PayPal is a convenient solution for those selling products on the internet. Instead of checks or money orders, PayPal users can take advantage of eCommerce that takes the guess work out of purchasing goods online. PayPal is easy to use, and more importantly, secure. Users love PayPal because their personal data is never shared for any reason. If you are considering using PayPal, your success will depend on your understanding of how PayPal works

If a merchant providing products is using a regular Paypal account for their business, no merchant account is set up and customers will be redirected to Paypal to make the payment, only to be returned to the merchants site upon completion.  Paypal fees include a transaction charge similar to current merchant account transaction fees. It is suggested that merchants login to Paypal every few days to transfer the funds to their respective bank accounts.

If a supplier has a merchant account, they have the option of adding a payment gateway from to the account. The gateway processes the money from their website and sends the information to the merchant account which then deposits it to their bank account. This option requires an SSL certificate which is typically around $75 per year.

Additional options include a merchant account through Paypal.  It offers a virtual terminal so merchants can  easily process phone orders.  The PayPal fee is $30 per month for the merchant account and the payment gateway. Often this is a less expensive option for website owners when considering their merchant account and gateway fees.  When choosing this option, any existing merchant accounts could be closed as it is often unnecessary to have two separate merchant accounts.  This option also requires an SSL certificate.

The following steps are taken with both the Merchant Account with Gateway and the Paypal Merchant Account and Gateway options: 

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Step 1: The merchant submits a credit card transaction to the Authorize.Net Payment Gateway on behalf of a customer via secure Web site connection, retail store, MOTO center or wireless device.

Step 2: Authorize.Net receives the secure transaction information and passes it via a secure connection to the Merchant Banks Processor.

Step 3: The Merchant Banks Processor submits the transaction to the Credit Card Network (a system of financial entities that communicate to manage the processing, clearing, and settlement of credit card transactions).

Step 4: The Credit Card Network routes the transaction to the Customers Credit Card Issuing Bank.

Step 5: The Customers Credit Card Issuing Bank approves or declines the transaction based on the customers available funds and passes the transaction results back to the Credit Card Network.

Step 6: The Credit Card Network relays the transaction results to the Merchant Banks Processor.

Step 7: The Merchant Banks Processor relays the transaction results to Authorize.Net.

Step 8: Authorize.Net stores the transaction results and sends them to the customer and/or the merchant. This step completes the authorization process all in about three seconds or less.

Step 9: The Customers Credit Card Issuing Bank sends the appropriate funds for the transaction to the Credit Card Network, which passes the funds to the Merchants Bank. The bank then deposits the funds into the merchants bank account. This step is known as the settlement process and typically the transaction funds are deposited into your primary bank account within two to four business days.

Are you ready to get started with a Merchant Account and/or Payment Gateway?
Click below to go to to fill out an application today. Your account can be setup and ready to use in as little as two business days!