PayPal is an excellent payment solution for a business on a low budget that wants to get up and running quickly and easily. But at some point, your business will outgrow PayPal. That’s inevitable. PayPal is attractive because of its low cost and easy setup but once you’re seeing more sales with larger transaction sizes, it might be time to switch to a merchant account. It may seem scary to consider going off PayPal, but you could be saving a ton of money by switching. Use these 7 signs to tell if your business is ready to switch from PayPal to a merchant account.
1. Your business is growing
Typically, if your website is not going to be running many transactions or big ticket items, PayPal can save you some money. You only pay for what you collect and the setup is easy. Once you see higher sales volumes and larger transaction sizes, it might be time to switch to a merchant account. PayPal’s rate doesn’t favor bigger businesses. You can get a more affordable rate with a merchant account. It is also better for your credibility as a merchant to offer more than just PayPal as a method of payment.
2. Your abandoned cart rate increases
In some versions of PayPal, your customer will be taken away from your website to complete the checkout process on PayPal’s site. Your customer will need to login with their own PayPal account, or create a new one, which is cumbersome when you want to purchase now. Customers shop online because its fast and convenient. The last thing they want to do is fill out a form or sign up just to buy your product or service. This could be the reason for a spike in your number of abandoned carts – your customers are going to competitors with an easier checkout.
3. You want your money asap
Taking payments with PayPal means more time in-between you and your money. PayPal is known to hold your funds in your PayPal account for 5-7 business days before moving it to your bank account. That’s a life time in the business world. Cash is king and in order to operate your growing business effectively, you need faster access to your funds. With a merchant account, the funds go directly from your customer’s bank account to yours. Direct access to your funds comes in handy when you need to replenish inventory, make big investments and especially for unforeseen expenses.
4. You’re selling to businesses
PayPal is great for Business to Consumer selling. But once you grow and realize you’re shifting to more of a Business to Business model, you’ll want to rethink the way you take payments. B2B sales are rarely done on PayPal even though the PayPal brand is widely recognized. Businesses need a way that is more secure like purchasing directly on your website.
5. You want more privacy
Customer data is never shared when processing a payment with a merchant account. It’s your responsibility to protect the information between your website and your payment gateway, but the actual transaction is always protected. PayPal on the other hand isn’t so secure. As a private company, they can share your customer data to third-party marketing research companies. They won’t share your bank account or credit card information, but everything else is fair game.
6. You want a better reputation
Growing sales and a growing customer base means that your brand is established and recognized. PayPal is seen as an alternative payment method for younger business who are starting out – it’s your starter payments software. Having a merchant account means you are doing business in the same way as solid, trusted businesses around the world. This means more confidence and credibility in your business. Your website can directly accept payments and you don’t need to take your customer away from your site.
7. You need more flexibility
PayPal is a third party system – you’ve got to work with the tools they give you. A merchant account enables you to customize the checkout experience with your brand’s look and feel, discount and coupon codes, customized email receipts, as many shipping options as you want to offer – sky’s the limit.