My revenue from my online business is getting lower over time and my credit card processing fees has approached 25% of my revenue. I am getting upset with all the fees the credit card companies and credit card processors impose on people.
At some point I am thinking of dropping using my merchant account and just go with Paypal.
I think my credit card processor charges for every attempt from my side to charge a credit card even if it's invalid. So basically someone at my online form can just sit and keep entering any card info and I get charged 40 cents for each attempt.
Does Paypal charge for successful transactions only?
You might be just be dealing with the wrong processors. I never heard of anyone spending 25% of their revenue on CC fees. Paypal is a PITA, compared to a good processor.
I'm surprised as well by the 25% rate, unless your product price is under a few dollars or you have a high risk product line.
PayPal is a bit quirky to implement (or at least it's been for us), at any rate it only charges successful transactions. Moreover, refunds are completely free.
We never used any other payment processor, but our sale volume is currently low. We will surely consider other methods as there are some customers (e.g. big corps) that do not have a PayPal account (no idea why, but that's it). Currently, we can handle them "manually" (e.g. wire transfer) but when the sales volume increases that becomes less manageable.
If you're paying a fee of 25% for credit cards, that's remarkable. I've never heard of a rate that high.
At our company we use the merchant services company that CostCo offers for its executive members. That company is called Elavon. You can also go directly to Elavon but it is less expensive if you go to them via CostCo.
Elavon has been good to deal with and is distinctly less expensive than Bank of America, which we previously used for merchant banking services.
The rate you pay your credit card company is based on a number of factors.
Unless you are charging unreasonably small amounts (say under $5.00), and are not in the porn market, there is no way your processing fees, including per transaction fees and statement fees, should approach 25%. (This assumes few charge backs, and few refunds.)
So if those criteria are being met, you need to find a new merchant account. If those criteria are the reason why your rate is 25%, switching to Paypal will not help. They will drop you once they discover you are not a "good" merchant.
Paypal only is not a good idea. You will greatly reduce the number of sales you make.
Did a google search for more information on payment processing fees and this is the first thing that came up.
http://credit-card-processing-review.toptenreviews.com/ Processing fees range from 2.14% to 2.27% and transaction fees are between $0.20 and $0.29 for online purchases.
Below are Paypals fees:
Purchase payments received (monthly)................. Fee per transaction
$0.00 USD - $3,000.00 USD................................... 2.9% + $0.30 USD
$3,000.01 USD - $10,000.00 USD ......................... 2.5% + $0.30 USD
$10,000.01 USD - $100,000.00 USD ..................... 2.2% + $0.30 USD
+$100,000.00 USD ................................................ 1.9% + $0.30 USD
None of the payment processors I've used (including Paypal) charge per transaction attempt only for successfully completed transactions.
Hope this helps.