So What is a Credit Card Processor? (cont.)
Contributed by Melanie Vannuys
Just a word of caution, though. This type of credit card processing is fine for businesses just starting out that don't have the capital to purchase a merchant account right away. But in the long run, you will end up paying more. It is strongly recommended that as soon your business is able to carry the extra bill, you should get your own merchant account.
When Does It Become Better To Have A Credit Card Processor Instead of Pay Pal?
If you have a PayPal account, your customers can always use their credit cards to pay that way. PayPal is a great system. There are no monthly or setup fees, you get your money right away and you can even get a debit card to access the funds in your account. However, if there is a downside to PayPal, it's the fact that the company takes 7.5% of the payments you receive.
If you are a business just starting out, a PayPal account is really more than sufficient to run your business AND accept credit cards. However, once your business starts to boom and you're making $500 a month or more in sales, it's time to reconsider that merchant account. Look at it in terms of losing money. With that $500 in sales, you are losing $37.50 in fees to PayPal. Once your business REALLY gets booming, think about how much you will lose with only Pay Pal to accept your credit cards.
