Accepting diverse payment methods through merchant accounts has become standard practice for traditional businesses. Even small establishments recognize the importance of offering multiple payment options, as fewer consumers carry cash and many prefer the security and detailed records provided by credit cards or checks.
Online businesses are increasingly recognizing this necessity as well. While the popularity of PayPal once deterred some from adopting merchant accounts, disadvantages soon became apparent. Negative experiences with PayPal, publicized by both merchants and consumers, led to hesitation. Many consumers were unwilling to create yet another account, memorize another password, and use a third party to transmit sensitive financial information.
The inconvenience of navigating a separate website to complete a simple transaction reduced consumer convenience. Merchants also realized that PayPal offered no additional fraud protection and often charged rates comparable to, or even higher than, dedicated merchant service providers. A significant concern is the inability to quantify lost sales due to consumer reluctance to create a PayPal account.
Consumers generally prefer familiar payment methods used by local retailers. For smaller purchases, many won’t spend the extra time required to set up an account for a low-cost item. While individual losses may seem small, the cumulative impact on businesses that don’t offer traditional merchant account systems can be substantial.