Accepting credit cards at your new business

**Financeguy74** · 07-02-2010 12:10 AM

Hey all, I've been a big reader on this site for a long time, but first time poster. Once your business is at the phase where you're ready to starting selling your product/service, the ability to take credit cards can make all the difference. People have a tendency to just 'google' a credit card processor and go with the first thing that comes their way. That's not the best way to go about it and this can be a costly mistake later on (especially if you unknowingly sign into a 3 year contract).

No matter what phase of startup you're in, credit card acceptance will eventually become a necessity. if anyone has any questions in this arena, feel free to ask.

-Sean

**ACMAir** · 07-02-2010 12:46 AM

Welcome to YE first off. What do you think of PayPal, for online credit card processing? I've been using it, and its pretty helpful so far.

**Financeguy74** · 07-02-2010 07:35 AM

Paypal, to put it simply is a reliable option. It's well known and easy to use.

There are downsides however. It generally costs a full percentage point over a traditional merchant processor. On a $100 sale, you can be giving up $1 more than you normally do. If the margins on your product are thin, this can affect the bottom line.

The other downside is their overwhelming tendency to side with the customer in a charge dispute. A customer can dispute your charge and win, despite you having all the paperwork necessary to document that goods or services were fulfilled.

Paypal works but you can certainly do better!

-sean

**Anthony Tori** · 07-02-2010 09:16 AM

There are no monthly fees or minimums for PayPal if using the basic processor, which is fine for most small businesses. I use PayPal for my e-commerce sites and Authorize.net for my bigger business.

**homenotion** · 07-02-2010 03:10 PM

I use Paypal too and have been happy with it.

**idealcost** · 07-03-2010 09:53 AM

I am in the payments industry. I own a consulting firm, I don't sign up new accounts. Many merchants have hired me to decide whether to use a conventional merchant account or Paypal when they first start their businesses. They are often surprised at how often I recommend Paypal. Many credit card processing reps bash Paypal and why wouldn't they? They don't get a commission if someone stays with Paypal, but they do when merchants switch to their service.

Objectively speaking, there are scenarios in which using a conventional processor is a better option than Paypal, but Paypal surely has its place and one would have to analyze each business on a case by case basis to decide which is the most viable option.

**Financeguy74** · 07-04-2010 10:54 AM

Originally Posted by Anthony Tori

There are no monthly fees or minimums for PayPal if using the basic processor, which is fine for most small businesses. I use PayPal for my e-commerce sites and Authorize.net for my bigger business.

Monthly fees and/or minimum monthly costs are negotiable charges with a regular merchant processor. They are not mandatory.

As for authorize.net, that's probably the most common gateway for ecommerce available. Auth.net does not actually settle the transactions and make the deposits to you account. You will probably notice that your monthly statements are from a bank or independent merchant service provider. You can use the auth.net interface to enter the sales yourself(can paypal do this? I don't remember) or simply connect it to your online shopping cart.

Either way, I do not have anything against paypal as I originally mentioned they were reliable. I'm happy to hear that many of you have positive experience with it.

I'm assuming not every young entrepreneur here conducts business or plans to conduct business purely over the internet though. For those that don't there are terminals, wireless terminals, pos systems, and software that will allow you to accept payment face to face.

**jonn655** · 07-05-2010 05:04 AM

Paypal and eBay (owned by the same company) both have similar policies - to give preference to customers because they feel that their reputation will be affected. However if the service is good there is no reason why anyone should be framing a dispute. Isn't it? Perhaps it will be good for sellers to express these concerns to them before using.