Accepting diverse payment methods via merchant accounts is now standard practice for brick-and-mortar businesses. From fast-food restaurants to convenience stores, small businesses recognize the importance of offering multiple payment options. Fewer customers carry cash, and many prefer the security and detailed records provided by credit cards or checks.
Online businesses are also recognizing this trend. Initially, the popularity of PayPal, which required users to create accounts, deterred some from offering merchant accounts directly. However, drawbacks to PayPal soon emerged. Negative experiences were shared by both merchants and consumers. Many consumers disliked creating accounts, remembering passwords, and using a third party to transmit financial information.
Consumer convenience suffered as they navigated a separate website for each transaction. Merchants also realized PayPal offered no additional fraud protection and charged rates similar to, or higher than, traditional merchant service providers, prompting a reevaluation of its value. The most significant concern is the unquantifiable loss of sales due to consumer reluctance to create PayPal accounts.
Consumers are generally more comfortable with familiar payment methods used by local retailers. Many are unwilling to spend extra time creating an account for small purchases. While individual losses may seem small, the cumulative impact of not offering a reliable merchant account system can be substantial for businesses.