Selecting A Payment Provider: PayPal® and Authorize.net®

Online payment processing is a complex topic. To help simplify it, we'll focus on two payment processors my clients have had good success with: PayPal® and Authorize.net® . You can use the referral links below to examine the services.

Sign up for PayPal and start accepting credit card payments instantly.
Authorize.Net Preferred Reseller

What You Need

To accept payments online, you need two things: a "payment gateway" and a "merchant account". When a customer makes a purchase, the "payment gateway" handles the authorization - meaning it contacts the credit card issuer and makes sure the card is valid. If it's good, the "payment gateway" will then charge the card, and deposit funds into the online store owner's "merchant account". Sometimes, the "payment gateway" and "merchant account" are two different companies; sometimes they are one in the same. The online store I work with (ECT) allows you to configure more than one payment processor, to give your customers a choice.

What It Will Cost

There are typically several fees involved in utilizing an online payment processor. Compare fees for different payment processors to see which is most beneficial for your small business. Here are a few examples of fees:

Fee Name and Description
One Time Set Up Fee
Monthly Fees
Per Transaction Fee - for each online transaction processed
Discount Rate % - percentage of each transaction


Using PayPal® as Your Online Payment Processor

PayPal® bundles it's services and offers comprehensive online payment processing. They are a payment gateway and merchant account rolled into one. To accept payments online, you simply need to sign up for a PayPal® business account. If you only need PayPal® "Buy Now" buttons on your website, sign up for Website Payment Standard. If you have an online store, sign up for Website Payments Pro.

Using Authorize.net® as Your Online Payment Processor

Authorize.net® is primarily a payment gateway, but since they were acquired by CyberSource, they also can provide merchant accounts.

Comparing PayPal® and Authorize.net®

Below is a brief comparision of PayPal® and Authorize.net® payment processing costs. Note the Authorize.net® costs are shown for payment gateway and merchant accounts, for a fair comparision to PayPal®'s Website Payments Pro. (This information is only for reference and you should check each company for the latest info.)

Description
PayPal® Website Payments Pro
Authorize.net® Payment Gateway and Merchant Account
Set Up Fee
$0
$99
Monthly Fee
$30
$42.95 - $57.95
Per Transaction Fee
$0.30
$0.35
Discount Rate %
2.2% - 2.9%
2.19%
VISA/MC
Included
Included
American Express
Included
Separate Application
Discover Card
Included
Separate Application
eChecks
Included
Separate Application
Automatic Deposit
Complex
Simple
ECT Online Store
Fully Compatible
Fully Compatible
Ability To Collect Complete Customer Data
No, because PayPal Express Checkout is required.
Yes
Customer remains on your website for entire transaction.
Not always. If they want to use their PayPal account, they will leave your website and may not come back.
Yes

PayPal® is a registered trademark of PayPal, Inc.. AUTHORIZE.NET and the Authorize.Net logo are trademarks of Lightbridge, Inc.


 
 
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