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Meet the author:
Jill Olkoski

Jill has a MA in Clinical Psychology, a BS in Computer Science, and a BS in Mechanical Engineering.

She currently owns Aldebaran Web Design in Edmonds (near Seattle WA) and enjoys educating her clients on topics related to small business website design.

In Jill's previous life, she spent 17 years in the engineering and quality organizations of a Fortune 100 tech company.


How To Select A Payment Processor For Your Website Online Store or Shopping Cart: PayPal vs

July 17th, 2007

When a website client wants to design an online store or shopping cart on their website, they have several decisions to make. One of the decisions that must be made early on, is which payment processor they will use to handle their website transactions. In this article, I’ll talk about my experience with two of the major website payment processors: PayPal and, and why a website client might select one over the other for their website eCommerce solution. Click here to find out how to add ecommerce to your website.

I’ll start by discussing using PayPal as your website’s payment processor. PayPal is ubiquitous on the Internet. They’re everywhere. They offer small businesses a way to add eCommerce functionality to their website with a minimum of investment in terms of time and cost.

PayPal has a range of payment processing solutions, from the very simple “buy now buttons” (that I use on my own website to collect funds from my clients) to PayPal shopping carts to custom shopping cart integration.

PayPal accepts all kinds of payments: PayPal accepts many different payment types (like Visa, Mastercard, American Express, Discover, eCheck, debit cards…the list goes on) so your website customers are very likely to have something in their wallet that PayPal will accept.

PayPal fees: The discount rate that PayPal charges is pretty competitive. They do charge a bit more than say, Wells Fargo would for handling Visa or Mastercard, but if your volume is not too big, PayPal might be the best solution.

PayPal’s online security: PayPal also handles all the sensitive customer information for you, so you don’t need to worry about how to store credit card numbers, or how to set up a secure website.

PayPal’s overall simplicity and ease of use: PayPal does a great job of bundling all of the complicated things that a payment processor can do.

Next, I’ll talk about my experience with If you want to be more independent and want more flexibility to customize your eCommerce solution, you might be considering My current experience is with using Wells Fargo as a “Internet Merchant Account” and as a “Payment Gateway”. (The first thing you’ll notice about trying to leave PayPal, is that you have to expand your eCommerce vocabulary 🙂 )

An Compatible Shopping Cart. Say goodbye to simple “buy now” buttons, you’ll need a full blown shopping cart/store installed on your website. The reason you’ll need to chose your payment processor up front, is because you have to make sure the payment processor and the shopping cart application are compatible. I am most familiar with eCommerce Templates shopping cart, and there is a built-in payment module that includes, among many others.

Getting to accept many kinds of credit cards. This is something that you can’t take for granted like you do with PayPal. Visa and Mastercard may come with your Merchant Account already, but American Express and others may not. We had to contact American Express, Discover, and eCheck separately and apply for an account, then notify both Wells Fargo and Each type of card has it’s own rules and it’s own discount rate. Read the fine print. Fees. As mentioned previously, the fees for using as your payment processor will vary, depending on which credit cards you accept and what you negotiated with your merchant account. There are also often start-up fees involved. It’s not like PayPal where you are charged the same for every purchase, and frankly, it’s a bit hard to calculate because there are so many hands in the pot. But in the end, I believe that you do save money if your volume is sufficient. online security. If you set up your own shopping cart, it means you are sending credit card info across the internet, and that means you need to send it securely. This means you’ll need to purchase and install a “SSL Certificate”, which run anywhere from $30 to $200 per year. Your website designer will help you do this, but it is an added cost for handling the credit card info on your website (versus leaving your website to let PayPal process it.)’s overall simplicity and ease of use: As I’m sure you’ve gathered by now, leaving PayPal and implementing a combined merchant account/payment gateway is significantly more complex and time consuming. What took us several minutes has taken us several weeks to accomplish.

So why would anyone leave PayPal? Excellent question! Because currently in the PayPal terms of service, you must activate PayPal’s Express CheckOut feature. This feature takes customers immediately away from your online store into the PayPal environment where all data is collected. For many website clients, this is not a problem, but for some, this is a serious issue. Some website clients want or need their customers to remain on their websites for the entire transaction. If this is the case, then these clients need another solution, and this means setting up a merchant account/payment gateway that is not PayPal. I realize that PayPal can also act as a “payment gateway” such as “Payflow Pro” but you still have to enable the Express Checkout.

The summary: Be sure your website designer explains all the ramifications of your eCommerce choices BEFORE you chose a shopping cart/store or a payment processor and educate yourself as well. The more you know, the higher the likelihood that you’ll have a satisfying and successful eCommerce experience.

Please visit my eCommerce page and learn about the different eCommerce options available for small business websites!

J. Olkoski
Aldebaran Web Design, Seattle
Jill Olkoski has a BS in Engineering, a BS in Computer Science and an MA in Clinical Psychology. She delights in using her advanced technical and psychological skills to help small business owners develop cost-effective and successful websites.

2 Responses to “How To Select A Payment Processor For Your Website Online Store or Shopping Cart: PayPal vs”

  1. Kyle S Says:

    thanks very helpful article

  2. raid01alpha Says:

    Thanks a lot! this is very helpful. I’ve been looking for an explanation regarding how to start an eCommerce website ‘coz i want to build my own soon.

    Again, thanks a lot. Hope to hear a lot from you.

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