill or something similar that keeps trake of your clients and all your payments!

Get a business checking account for now. We accept monthly payments via PayPal and Authorize.net (invoice). Why would you need to have your customers pay by bank transfer? Doesn't seem more professional if you accepted credit cards?

Try worldpay! They're brilliant when it comes to customer service, and have a very extensive range of services.

I use a combination of Paypal and Card Service International. Signing up with CSI was as painless as could be, and they have absolutely no problem with recurrent billing whether they do it for you (via their web panel) or you do it yourself via API.

I use Paypal Payments Pro as a backup for CSI card processing but haven't needed it yet.

Paypal is the way to go now with the pro version you can even take orders by phone with low fees.

I would personally recommend 2checkout it’s much better than paypal. I would say that paypal is the worst 3pp on the internet full of problems infact it shouldn’t be on the internet. Stay away from paypal unless you’re ready to face problems! Paying a little extra is worth it….trust me.

No way, I've never had a problem with PayPal. It's a good method of receiving money, it's just that a credit card processor like 2Checkout or CSI make your business look more professional. Onerisk, what kind of problems have you experienced with PayPal?

Erm... Like police coming down my house and arresting me in suspicion of deception to paypal or something and then after the interrogation letting me go knowing that I couldn’t do such because I never used a computer within the date those fraudulent transactions occurred. But not only that. Paypal froze my account before that so possibly how could I have even receive the payment. Paypal is fraud. Checkout `w`w`w`.`p`a`y`p`a`l`s`u`c`k`s`.`c`o`m , Loads of stories there!

We've processed five figures ($xx,xxx) per MONTH with Paypal for the last six years and have had maybe two problems in that time...and both were resolved very quickly.

As for the website onerisk posts about - - of course a huge corporation, with millions of customers, is going to have some unsatisfied people. With a name like that, you sure aren't going to find any stories from their happy customers posted there. That website is VERY slanted.

--Tina

i think what people tend to forget is paypal is probably the biggest type of payment system of its type, therefore its bound to have more complaints about it because it has such a huge client base!!! All companies and businesses have problems at some point, theres always someone who wants to moan or theres always some way of improving the way ur business is run! Your always bound to get someone who isnt happy or who has had a problem using such a highly popular service!!

i think what people tend to forget is paypal is probably the biggest type of payment system of its type, therefore its bound to have more complaints about it because it has such a huge client base!!! All companies and businesses have problems at some point, theres always someone who wants to moan or theres always some way of improving the way ur business is run! Your always bound to get someone who isnt happy or who has had a problem using such a highly popular service!!

Still, there shouldn't be any reason to discredit a service entirely because a few people are unhappy. Most PayPal users are satisfied customers. I am one. And if the cops didn't bust down a few doors the lot of you would be complaining that PayPal does nothing in terms of fraud investigation. It's the double standard. Also, I've said this befor, and I'll say it again, use a credit card processor, especially if your client base is in the thousands.

Also, I've said this befor, and I'll say it again, use a credit card processor, especially if your client base is in the thousands.

Why do you say that though?

--Tina

First, it makes your business look more professional, and second, there are credit card processing services that will actually give you a fraud score when a card is charged and perform fraud verification services. PayPal won't get around to any kind of fraud verification unless it's in the form of contacting your local police department. I'm not negating PayPal as a way to transfer funds, mind you. I do it too. It's just me preference to use a processor instead.

First, it makes your business look more professional, and second, there are credit card processing services that will actually give you a fraud score when a card is charged and perform fraud verification services. PayPal won't get around to any kind of fraud verification unless it's in the form of contacting your local police department. I'm not negating PayPal as a way to transfer funds, mind you. I do it too. It's just me preference to use a processor instead.


It may have been more professional to use a standard merchant account in the past, but more and more Paypal is becoming the preferred payment processor for quite a few huge corporations (like iTunes, Egghead and others). Paypal does perform the exact same kinds of fraud screening, with their Website Pro, that merchant accounts do...AVS, etc. included. Further, at this point, your customer doesn't even have to have a Paypal account in order to pay you. Their fees are, in alot of cases, cheaper than traditional merchant account providers AND you can get a Paypal debit card in which you can pay bills from your account and get 1.5% cash back.

At this point, I don't see any reason to consider a merchant account over a Paypal account for payment processing.

