PayPal for a Merchant Account? Say It Isn’t So!

Sep 26, 2016

PayPal is great for many things, from online purchases to sending money to friends and family. What PayPal is not good for, however, is acting as a merchant account. Many e-tailers do this – and it is one of the worst business mistakes they can make. While the ease of PayPal can be comforting to a new merchant, what typically ends up happening is not comforting.

PayPal has very stringent rules when it comes to acting as a merchant account, and these rules are not looked over by many merchants. First, did you know that PayPal can freeze your account for any reason? It’s true! They can suspect any little thing and freeze your account. One chargeback or challenged charge can leave you in a big jam: If your account is frozen, you cannot access your money, and you cannot refund any money, and you cannot get ahold of information in regards to your customers.

PayPal may work for those who have small side businesses, for those who sell on Etsy. But for those who want to DIY their business, you need to consider other options – especially if you fall into one of the dreaded “high risk” categories. Be it from your personal credit, or the industry you are in, the “high risk” label is hard to stomach in the merchant account industry – and by PayPal. High risk businesses often have a higher percentage of chargebacks, which makes PayPal a terrible idea. Instead, you need to look for a merchant account provider who has experience dealing with your type of business, and that understands the issues that may arise from these businesses.

So, what do you do if you have your PayPal account as your merchant account? Look around for a new merchant account – if you need to. Most merchants should, but those who have Etsy as a backup are typically okay to just stick with PayPal (especially since it is the only actual “guaranteed” method by Etsy). For everyone else, do your research before signing with another merchant account provider.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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