To PayPal or not to PayPal: A Review of Online Credit Card Platforms

With transaction fees ranging from 2.2% – 2.9% plus $0.30 per transaction, PayPal can be a costly proposition–especially for small businesses.
As I started digging into the technology side of The Mogul Mom, I felt certain there were better credit card processing options for small business like ours.  I just needed to find them.
“We can certainly do better than PayPal,” I told Meg.  Call it rookie hubris.  Call it know-it-all-ism.  My wife has affectionately titled me the “product manager” of our household because of my compulsive need to read reviews and run cost comparisons before purchasing–well, just about anything.
This sort of due diligence has spared me countless financial losses and ultimately saved time, money, and frustration. (Well, that’s what I tell myself anyway).
The interesting thing is, as I dug into the world of online credit card platforms, I discovered that PayPal has charms that make it worth the extra money–at least while we are still fairly small.

To PayPal or Not To PayPal

To come to this decision I evaluated 4 basic criteria: cost, simplicity,  brand recognition, and integration with our shopping cart software. There are other criteria like being able to accept payments from around the world and the ability to stay on your own site  throughout the transaction, but they took a back seat in this analysis.
The primary thing that made me seek out options beyond PayPal in the first place, was the cost.  For any of us working in start-ups, definitely cost is a criterion.  I had seen other companies advertise lower rates for credit card processing.  After doing my research the fact remains: PayPal isn’t the cheapest option.
PayPal costs are broke down accordingly:
Monthly Sales | Fee Per Transaction | Examples

$0 to $3k            |       2.9% + $0.30            | $3.20 fee on $100

$3k+ to $10k    |        2.5% + $0.30           | $2.80 fee on $100 

$10k+                  |        2.2% + $0.30            | $2.50 fee on $100 
Since Megan and I are both new to the world of online business, simplicity was a factor.  There is a lot of work to do, and we don’t want to waste time on a part of the business that doesn’t add value to our readers.
Unlike cost, PayPal has simplicity on its side.  As possibly the most widely recognized of the global credit card processing platforms out there, and the established platform of The Mogul Mom, there was a definite simplistic advantage to sticking with PayPal. The simplicity comes at a cost, for the most part, you have to let your customers leave your site to complete their purchase.
Brand recognition is also important.  Many online shoppers still have, justifiably, qualms about sending their credit card information, pins and personal IDs out into the great cyber unknown.  Because we aren’t Amazon, we want to make sure our customers know that they can shop with confidence.
Finally, unless you are prepared (we weren’t) to switch up your shopping cart software as well, you need to select a platform that is compatible with the shopping cart software you use.  We currently use SendOwl which is compatible with 6 different platforms: PayPal, Google Checkout,, SagePay, PayMill, and Stripe.
Now equipped with my four-pronged company evaluation matrix I was prepared to have a look at the contenders.  When I told Meg I thought we could do better than PayPal she thought a moment and then said, “But who else is there?”  Turns out there are a number of services to choose from.  They call me the product manager 😉

Review of Online Credit Card Platforms

The first option I considered was Google Checkout.
I made the assumption that Google had the size to provide the same brand recognition of PayPal and I was hoping that it would be simple and more cost effective.
Just one problem, as of November 20th 2013Google Checkout is shutting down and transitioning its services to Google Wallet.
That means that if you ship a physical product, Google isn’t the solution for you. If you ship a digital product, like an app or an e-book, you can still use Google wallet.
Google wallet charges 5% or 1.9% + $0.30, whichever is better for the seller. So if you sell an item for $1, Google wallet (5 cents) is much cheaper than PayPal (33 cents).
I like this option, but Google’s big shift in policy worried me. Plus I wasn’t sure if it integrated with our shopping cart software, you have to use their API (Application Programming Interface).
Overall the Google Wallet option is:

  • Cost = Lower than PayPal
  • Brand recognition = Same as PayPal
  • Setup = More complex than PayPal (you have to use an API to integrate, although they swear it’s easy)

The second option we looked into were the more traditional credit card payment processors, the largest of which seems to be
When you read articles about them, they say charges $20 a month and 10 cents a transaction – once you start selling in volume, you can save a lot of money!
What the articles don’t say is that is only half the solution. They are a payment gateway – they provide the mechanics of the transaction.
You also need a merchant account – which is the authority to accept credit cards. They charge 2-3%  + 20-30 cents per transaction. You have to apply for the account and wait until they accept you.
Many merchant account providers (like merchantplus) bundle the services of the gateway to save you some money over buying them separately.
Overall the Option is:

  • Cost = comparable, although you can save $ at high volumes
  • Brand recognition = Less recognizable
  • Setup = Much more complex to set up

Stripe offers services and prices comparable to PayPal, but they make a point of promoting themselves on the basis of their simple pricing structures.
With Stripe there are no monthly fees, no hidden costs, and no refund costs.  PayPal retains the fixed transaction fee when you disperse a refund to a customer.
What’s more, Stripe will process payments without re-directing your customer to another site the way PayPal does.
Finally, Stripe was designed with developers in mind and offers API’s in multiple programming languages, including Java, PHP and curl.
Overall the Stripe Option is:

  • Cost = Comparable to PayPal but less expensive if you handle many refunds
  • Brand recognition = not as good, and it’s only available in the US and Canada for now
  • Setup = probably similar to Google Wallet

Based on this brief analysis, I decided we will stay with PayPal for the time being.  Though if we weren’t already established with PayPal, Stripe would be a serious contender.  As we grow and expand our services we may find we’ve outgrown PayPal and want to again consider the options.  When we do, as a dutiful product manager, I will keep you posted.

