When it comes to payment processing, both consumers and businesses are given a lot of options these days. There are the traditional payment methods and there are also the more modern digital wallets and high-risk merchant accounts

PayPal is one of the most popular digital payment platforms today with millions of users, many of whom are entrepreneurs. There’s also the option to apply for a merchant account if you’re a business that wants a more convenient payment processing system. 

Now if you’re still debating between the two, here are some of the differences that will help you decide on the right payment platform for your business.

PayPal vs. Merchant Account

PayPal is primarily a digital wallet where you get to keep your funds, transfer them to your bank account, cash them in, or make payments to other merchants. With this platform, you also have the convenience of combining all your business accounts into one account. This can make it easier for you to track expenses and manage your finances wisely. 

A merchant account is simply a payment processing option that allows you to process credit and debit card payments for purchases made both in-store and online. This gives your consumers more payment options other than paying in cash, which can give your business a huge advantage.

PayPal can also give you the capability of processing credit card payments like a merchant account. The only downside is that it charges higher fees than your major credit card processors, which could hurt your finances. 

To compare pricing, PayPal charges you 3.49% + $0.49 per online transaction, which is why it’s ideal for startups that don’t have a high volume of transactions yet. 

On the other hand, a merchant account will charge you lower fees depending on your needs. Most merchant account providers also offer tiered pricing, so you don’t need to worry about extra fees and charges for every transaction.

In terms of security, merchant account providers are a lot stricter when following standards because they always want to protect the interests of their merchants. When you apply for a merchant account, especially a high-risk one, you’ll need to go through a vetting process before approval.

On the other hand, PayPal offers more accessibility when it comes to opening an account. Since it’s basically a digital payment platform, it doesn’t vet applicants before signing up. You just need to provide some basic information and you can create an account right away.

What PayPal does, however, is look into your business once you start accepting payments and making transactions with it. Any suspicious transaction could be flagged as fraudulent and might put your account on hold until you prove it otherwise.

Making the Right Choice for Your Business

At the end of the day, it’s all about knowing your options as a merchant. If you’re just looking for a convenient and easy payment processor, you can try PayPal. 

But if you want a payment processing provider that can provide you good quality service for a long time and without the expensive fees, you can always apply for a merchant account for your business.