If your home based business involves taking online payments, do you use PayPal or a Merchant Account? Both of those options will let you take credit card payments, but which is better? A lot of people, especially those just starting out with a home business, start with PayPal because it seems cheaper and easier.
PayPal does have the advantage of being easy to set up and has no monthly or set-up fees for standard business accounts. The trade-off is that the per transaction fee is often a bit higher than you can get with a merchant account.
A merchant account will usually have a setup charge and often a small monthly fee (generally less than $20). However, you can often negotiate a transaction rate (called the “discount”) depending on your anticipated volume. The discount is generally less than the PayPal transaction fee.
Apart from the dollars and cents of this choice, consider also that a merchant account will add to your credibility. And furthermore, there are a lot of people that don’t like using PayPal and by offering just PayPal, you could be limiting your business who don’t want to use it. On the other hand, there are people who LOVE PayPal.
The best option is to use both! The more options you can give people to part with their money, the more likely you are to make a sale.