If your business involves credit card processing, we’d love to hear about and learn from your experiences.  Have you made a switch and regretted it?  Conversely, have you made a switch and wondered why you didn’t do it sooner?  Tell us in the comments.





  1. Terri

    That was a very informative article. Thank you. I have been using PayPal for years. I just added the square cash app to my smartphone for on-the-go transactions. I love it. It is free, simple, and sometime deposits immediately into my bank account. The drawback could be that both parties need to have a debit card. Neither of the parties receives the others information but there are notifications about the transaction. Another drawback is that you will have to categorize the transactions in your bookkeeping. Did I say, it is currently free?

    • Megan Barnes

      Hi Terri!
      Thanks for sharing! It’s good to know about the square cash app…that sounds really interesting and like something our broader community should hear about. We’re looking for guest bloggers to cover these kinds of technology topics — would you be interested in submitting an article about the square cash app? I’d love to discuss this more — email me at megan at the mogul mom dot com. 😉

  2. Sandy Dell

    Thanks for the informative article!

    We have the best of both worlds on MOST of our websites: We use both PayPal and Stripe. We found that giving buyers an option makes for more sales. And we love both services!!

    Sandy Dell
    ‘Gift Rep Sandy’

    • Megan Barnes

      Thanks for sharing, Sandy! The Mogul Mom also uses a combination of Paypal & Stripe at this time. We’ve been very happy with both!

  3. Dedi

    You should look into Outright (we now use Quickbooks for Small Business).

    I use this service and can take checks and credit cards for a low price and do invoicing through them if I chose to. You can have this sync’d to Quickbooks if that is the accounting program you use.

    • Megan Barnes

      Good recommendation, Dedi! I have experienced Intuits Payment Network only as a customer, but I found it very user-friendly. Thanks for sharing!

    • Sandy Dell

      We tried the Intuit service several years ago and it was a nightmare. When we tried to cancel it after our contract was up, they still charged us a $250 fee. We were very upset with them!

  4. LaTonya

    Great article! I’m always wondering if I’m with the best merchant or not. I just like the ease of PayPal. I haven’t had any problems with them event though the fees are a little high. My mom has been trying to get me switched to a merchant service called Anovia on her site. I’m not sure of the fees? You have to send a price request. It may be worth checking it out if anyone is looking for anymore options. They are offering any business that currently accepts credit cards and processes $2000 a month a guarantee that they can save you more money with them or they give you a $100 Visa Card. The website is if you would like to see if they are cheaper/better.
    I also have a Square reader that I have yet to use but I have heard some good reviews on them as well so I will see how they compare to my PayPal.

    • Megan Barnes

      Hi LaTonya!
      Thanks for bringing up Anovia…may be an interesting alternative. I personally tend to be a little sketched out by companies that make you make you email for a quote, rather than have a stated price range on their site, however, it looks like they have really focused on being streamlined and efficient. If anyone has had personal experience with Anovia’s service, I would love to hear about it. LaTonya, thanks for commenting!

  5. Megan Barnes

    Hi Carisa! Thanks for sharing. I’m relatively new to PayPal myself, but I looked it up when I saw your comment and it looks like PayPal enables you to punch the credit card info into your PC from home and to process payments that way. I copied the following from the PayPal site:
    Accept credit cards virtually anywhere.
    Use Virtual Terminal wherever you have Internet access-at your office, at a trade show, even at the airport. To take a credit card order, simply log in to your PayPal account and enter the payment details into the secure Virtual Terminal order form. We’ll process the payment and send you a confirmation.

    For more info, check out the following link:

    Best of luck in your new consulting business! Please keep us posted on your progress, or if you have further questions.

  6. Carisa

    This was a very useful, and personally timely article! Thank you. I am getting my feet wet in ‘business’ by starting up as an “independent consultant” for a direct sales company, right this very minute. I don’t have a smart phone, so I will be running cards once I return home from “parties”. Does anyone have a specific suggestion for processing charges (to go directly into my account) in this manner (proceeds from direct sales)? I’m leaning towards PayPal for name recognition and ease-of-use.

    • Bola


      PayPal has a card reader that links to your PayPal account.

      Square Register is another good option.

      Either one works well for mobile payments at parties and trade shows and they both offer the card swipe device for free.

  7. bola

    Thanks for the insightful article on payment options. I will certainly be looking into Stripe.

    I hear that BrainTree is a decent option too. The fees are comparable to PayPal if you use them as the gateway and the merchant account. PayPal just bought them out too.

    The other advantage with using PayPal is that your bookkeeping is smoother. I don’t know if Stripe or Google Wallet generate financial reports like Paypal.

    • Megan Barnes

      Hi Bola!
      I’m not familiar with BrainTree, though if they’ve recently been bought out by PayPal you may find it easier to stick with PayPal and avoid the hassle of separate gateway and merchant accounts.
      As for Stripe, you might look at their Checkout feature, and also it appears that you can generate financial reports using their “webhooks” though not sure it will be as simple as PayPal.
      Thanks for your comments!


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