I'm doing a bit of research for a client so that I can give them a recommendation on how best to accept payments from their website.
I've done a good bit of poking around the internet, and I want to make sure that I'm clear about what exactly this entails.
My options as I see them (please correct me if wrong):
1. Paypal (I realize there are other 3pp's out there, but, let's face it, PP has name recognition, and *MOST* people generally don't have problems with them)
2. Merchant Account + secure payment gateway
The paypal route is pretty clear to me, but the second option is a little murky. If I use a company such as authorize.net to be the gateway, I still need a merchant account, correct? It seems as though a solution such as WellsFargo SecureSource Suite combines the two (merchant/gateway).
Looking at some of the fees, though, I have to wonder what a person gains by using the merchant account/gateway route instead of Paypal. I realize that Paypal hasn't always gotten good press here on the forum (and other places), but it seems like fees are much lower (plus no recurring fees incurred simply by using their services). I realize also that the volume of sales processed by my client will also help determine which solution is best, but I still don't necessarily understand why it makes more sense to pay higher fees for a "real" merchant account/gateway as opposed to the 3PP, like Paypal.
Well PayPal allows you to get started right away. Setting up an account is fast and easy.
The advantages of using a merchant account include:
Complete integratin with your website. The customers are not sent to a third party website. If you are proccessing a high volume then using a merchant account is actaully cheeper. You have more of a say in customer disputes. PayPal and other 3 Party Payment Proccessors give preference to the client to be on the safe side and avoid chargebacks.
Paypal is ok, easy to use and set up. And ofcourse it is fairly well known among the buying public, both good and bad.
To use a Merchant Account + secure payment gateway does give you some advantages though.
1. Your shop will look more serious
2. The customer do not have to leave your site to pay
3. With your own merchant account, you are creating a "track record" for transactions which you can later use as reference in banking related mathers.
4. The name which shows on the customers credit card bills is yours and not some 3 party payment processors.
5. You stand at a stronger position regarding chargebacks. (Paypal and some other 3 party providers, will always side with the customer)
I have to agree with you, while there are some advantages to both, most seem to feel that having a true merchant account gives the impression of a more professional business. Also, not having to leave your site to make the payment is a big issue, and some cause for losing business ultimately because there are too many steps in the payment process with 3rd party processors.
Also, you can find many merchant providers that offer both merchant accounts and the gateway setup all under one roof, which is a nice convenience.