When to (and not to) use PayPal for your Online Business

It’s always a good time to start selling directly from your website. Whether you sell products or provide services, a “Buy Now” button will make your life easier – and your revenue bigger: if you make it easy for your online visitors to buy, they will buy.

One of the easiest ways to integrate a “payment gateway” on your website is by using PayPal. So, find out when you should use it or when you’d better use another eCommerce payments provider.

What is PayPal?

PayPal is an online facility that allows credit cards and bank account payments through the internet.

PayPal features

So, when should you use PayPal, and how much is it going to cost? In the following paragraphs we will go through the main aspects of PayPal, so then you can compare it with the other online payment providers.

→ Setup

Setting up PayPal for you business is straight forward and PayPal will only request your business details – this will take no longer than 1 working day. If you plan to sell more than €2500/month, PayPal requires you to upload a few documents (ie your Business Registration Certificate). Anyway, PayPal doesn’t require a bank merchant service agreement (it may take 3 or 4 weeks to set this up with your bank).

→ Installation

PayPal can be easily integrated on your website – no technical knowledge is required. From your PayPal dashboard, enter product name, price and shipping options and PayPal will create some HTML code that you can copy and paste onto your website (ie beside your product image).

→ Fees

PayPal has no setup, cancellation, gateway or monthly charges. You get charged when you receive payments for goods and services, at a rate of 3.4% + €0.35 (if you sell more than €2500/month, the rate is lower). For example, if you sell €1000 in goods, PayPal will charge you a commission of €34.35.

→ Security

PayPal transactions “happen” on PayPal servers. No server is 100% secure but PayPal has fraud prevention tools and secure connections. This means you don’t need to purchase & install additional security software on your own website (ie “SSL certificates”). SSL certificates are from €100/year.

→ Credit Cards

With PayPal you can accept payments from VISA, MasterCard and PayPal accounts.

PayPal or not PayPal?

To decide whether using PayPal or another online payment provider, you need to consider money, time and credit cards.

→ Cost comparison

You can compare PayPal to any other online payment provider by using a simple formula – which takes into account all the costs involved:

1) Once-off Setup fees
2) Once-off Website integration costs
3) Monthly charges
4) Sales Commissions
5) Once-off Cancellation fees
6) Yearly Security costs
7) Bank charges

Based on a volume of sales of €10001 in Year 1, PayPal will cost you €270. For the same volume, e.g. Realex Payments Remote Integration will require a developer to be integrated (estimate: €400 once-off), €29/month in flat charges and €100/year for security – that is €848 in Year 1 and €448 from Year 2.

→ Credit Cards comparison

PayPal allows you to receive payments only via VISA or Mastercard (in Ireland). If you need to accept Laser or other cards you can’t use PayPal.

→ Time comparison

PayPal can be setup in 1 working day, other platforms may require from days to weeks. However, PayPal is very time consuming if you have hundreds of products, as the HTML code needs to be copied and pasted by hand and is different for each product.

When should you use PayPal?

This 1 million dollar question is very difficult to answer. However, we would recommend to use PayPal if your business website sells a few products only (ie max 50 products) and turns over less than €20k in online sales.

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