After much research and analysis of credit card processors, we recommend PayPal as the best low-volume credit card processor for small businesses.
Ease of use
Very small businesses don't have the resources to waste on a credit card processor that takes a long time to set up and learn how to use. Whether you are just starting out or simply don't have a large sales volume, you should choose a service that lets you process credit cards right away. This is where PayPal can help — there aren't any hoops to jump through to set up your account, and you don't need any technical skills to use the service.
To start using PayPal, just sign up for an account, and enter your business and banking information. The registration process is fairly straightforward, so it shouldn't take more than a few minutes to complete.
Unlike with many credit card processors, anyone can use PayPal. You don't need to apply for a merchant account, wait for a credit check or complete any complicated paperwork to open an account. You don't need to learn any fancy software or set up complex checkout systems, either. Regardless of which PayPal credit card processing method you choose, you'll have a plug-and-play service that lets you get started in just a few steps.
Read on to find out more about the different ways PayPal lets microbusinesses easily process credit cards.
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Just because you have a low sales volume doesn't mean your options are limited. One of the best things about PayPal is that it offers several ways to process credit cards for all types of really small businesses. Whether you are a home-based business, consultant, service provider, online store, small boutique or any other type of microbusiness, there is a low-cost PayPal credit card processing solution for you.
PayPal offers two types of credit card processing services, both of which come with multiple processing options:
Online credit card processing. Start selling online and accept all major credit cards using PayPal's e-commerce solutions.
One option is to request credit card payments by email. Just go into your PayPal dashboard to email customers an invoice. All they have to do is click on the link in the email, and PayPal will take care of the rest. Alternatively, if customers already know your email address and have their own PayPal account, they can just send you the funds directly by entering your email address via the Send Money section in their dashboard.
You can also place Buy buttons throughout your website, blog or online store. Although this option requires some coding, you don't need any programming skills to use it. Just set up your inventory by inputting information like product numbers, description, cost and other variations — PayPal will automatically generate the Buy-button code that you can easily copy and paste into your website.
In-person credit card processing. PayPal Here, PayPal's mobile credit card processing and point-of-sale (POS) system, lets you accept credit cards in person anytime, anywhere. Use the PayPal Here dongle — a small credit card swiper that connects via a smartphone or tablet's headphone jack — and download the PayPal Here mobile app to start accepting credit cards at your brick-and-mortar location, at home or on the go. The app can even scan bar codes, automatically send invoices and receipts, and allow customers to enter debit card PINs and sign for credit cards. PayPal Here is available on iOS, Android and Windows mobile devices. [See Related Story: Credit Card Machines: Answers to Frequently Asked Questions]
In addition to offering flexible credit card processing solutions, PayPal can help you grow your business. A PayPal representative told us that you can use more than one method at the same time for multichannel sales at no extra cost, and all funds go into a single PayPal account.
For instance, if you own a handmade-jewelry business, you can sell your creations on your website using PayPal's Buy buttons (or via email) and easily process credit card sales in person at your store or trade shows using PayPal Here. You'll use the same PayPal account for both methods, so you can easily manage all transactions and withdraw money from a single dashboard.
Small business owners love PayPal because of its affordable and straightforward pricing. The very small businesses we spoke with said they chose PayPal over other credit card processors because the fees are friendlier for lower-volume sales.
Here is a breakdown of PayPal's fees:
- Online credit card processing. Fees depend on your monthly sales numbers, not volume. Online (invoice and Web-based) sales cost 30 cents per transaction plus 2.9 percent for sales up to $3,000 per month, 2.5 percent for sales up to $10,000 per month and 2.2 percent for sales up to $100,000 per month. PayPal will also give you discounts if you have sales that exceed $100,000 per month.
- PayPal Here. Swiped credit cards cost 2.7 percent per transaction, or 3.5 percent plus 15 cents per transaction for keyed-in credit cards.
Furthermore, as a low-volume business, the last thing you need is to be hit with surprise fees. Because transaction charges add up, what we also liked about PayPal is that there are no hidden costs. When we asked the company about its pricing structure, we confirmed that there are no startup costs, setup charges or monthly processing fees.
PayPal doesn't require any long-term contracts, either, so you won't be hit with a hefty early-termination fee if you decide you don't like the service or it no longer suits your business. In comparison, most credit card processors charge $20 or more on various monthly fees, lock you into multiyear service contracts and hit you with hundreds of dollars' worth of termination fees.
