How Does an Ecommerce Merchant Account Compare to PayPal?

merchant account vs paypal

How Does an Ecommerce Merchant Account Compare to PayPal?

Ask people how they pay for online purchases, and many will say PayPal. If you were to ask businesses how they prefer to accept online payment, many will say ecommerce accounts. Despite PayPal’s benefits for consumers, its benefits for businesses are fewer than its drawbacks—a fact that merchant service providers (MSP) know well. If you are considering opening a PayPal business account, first consider how it compares to a merchant account vs paypal concerning the following factors.

Suspended Accounts

PayPal could suspend your account for reasons beyond your control. For example, receiving fraudulent payment could result in a 180-day suspension regardless of your innocence. If fraudulent payment occurs through a merchant account, the resulting chargeback fee goes toward the percentage of chargeback fees you can incur based on your revenue, and you carry on with your business as usual.

If your business depends on online payment, choosing a service that unintelligently suspends accounts is bad for business, to say the least.    

Payment Conversion

Although PayPal is the most preferred ecommerce website among consumers, not all consumers have PayPal accounts. Furthermore, of the 250 million PayPal accounts worldwide, only 100 million of them are currently active. If you limit potential customers to paying via PayPal, you will turn many of them away.

Transaction Fees

PayPal transaction fees are higher than the transaction fees of most merchant accounts, especially for small businesses. PayPal bases its fees on sales volume. If your sales volume is low, then your fees will be high. MSPs help businesses avoid this scenario by letting them lock in rates, or open a fee sensitive account designed for small businesses.

Service Integration

Unless your business only operates online, it probably needs more than one payment account. Unlike PayPal, MSPs supply retail, wireless and ACH check processing accounts. They also supply the equipment (e.g.card processing terminal) needed for these accounts. If you need multiple payment options, receiving them from a single provider is simpler and more convenient.

Transfer of Funds

The transfer time of sales revenue affects a business’ purchasing power and financial management. An ecommerce merchant account can transfer funds in roughly twenty-four hours, compared to a minimum of three business days for a standard PayPal account.


A PayPal account can be established in roughly twenty minutes. This is because PayPal does not examine extensive documents to ensure a business’ financial state—or the financial state of its owner—predicts success. Most consumers are not aware of this, but most businesses are. If you sell business-to-business (B2B), requesting payment via PayPal can create a lack of confidence in potential customers.

AVPS Offers Ecommerce Merchant Accounts

At AVPS, we know that businesses choose PayPal for its easy startup process. We also know that—over time—a PayPal account can cause significant revenue loss that an ecommerce merchant account would not. If your business needs an online payment solution, do not choose PayPal before considering the benefits of contracting with an MSP.

AVPS has over twenty-five years of experience in Small Business Merchant Accounts and servicing merchants. To learn more about the benefits of ecommerce merchant accounts, call us today.