Hacker News Reader

Comment by ladyada | Hacker News Reader

This is misleading. The 1.9% interchange fee is going the MINIMUM of many many different interchange fees especially Amex's and the vast number of 'rewards' cards. For online 'e-retail', expect at least 2.5% as well as many new and exciting monthly fees that have been recently added by visa/mc and your processor.

Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one.

View on HN

Actually its not misleading. That 1.9% interchange fee is a blended average of the interchange fees that an online business is likely to encounter, including debit (which is less than 1.9%), standard credit (less than 1.9%) and rewards (more than 1.9%) and business (more than 1.9%). Its a reliable estimate based on a huge database of transaction history. In the "More info" we give you the ability to modify the assumptions and see the result.

Amex is a non-issue since it costs online businesses the same 3.5% whether you use paypal or not (note - this is new as of next week, previously Paypal always gave you the ordinary 2.2% rate for Amex and lost money doing it).

Paypal is a very competitively priced product, for a lot of transaction profiles it is cheaper than a traditional merchant account + gateway.

If you get a shitty deal on your merchant account then Paypal will always be cheaper.

How would a online merchant get PIN debit rates? I mean this in a very practical manner: I have never seen a merchant with any way to use a card as Debit - only as a credit card.

Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one.

Actually you don't need a PayPal account to buy via PayPal -- you can use a credit card. However, this message does not always get through to the customer, and PayPal can be picky about some cards (or vice-versa).

There's an interesting edge condition i ean into during user testing. If you created a paypal account in the past, associated your credit card with it and then forgot how to access it - you cannot pay with your credit card. Paypal forces you to login with your old account. This along with paypal strongly encouraging people to create an account no doubt contributes to the "paypal requires an account" confusion.

Its been a while, but I recall that you -do- need to make an account - it gets created when you make your first purchase. But having to send people off to another site (where they get to reenter all their address info -again-) is a PITA and is not as 'professional'. Its getting more common... but if you made it through the hassle of getting a merchant account there is a bit of respectability there.

Also, we have encountered institutions (schools and businesses mostly) where there is strict policy that they may not use paypal.

If you use paypal as your payment processor, your customers don't need a paypal account. They can pay directly with credit card without signing up for Paypal.

I don't think anyone using Paypal thinks it's a cheaper solution, but it's probably the easiest and quickest integration solution.

> Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one.

You don't need a PayPal account to pay with PayPal.

Unfortunately, many customers don't know that.

With PayPal PayFlow Pro you can set up PayPal so that the customer never even sees a PayPal logo. They just go through the payment process as if you had a regular merchant set-up.

https://www.paypal.com/cgi-bin/webscr?cmd=_payflow-pro-overv...

... Except you do need to have a regular merchant set up. PayFlow is just a gateway like any other (Authorize.net, Braintree, etc).

One difference is that they now require you to accept PayPal to get the lowest rates. One of my clients is going through that now, if it's not up by the end of July their rates go up.

Reply on news.ycombinator.com