Believe it or not, there are times when. I recommend using PayPal as in it’s a good option for some companies now hold on a second before you click away the way to know whether you should use PayPal or not can be found by following the 3 000rule, which I’m going goon an explain to you today coming up. So, the three-thousand-dollar rule is a pretty simple conceptually and uh.
What it is it’s simply, a benchmark dollar amount that is that’ve used uh just by using a simple calculation comparing costs of PayPal versus that of a merchant account solution, and these are averages of course but PayPal. You know you’re going today the 2.9 plus 30 cents transaction fee or whatever.
It is for your account and merchant accounts are typically 10 to 15, maybe 20 per month for the platform and the gate, gateway fees all those access fees and then the rates are going to be lower.
They’re typically just under two percent up to maybe two and a half again on average, so there’s a 40 or 50 basis, pointer a half of a percentage point difference between PayPal, which is a higher rate, and merchant accounts, which is a lower rates, very simply how this works uh For most people that i talk with is that if you’re if we, if we use three thousand dollars as a central benchmark for your business and you process, less than 3 000 a month or you’re, doing periodic transactions like maybe you’re seasonal, Orit, just you’re, it’s a hobby, business or you’re not doing.
A ton of volume, maybe one transactional month or something that’s not very consistent it’s, okay to use PayPal, believe it or not in those cases, and i actually recommend that people use PayPal or at least some other solution like PayPal because, there’s, no holding costs and there’s no setup costs and it’s Fairly easy to get set up, and started, i mean you can have a a PayPal account set up with your email account as most people, know inside of a couple of minutes and youkan be ready to send out an invoice or a you know payment link to your customer. And you can collect uh via a credit card.
And you know you’re in business, so in those cases it’s okay, it makes sense uh to use PayPal for those periodic transactions, low transactions, infrequent volume and so forth.
That’s when i would recommend PayPal. The three-thousand-dollar rule is when again, as i mentioned, threats and the costs for the two earlier in the video uh. That’s when the scales start to tiptop utilizing a merchant account where it actually makes more sense from a cost standpoint and then all.
The other benefits that you’ll get with. Most merchant accounts these days, which is platform, access to online reporting, and virtual terminals and hosted payment pages and, then api integrations security and all the other stuff, not even to mention service but um. You you’ll get a lot more with a merchant account solution and those rates will end up beingless because again, when you’re processing, 5 1020, 50 100 000 a month on the merchant account two percent, is going to be a whole lot less than2.9 percent.
When you talk about the merchant account rates and fees, so that’s what the3 000 rule is very simply.
It started off as just accost comparison and over the years as the merchant services industry and the payments industry has evolved and changed, especially in the online world, the separation for that has really gotten uh, quite a bit bigger and it’s really a night and day difference between the two so there’s.
A lot of instances where i don’t recommend PayPal and there’s other videos on my channel Anndi’ll link them up in the description on you know when to stay away from it and when not to use it and in these certain cases, as I’m outlining here today, it is an okay solution To use if, your business falls into those parameters that i shared earlier comment: below if, if you’re, currently using uh, PayPal. If you’re just on that threshold of three or four or five thousand dollars a month and you’re in that position, where you’re going to be looking at.
A merchant account option because your businesses picking up volume and momentum and everything let me know what your thoughts are.
If there’s any questions that I’ve missed in this video that icon address. Let me know in the comments. Because other people probably have those questions, too if you’re new here and you haven’t seen any of my other videos feel free to check out some of the playlists that i have linked below.
I cover all things payments, related merchant account, topics online order forms, payment, pages, invoicing all things that touch the electronic payment particular to credit and debit card processing, Ach payments and so forth. So, if that is uh information that you want to learn about.
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