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Paypal™ Virtual Terminal vs. Merchant Account Processing

When making a decision on payment processing for your website or business, Paypal™ might be one of your options. However if you are processing credit card payments via their virtual terminal, you will find that the rates and fees charged can be much lower with a traditional merchant account. Especially a merchant account with Service Related.

Paypal™ is a solid company with a good reputation. However, many users are frustrated with the lack of support that can come with a payment account with Paypal™.

A virtual terminal will allow you to log into a secure site on the web and process credit card transactions from virtually any location in the world. This is a great option for merchants who are on the go. The comparisons below will give you a demonstration of whether it makes sense to choose a merchant account with a virtual terminal at Service Related, or to select a virtual terminal with Paypal. As you will see below, it will depend upon the scale of your business and the number of monthly transactions that you process.

Paypal versus a Merchant Account

In our first example, we are comparing an online merchant who is processing $2,000 worth of credit card transactions per month with an average sale ticket of $20 (100 transactions).

  PayPal Service Related Credit Card Processing Services Monthly Savings
Discount Charged $ 62.00 $ 43.80 $ 18.20
Transaction Fees Charged $ 30.00 $ 20.00 $ 10.00
Monthly Fee $ 30.00 $ 9.95 $ 20.05
Total $ 122.00 $ 73.75 $ 48.25

Total monthly savings would be $48.25 or 39.5 % lower than PayPal

Annual Savings with a merchant account would be $579.00

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Paypal vs Merchant Account

Example 2 represents a retail merchant who processes $10,000 worth of credit sales per month having an average sale ticket of $50 (200 transactions)

  PayPal Service Related Credit Card Processing Monthly Savings
Discount Charged $ 270.00 $ 159.00 $ 111.00
Transaction Fees Charged $ 60.00 $ 40.00 $ 20.00
Monthly Fee $ 30.00 $ 9.95 $ 20.05
Total $ 360.00 $ 218.95 $ 151.05

Savings per month would be $67.90 or 39 % lower than PayPal

Annual Savings with a merchant account would be $814.80

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Paypal vs. Merchant Account

Our third example represents a merchant who has a retail location along with a web site where they are processing a combined volume of $110,000 in credit card payments per month. For this comparison, we will calculate the savings based upon a sales mix of 60% retail and 40% online. Our savings numbers will be based upon 1,000 credit & debit card transactions for the month, with an average sale of $100.

Due to the monthly savings that can be achieved, this account would be best as two merchant accounts. One account would handle the the processing for the Internet sales volume and the second would be for the retail transtactions. These accounts can be tied together on a single master account for ease of use and recordkeeping.

  PayPal Service Related Savings
Discount Charged $ 2,640.00 $ 2013.00 $ 627.00
Transaction Fees Charged $ 300.00 $ 200.00 $ 100.00
Monthly Fee $ 30.00 $ 9.95 $ 20.05
Monthly Gateway Included $ 9.95 -$9.95
Total $ 2,970.00 $ 2232.90 $ 737.10

The Monthly Savings would be $ 737.10 or 24.8% lower than PayPal

Annual Savings with a merchant account would be $8,845.20

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The three examples above that compare a traditional merchant account with PayPal's virtual terminal are meant as an illustration. There are assumptions taken into account with each illustration such as the number of transactions and card types. Please contact us for a full evaluation or being your merchant account rate quote today.


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