Cardswitcher’s PayPal calculator

The default payment provider for any new online business is PayPal. Its simplicity is highly appealing to any new business owner – the joining application is online and quick, and every transaction incurs the same fee rate irrespective of card type. But as the business grows, PayPal can be a very costly option, and many businesses are often unaware of just how much cheaper the alternatives can be.

Cardswitcher’s PayPal calculator

So we have launched our PayPal calculator which will give you a comparison of the cost of using PayPal against a traditional Internet merchant account available on Cardswitcher and an Elavon merchant account bought through SagePay. Typical savings on Cardswitcher are 35% to 60% for a business with annual card turnover of £25,000 to £100,000.

The calculator is very simple and quick to use and you only have to enter 3 numbers – your annual card turnover, average transaction value and the percentage of debit cards. You don’t even have to enter your name or contact details to use it.

Paypal calculator screenshpotClick here to use our PayPal calculator.

Some common misconceptions about merchant accounts

1) They are difficult to obtain and many businesses are rejected. Its true that for a start up business PayPal’s acceptance rate is higher. PayPal has a “presumption of innocence” and limits its risk by capping the volume of transactions you can accept rather than rejecting an application. Merchant account providers on the other hand will perform more detailed credit checks and business reviews and like to see a trading track record before they provide facilities. For established businesses these requirements are far simpler to fulfill and merchant account acceptance rates are typically in the region of 95%.

2) They contain many hidden fees. It is true that the pricing structure of merchant accounts is more complex with different types of fees, but the overall level of fees is usually considerably lower than PayPal as demonstrated by our calculator. The best example is debit cards which cost c.24p to process using a merchant account (10p for the payment gateway and 14p for the merchant account) and up to £1.90 to process on PayPay (£50 transaction at 3.4% plus 20p).

3) They are complex to set up and operate because you need both a merchant account and a payment gateway to accept e-commerce payments. It is true that most providers sell these as 2 different products whereas Paypal’s product combines both. But in reality, the additional effort is in doing 2 sets of application paperwork and in ensuring the merchant account and payment gateway are compatible (which the vast majority are). The additional hassle is so deminimus that we would actually encourage you to buy a payment gateway and a merchant account from different providers as this is even cheaper.

4) You can’t accept Paypal with a merchant account setup.  False, almost all payment gateways include a PayPal button to enable your customer to pay with PayPal rather than cards.  Most payment gateways can also include a variety of other payment methods which will grow in popularity in the future and will appeal to overseas customers.

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