--Tina

Tina, I find it quite interesting that you are using a PayPal account as your primary form of acceptance over a merchant account. Surely a PayPal account gives you alot of the features a merchant account would give you (especially with Website Pro) but it is after all a 3rd party payment processor

With a merchant account, your funds are dispatched directly to your bank every few days. Surely you'd trust your bank more when dealing with large volumes of incoming payment than a 3rd party processor like PayPal. And obviously, a bank offers you way more financial services with large cash volumes than paypal can. PayPal can technically keep all your money if they want to, according to their TOS. They do not come under the sort of provisions a financial institution is suppose to in the US

We use paypal for customers who want to pay via their paypal accounts. However paypal transactions account for a small percentage of our total monthly revenue.. And most of that monthly revenue is processed by a merchant account. I don't see why we should use PayPal as an intermediatory

We too use PayPal. Some customers don't want us to have their CC numbers, that's where PayPal comes in. And to expand on Yash's comments, PayPal is a bank...just not my bank. It just so happens that most of our clients charge through our merchant. Also, just because big companies like iTunes , eBay, and Skype use PayPal, doesn't necessarily mean it's the best thing around. Plus, we have our merchant set up so that when a client charges his card it doesn't redirect them to the CC processors site which is usually what you will find happening.

Hi there,

I don't know why you're having those problems. I've always used Barclays for my banking services and so I haven't shopped around for my merchant account. But I am setting up a business at the moment here in the UK. I have the company registered and I have my business bank account with Barclays. I called them up to see about getting a merchant account and they didn't have any problem with me being a new company at all. I told them I'd be doing both single and recurring payments and that I'd be taking payments in USD. They want £200 setup fee and 2.4% per credit card transaction and £0.35 per debit card transation. Then I'll be using ProTX as the gateway which is £20.00 a month if you do less than 1,000 transactions a quarter - £0.10 a transaction with no recurring fee if you do over 1,000 a quarter. So try giving Barclays a call, they've gbeen good to me.

Good luck

Sorry, I forgot to note... I'd recommend against taking payments via PayPal. My accountant here in the UK won't account for transactions processed by PayPal, so you're better of sticking just to credit card payments via the merchant account.

Why won't your accountant do PayPal transactions?

Tina, I find it quite interesting that you are using a PayPal account as your primary form of acceptance over a merchant account. Surely a PayPal account gives you alot of the features a merchant account would give you (especially with Website Pro) but it is after all a 3rd party payment processor

Yes, it is a 3rd party processor. Besides the title "3rd party processor"...who cares? ;)

With a merchant account, your funds are dispatched directly to your bank every few days.

Yes, I know. We've gone through many, many merchant accounts over the years and processed over a million dollars through them combined.


Surely you'd trust your bank more when dealing with large volumes of incoming payment than a 3rd party processor like PayPal.

Not really. Banks make mistakes, just like Paypal. Neither is really any more trustworthy, in my opinion. I've had more bank mistakes than I have Paypal mistakes though. Right now I've been battling with our current bank to stop charging me for 'online bill pay' which I have cancelled at least 6 times (once each month) since the trial period ended. I also had a bank literally lose a $6000 wire transfer once.

And obviously, a bank offers you way more financial services with large cash volumes than paypal can.

If that's what you need, you can simply dump your Paypal funds into your bank account each night. No big deal. Paypal isn't a bank any more than a merchant account is a bank. They are both payment processors...which can (or not) work with your bank.


PayPal can technically keep all your money if they want to, according to their TOS. They do not come under the sort of provisions a financial institution is suppose to in the US

Yeah, but why would they want to? They're not in business to run off with your money, they're in business to keep you a satisfied customer. The few instances I've heard of Paypal keeping people's money were generally in the case of outright fraud. A merchant account provider will do the exact same thing (reverse a payment they credited to you).

We use paypal for customers who want to pay via their paypal accounts. However paypal transactions account for a small percentage of our total monthly revenue.. And most of that monthly revenue is processed by a merchant account. I don't see why we should use PayPal as an intermediatory

If Paypal is not for you, that's perfectly fine. I just have a problem with people giving advice which implies that Paypal is inferior to other payment methods and that it is somehow less professional. Unless you have valid reasons why Paypal is inferior or less professional, then it really boils down to your personal preference. :)

We recently switched to only accepting Paypal for new orders, after 8 years of accepting both traditional cc payments and Paypal payments. After quite a bit of research into our payment history, chargebacks, fraud, problems with deposits, etc. - - I was surprised to realize that Paypal actually yielded the least problems and the most profit. The fact that they now offer Paypal Website Pro solution, which is pretty much like a traditional merchant account, AND the 1.5% cash back debit card...there was really no reason why we needed to keep both payment methods.

--Tina

Sorry, I forgot to note... I'd recommend against taking payments via PayPal. My accountant here in the UK won't account for transactions processed by PayPal, so you're better of sticking just to credit card payments via the merchant account.

Sounds like Paypal isn't the problem...but your accountant. Paypal allows you to download in several formats, for easy importing into the most common accounting software packages.

It also begs the question - - how, exactly, are you reporting Paypal income if your accountant won't count it?? *yikes*

--Tina