What are the differences between accepting credit cards with Paypal, a Merchant Account, and a Merchant Account/Internet Gateway?

1.) Paypal. There are no monthly service fees. The only cost you pay is the discount rate (the percentage charged on each transaction). Paypal charges about 2.9%. After a card has been charged, money is not deposited into your bank account automatically. You must initiate a transfer manually. The transfer takes a few days. If you had $1,000 in credit receipts for a month, your total fee would be about $30.

2.) Merchant Account. Monthly service fees are $10-$15. You need to obtain the credit card number and charge the card manually. Once the card is charged, the money is deposited into your bank account within a few days. If you take payments over the Internet, you must securely store the credit card number. This requires additional time and increases the security risks to you and your customers. There is usually a $25 minimum transaction fee (this is the amount charged for the discount rate). If you have $1,000 in credit card receipts for a month and your discount rate is 2.3%, you would be charged $23 for the discount rate and $2 to meet the minimum charge. Once you have more than $25 in transaction fees, there is no additional fee. Your total monthly minimum charge is $35-$40.

3.) Merchant Account/Internet Gateway. Monthly service fees are about $25 (plus $25 for the minimum transaction fees - see above). Credit cards are charged at the moment the order is taken. There is no need to obtain or store the number as the credit card company takes care of this. Money is automatically deposited into your account within a few days. There is no need to store the credit card number as transactions can be re-billed or setup with automatic recurring payments through the credit card company (Authorize.net charges an additional $20/month for automatic recurring payments). Your total monthly minimum charge is about $50.

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