Payment Gateways: vs. PayPal

Payment Gateways: vs PayPal


 This article is part of the WWW 101 Series which provides an introduction to small business websites.


When you build your small business ecommerce site, one of the many tasks on your ‘to do’ list will be to get a merchant account (if you don’t already have one) and a payment gateway. While working on a new ecommerce site, I had the chance to see how two different payment gateways integrate with WordPress Woo Commerce. Along the way, I also learned about the very different styles of customer support that and PayPal provide.

What is a Payment Gateway

First – in case you are new to ecommerce – a payment gateway is like the middle man that connects your website’s shopping cart to your merchant account. Some merchant account providers have their own payment gateway and some don’t. It is also important to know that not every payment gateway is compatible with every ecommerce system (shopping cart).

The payment gateway story begins…

We started with PayPal because it is a good option for small business owners who seek a quick all in one merchant account / payment gateway set up – or so we thought. The owner logged into his personal PayPal account, completed the steps to upgrade to a business account (PayPal Advanced), and was approved on the spot. He purchased the WordPress PayPal Advanced plugin for Woo Commerce and I got to work setting up the integration. I encountered numerous challenges completing test transactions in the sandbox and called technical support. PayPal doesn’t provide technical support over the phone – the call center representatives submit a ticket and then you wait. What followed was a series of frustrating messages in the support system over several days with staff that have poor communication and troubleshooting skills. It took 24 hours to receive a reply to each thread and the replies came in the middle of the night. I gave up on obtaining a resolution and switched to live mode, which worked without incident.

A few days later, the business owner received an email from PayPal to advise that they revoked his business account because it violated their acceptable use policy. He called to inquire and was on hold for 45 minutes. The representative explained what PayPal considered to be the violation – they thought his product, a caffeine-infused vapor pen, was a tobacco product. The owner’s attempts to explain that the product is not a cigarette and has no tobacco and no nicotine, which is also stated on the website, failed to restore the account. Furthermore, the representative stated that he is not the first vapor merchant who has been rejected – PayPal rejects all vapor products. (This made me wonder why vapor products are not listed in the acceptable use policy and why PayPal approves vapor merchant applications in the first place.)

  PayPal Merchant Account Tip

Be aware that PayPal’s acceptable use policy is incomplete and not enforced consistently (e.g., eBay sells vapor pens). If your product is new or not mainstream, you have the risk of spending time and money to set up your ecommerce integration only to have your account revoked in the future.

The payment gateway story continues…

The business owner did some research and set up a merchant account with Payline Data, which took about one week to process. Payline Data does not provide a payment gateway, so the owner set up an account on (instant set up) and purchased the WordPress Woo Commerce plugin. Then I got to work setting up the integration. I encountered a small challenge completing test transactions and the owner called his account representative who got on the phone with me and advised how to resolve the challenge in minutes. I also asked a few general questions about set up and maintenance. Easy; done! After the website launched, the business owner noticed that they payments were not transferring from to his merchant account, so he again called his account representative who provided instant guidance to resolve the issue.

Comparison of and PayPal Advanced

The information below is current as of the date of this article. Paypal
Merchant Account No Yes
Set Up Cost $99 $0
Monthly Cost $20 $5
Transaction Fee .10 per transaction 2.9% of sale (for up to $3,000 in sales per month; % varies based on monthly sales volume)
Other Fees .25 batch fee .30 per sale
Customer Service dedicated account manager call center
Technical Support dedicated account manager resolves issues on the phone with you must submit help ticket – slow turn around, staff has poor communication and troubleshooting skills Pros and Cons

Pros: quick application and approval process, lower transaction fees, great customer service (dedicated account representative), great technical support (account representative resolved technical issues on the spot by phone), easy integration

Cons: set up fee, higher monthly cost, need a separate merchant account (which may also involve more fees)

PayPal Pros and Cons

Pros: all-in-one merchant account / payment gateway, quick application and approval process, no set up fee, lower monthly cost

Cons: higher transaction fees, inconsistent acceptable use policy, inadequate customer service (long hold times, poor communication skills), unacceptable technical support (no phone support, 24 hour wait time for ticket response, poor troubleshooting and communication skills)

Summary: vs. PayPal

As you’ve seen, there was a huge difference in our experience working with the two companies. is more customer focused, which provided a smooth, efficient, stress-free set up. As of today, the ecommerce site has been live for one month with no technical issues.

Despite the poor experience with PayPal, it is still a good option for limited scenarios: non-profit organizations that need a quick, easy way to accept online donations or sell tickets to an event (knowing that there are limited customization options). But, for all other types of merchant account and ecommerce requirements, I would not recommend PayPal because the service and support is inadequate.


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