Recently I switched a Volusion hosted ecommerce store from credit card processing with Paypal Payments Pro to the Paymentech platform via my ISO. (3D Merchant is not an ISO, but your blog author is an agent with multiple payment processing solutions to choose from, including Paymentech.)
I chose Paypal years ago when the store first started. It was just a ‘buy now’ button. Then it became a full fledged store, and I upgraded from regular paypal to Paypal Payments Pro. With Volusion, I bought the Volusion branded security certificate and used in the integrated Paypal checkout. This means customers would pay with a credit card just like on any other web site. Shoppers normally never know who a company’s processor is. They just get a receipt from the business they bought from. I also kept the Paypal option. This means a customer could also check out with Paypal or with any credit card.
Paypal regular- customers checkout on the paypal web site.
Paypal Payments Pro- checkout just like any other store with your credit card, all on one page.
In either case, merchant fees are deducted from every transaction. Additionally, you have to login to Paypal, then request to transfer deposits from transactions to your bank. The transfer time to my bank account was about 2-3 business days, sometimes longer.
My typical transaction cost was 2.95% (excludes factoring in the monthly fee). This is not the same as effective rate covered below.
Processing via my ISO/paymentech
Credit cards- customers use a one page checkout. I’m using authorize.net as a gateway. I can login to authorize.net or Paymentech to view transaction information. The transfer time to my bank account with Paymentech is 2 days FIRM, add 1 day if Sunday is in the 2. Merchant fees are deducted once per month, which makes it much easier for reconcilation.
I’m paying pass through interchange now instead of being lumped into one big rate. For example, I hit the CPS Rewards rate of 1.9% most frequently. My worst interchange rate is 2.3%.
Customers who use this same scenario also need to add the merchant discount, per transaction fee, dues and assessments, and monthly statement fee. Paypal checkout is still offered; customer checkout is on the paypal web site. Customers rarely use it.
The old Paypal effective rate was 3.75% when I ran it just before switching and the new effective rate for my B2B stores which usually hit higher interchange rates because of corporate cards is probably going to be about 2.2%. The effective rate includes all fees- monthly statement, percent of transaction, per transaction fee and everything else.
The old way (Paypal Pro) was cost efficient when the store first opened, but later became costly and I didn’t like that customers would see ‘paypal’ on their credit card statements when they paid via normal checkout. It was also a manual process when I wanted to partially refund a customer.
The new way (regular merchant account) , which includes authorize.net, has reduced bookkeeping and customer care time because of the superior transaction flexibility. In reality, those costs are probably much higher than what I am saving on the processing, but the hard cash savings is great too!
Old effective rate 3.75% vs new effective rate 2.2%. Your ecommerce effective rate will vary since the merchant discount, a fee over and above interchange, is usually tied to volume. Additionally the type of buyer correlates to the type of credit card used.