If you’ve been wondering whether to accept PayPal payments in your business, you’ve come to the right place. You’ve probably been hearing about PayPal for a while, or you may even have used it as a consumer to make payments. But is it the time to adopt PayPal for your small business, so you can receive payments as well? Why should you do it?
First, let’s check some numbers that speak for themselves: around the world 17 million merchants and almost 250 million people use PayPal. Today PayPal moves more than $150 billion in payment transactions every year. It is the world’s largest payment system.
What’s the reason for PayPal’s success? Why is it the leader not only in online payments but also in mobile payments? First, simplicity. It makes it easy for small businesses to accept payments and for consumers to pay with just a couple of clicks. Second, variety. It provides a variety of solutions for accepting credit and debit card payments, Apple Pay, Google Pay, eCheck, and more. Besides payment solutions, it brings smalls business owners other banking and POS tools. Third, affordability. PayPal is free for consumers, and retailers are charged competitive rates for processing transactions.
What Are the Benefits of Using PayPal for Your Business?
1. It offers solutions for online and on-site sales
Whether you do online sales, in-person sales, or both, PayPal has a solution for your business.
If you sell through a website PayPal is very easy to integrate. WordPress and Wix – the two most popular platforms for creating personal and small business websites – both have PayPal payments integrations which take only a few minutes to configure.
And if you do in person sales, PayPal has a variety of Point of Sales (POS) solutions to help you out. PayPal payments can be received through POS virtual terminals from Vend, Lavu, Touchpoint.io, BrightPearl, Touchbistro, and ERPLY. Vend is designed for retail operations and supports multiple locations, online sales, and inventory management. Lavu, Touchpoint.io, and Touchbistro are designed for restaurants and the hospitality industry.
All of them run on either iPad or Android tablets and work with PayPal’s chip card reader. The chip card reader supports contactless payments from Apple Pay and Google Pay, as well as good old-fashioned mag stripe cards.
Learn here more about the different capabilities of these solutions.
2. It’s easy to set up
Setting up PayPal is very easy. First, you need to open a PayPal account, which takes just a few minutes. All you need are a valid email address, a business address, customer service contact info, and a bank account. You will need to enter the bank routing number and your bank account number.
You can use either a personal or a business bank account when creating a PayPal business account.
Learn here how to set up PayPal Payments and start using it to receive payments.
3. It integrates with Xero
Xero is an online accounting software designed to make a budget for your business. You can use Xero to bill your clients: Xero sends them the invoices via email. The good part is that PayPal integrates with Xero in a way that saves you a lot of time and hassle. You can use PayPal as your default payment solution since the invoice has a pay option with PayPal button. When your client presses the button they get a screen where they can choose to pay with funds from their PayPal account balance. Or, if they prefer, they can use a credit card. It makes no difference: you ’ll just see it as a payment made via PayPal.
Here’s the great part: Xero shows the payment in your account right away. It also marks the invoice as paid. PayPal tells Xero how much it charged as a transaction fee, and Xero puts that amount in your Bank Charges category. Then you don’t have to do anything else: Xero and PayPal work together to do your accounting for you.
4. It offers other banking services
PayPal has been building out more banking services than just online payments. It now offers ATM services, debit cards, and credit cards.
The ATM card is called the PayPal Cash Card and can be used without incurring any fees for withdrawing cash at 25,000 MoneyPass ATMs. You can use the Cash Card to withdraw funds from your PayPal account.
The debit card also withdraws funds from your PayPal account.
PayPal’s debit and credit cards are both part of the MasterCard network. Unless you plan to pay off the balance every billing period we recommend you to avoid the credit card: PayPal charges an APR above 20 percent.
5. It’s mobile
PayPal’s mobile app is called PayPal Here. It runs on iOS and Android tablets and phones. The app is free and works with PayPal’s chip card reader. Your mobile device connects to the chip card reader via Bluetooth. PayPal charges $99 for the chip card reader.
Using PayPal Here with the chip card reader lets you accept payments anywhere you can get either a cell phone or wifi signal.
6. It’s reasonably priced
There are no charges for setting up or having an account with PayPal. Fees are only charged when you make a sale: you get charged 2.7% of each transaction done through your website or swiped and check-in transactions done in your store. If it’s a keyed or scanned transaction done in store, the fee is of 3.5% + $0.15. Other fees may apply if the payments are coming from outside the US.
Paypal can deliver the funds to your bank account: it normally takes one or two business days to transfer funds from your PayPal account to a linked bank account. Then, you can access the funds in your account right away using either the ATM or debit cards.
Find here a breakdown of all the fees that apply to PayPal transactions.
The other kids on the block: Square and Stripe
Paypal might be the leader in the space, but there are two alternatives that are worth considering – Stripe and Square. There’s a lot of overlap among the three payment services, but they also have differences that make each of them better depending on your purposes and needs.
PayPal, Square, and Stripe all provide payment gateways and mobile POS. PayPal and Square also offer invoicing and virtual terminals. PayPal and Stripe both sell or lease card readers.
Stripe is unlike the other two since they focus on helping 3rd party developers create payment solutions with their payment gateway.
Square offers two sleek registers that look great and are easy to set up.
The transaction fees charged by the three services are very similar. PayPal and Stripe both charge 2.9 percent plus $0.30 for U.S. credit card transactions. Square charges a slightly lower 2.75 percent. For businesses with average sales prices below $10, Square adds on $0.10 per transaction.
However, if your business primarily sells items for under $10 you can qualify for micropayment fees at PayPal. PayPal’s micropayment fees are 5 percent plus $0.05. For example, when selling a $5 item, the transaction fee would be $0.30 instead of $0.45 using Stripe (2.9% + $0.30). The same transaction would cost $0.24 on Square (2.75% + $0.10).
To sump up, PayPal is the leading online payments gateway, but Square and Stripe are also worth considering. PayPal and Square have tools to help your business, including invoicing, inventory, and payroll, among others. Stripe does not. Also, Stripe does not accept PayPal payments, so if a lot of your customers pay with PayPal, Stripe might not be the best choice for your business. All in all, PayPal, Square, and Stripe are three great solutions, but which one is best for you depends on the individual needs of your business.
If you are ready to set up a PayPal account, make sure to check here the steps to follow and how it works.
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