Benefits of a Merchant Account vs. Square or PayPal
Most merchants have the mindset that they are paying a flat rate with Square or PayPal which saves them money. For merchants using Square, they believe that they are paying a flat rate of 2.75%. However, if the transactions is keyed, the pricing goes up to 3.50% and $.15 which is significantly higher than a standard merchant account pricing. Additionally, merchants who are taking a fair amount of check/debit cards, the 2.75% pricing is far higher than the average .50% that they would pay with a merchant account. Similar pricing is offered by PayPal of 2.70% swiped rated vs. 2.9% + $.30 per transaction if online or hand-keyed.
Square and PayPal offer the convenience of quick set up with no credit check and being able to process transactions immediately. Many merchants don’t realize that if they are processing higher volumes of transactions or high-ticket transactions, their funds are at risk of being held – sometimes for a minimum of 3 weeks. Merchants have limited access to customer service which means they are without their funds for longer periods of time. Even if a merchant sets up a Square/PayPal account just to get started, there are many benefits for them to explore getting a traditional merchant account especially if their business is growing.
Benefits of a Metro Merchant Account:
- Stronger customer service
- Stronger Security
- Flexibility and customization to fit the needs of the business
- Better rates Guaranteed
- Merchant ID is issued exclusive to your business and no one else
- Straight relationship with your company to Metro
- Assistant with fraud prevention or chargeback processing
- Detailed Online Reporting to view deposits and transactions
Square and PayPal are basically payment processing aggregators. They have ONE merchant account with a processor and merchants who sign up with them are “sub-merchants”. The aggregator model takes one merchant account and offers it for use to many different businesses. There is no personal contact. They don’t have any idea what your business does nor do they care. You are just a number to them. Your transactions are processed along with millions of others through their processing account. These service providers all have their own risk procedures, that allow them to hold or freeze your funds if volume changes or chargebacks occur within your account or really anything that they see as suspicious activity… and it’s completely up to them – all done through algorithms. These providers have been known to shut down and freeze accounts without warning. And good luck trying to get in touch with someone to help you get your funds or reopen your account. Just Google “frozen PayPal account” to see how often this occurs.
In addition, Visa and Mastercard monitor Aggregators very closely. Once an individual or business sells more than $100,000, Visa and Mastercard force the Aggregator to issue individual, traditional Merchant Accounts for the business. As an entrepreneur, this should be a clear indicator to you that using an Aggregator is not intended as a long term, scalable solution to accepting payments.
Some key questions to ask before setting up your merchant processing:
- Do you want an “off-the-shelf” solution or a customized solution that fits the needs of your business?
- Do you want to be a small fish in a big pond, or have a personal relationship with your processor to assist with chargebacks, fraud, or offer solutions to help you keep costs minimized and grow your business?
- Do you want control over pricing and other integration options or a one size fits all option?
- Do you want detailed reporting to help you make crucial business decisions or zero reporting detail?
- Do you want personalized customer service or extremely limited customer service especially in the event that funds are being held?
- Do you want to be kept up to date on industry news that can affect your business and/or potential security risks?
There are significant benefits to having a merchant account. Give us a call today to discuss your business and the best processing options available along with the best pricing the industry has to offer!