In addition to credit card processing, PayPal is packed with features to help you grow your business. Here are just a few that matter most for really small businesses:
POS system. If you're looking for a more advanced solution, you can also use the tablet-based PayPal Here as a complete POS system. PayPal has partnered with a number of merchant services providers, so you can use PayPal Here to process sales, manage inventory, manage customers, run sales reports, launch marketing campaigns, integrate the service with business apps you already use and much more. This works for mobile payments, or you can attach the tablet to a stand to create a stationary register.
Multiple payment methods. Keep customers coming back by giving them the power of convenience and choice. In addition to credit and debit cards, PayPal can process bank transfers for online sales and cash in person. PayPal doesn't require that customers have a PayPal account to pay for products and services. They can easily input their credit card information online just as they would at any other e-commerce store.
Extend credit. Offer financing options online with PayPal Credit. Not many credit card processors offer this opportunity for customers, making PayPal a great option if you want to increase sales and customer loyalty by offering flexible payment plans.
Fast payments. Because PayPal doesn't require merchant accounts, there are no delays in processing payments. Funds are transferred to your PayPal account in real time within minutes of transactions, so you can get paid right away and simplify your accounting.
PayPal Business Debit MasterCard. In addition to transferring funds to your bank account, you can manage your earnings using PayPal's Business Debit MasterCard. If you qualify, you can use this debit card to make purchases using your PayPal funds just as you would with any other debit card. It comes with perks like 1 percent cash back on certain purchases and the ability to immediately withdraw cash from approved ATMs. It also lets you bypass the three to four business days it takes to transfer funds from your PayPal account to your bank.
Security. Whether you make one sale per month or process thousands of transactions per day, all merchants are responsible for making sure that both their own data and customers' information stay protected. But as a low-volume business, you likely don't have the resources or knowledge to worry about securing transactions yourself. PayPal takes care of security for you: A PayPal representative told us this includes a wide range of safety measures, such as compliance, encryption, seller protection and 24-hour fraud protection.
PayPal has been around for nearly two decades, so some of its strongest points are customer service and merchant support. The company offers several ways to get the help you need when you need it.
If you need to reach a live person, PayPal gives you 24/7 access to phone and email support. If you prefer to troubleshoot issues yourself, PayPal has a dedicated customer support center that's easily accessible on its website. There, you'll find a searchable database of articles, how-to guides and frequently asked questions; access to the Resolution Center to help with customer disputes; and the community forum, where you can browse common issues or ask other PayPal users for help.
Although there are many things we liked about PayPal, we have one major issue with the service: There are a ton of merchant fees for additional features.
For instance, if you use PayPal to process credit cards for your online store, there's no way to do so right on your website — customers are taken to the PayPal website to complete the purchase, which could be inconvenient. However, you can customize the checkout process with your own branding by upgrading to PayPal Payments Pro. This add-on will cost you $30 per month.
Other fees include the following:
- $30 per month for a virtual terminal that lets you turn computers into credit card terminals and accept payments by phone
- $30 per month for recurring payments
- 3.5 percent transaction fee for American Express payments on PayPal Payments Pro, PayPal Payments Advanced and virtual terminal transactions (compared to the 2.9 percent plus 30 cents using the basic PayPal plan)
- $20 per month plus 5 cents per transaction for advanced fraud management
- $19.95 per month (plus a $29.95 setup fee) for account monitoring
- $20 chargeback fee
- 30 cents per uncaptured authorization (when a credit card is authorized, but the purchase is not complete) on PayPal Payments Pro
- 30-cent refund fee for domestic transactions
We do appreciate that PayPal is very transparent about these fees on its website — and that the sales rep had no qualms about disclosing them to us — so there will be no surprises if you decide to take advantage of these features.
To be fair, as a business with low-volume sales, these additional charges likely won't matter to you. But if you plan on increasing your profits and expanding your business, these costs will quickly add up — you may outgrow PayPal and eventually seek a more budget-friendly service.
We chose PayPal from a pool of the dozens of credit card processors we considered. To read our full methodology and for a more comprehensive list of credit card processors, visit our best picks page here.
Ready to choose a credit card processor? Here's a breakdown of our complete coverage:
- How to Choose a Credit Card Processor
- Best Credit Card Processors
- Payline Review: Best Credit Card Processor for Small Business
- Flagship Review: Best High-Volume Credit Card Processor
- Paypal Review: Best Low-Volume Credit Card Processor
- Stripe Review: Best Online Credit Card Processor
- Square Review: Best Mobile Credit Card Processing Solution
- TSYS Review: Best Credit Card Processor for Medical Practices
Editor's note: Looking for information credit card processors for your business? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need: