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PayPal Review

Best Low Volume Credit Card Processor

A Business News Daily Review

Product and service reviews are conducted independently by our editorial team, but we sometimes make money when you click on links. Learn more.

After conducting extensive research and analysis, we recommend PayPal as our pick for the best low-volume credit card processor for small businesses in 2018. To understand how we reached our selection, you can find our methodology and a comprehensive list of credit card processing companies on our Best Picks page.

Very small businesses that don't accept many credit card payments each month don't have the resources to waste on a credit card processing service that charges multiple account fees and has monthly minimums. But that doesn't mean that you shouldn't accept credit cards at all. Rather, you should look for a processor that has pay-as-you-go terms and no monthly processing requirement, such as PayPal, which is our pick for the best low-volume credit card processor.

Small business owners love PayPal because of its affordable, transparent pricing. The very small businesses we spoke with said they chose PayPal over other credit card processors because the rates are friendlier for lower-volume sales. Here's a breakdown of PayPal's rates:

  • In-person sales accepted using the PayPal Here app and a card reader cost 2.7 percent per transaction.
     
  • Online sales (invoice and e-commerce) cost 2.9 percent plus 30 cents per transaction.
     
  • Cards that you accept using PayPal's virtual terminal cost 3.1 percent plus 30 cents.
     
  • Cards that you manually key into the app cost 3.5 percent plus 15 cents per transaction.
     
  • Registered charitable organizations can apply for discounts on online donation transactions. These cost 2.2 percent plus 30 cents per transaction.

PayPal doesn't charge any application or setup fees, monthly fees or PCI compliance fees. If a customer disputes a charge, there is a $20 chargeback fee. The company doesn't require any long-term contracts, so you won't be hit with a hefty early-termination fee if you decide the service no longer suits your business. In comparison, many credit card processors charge $20 or more on various monthly fees, lock you into multiyear service contracts and penalize you with hundreds of dollars' worth of termination fees if you close your account early.

Editor's note: Looking for information on credit card processors? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.

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PayPal makes it easy to start accepting card payments – 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. The registration process is straightforward, taking just minutes to complete.

Unlike many credit card processors, both businesses and individuals 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.

One of the best things about PayPal is that it offers small businesses several ways to accept credit cards. Whether you're a consultant, service provider or freelancer, or your business is an online store, small boutique, a home-based business, or any other type of microbusiness, you can accept credit cards in-person and online.

There are several ways you can accept online payments made using all major credit cards.

  • Accept credit card payments for invoices by email. Just go to your PayPal dashboard to email customers an invoice. All your customer will need to do to pay it is click on the link in the email, and PayPal takes 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.
     
  • Accept credit card and PayPal payments on your website. You can 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 copy and paste into your website. With PayPal Standard, the checkout pages are hosted by PayPal. If you want to keep your customers on your website and host the checkout pages yourself, you can do so using PayPal Payments Pro.
     
  • Accept credit card payments using a virtual terminal. If you take payments over the phone, via fax or mail, you can use PayPal's virtual terminal to key in your customers' credit card information.

PayPal Here, PayPal's mobile credit card processing and point-of-sale (POS) system, lets you accept credit cards in-person anytime, anywhere. Download the PayPal Here mobile app to your phone or tablet, connect a card reader and start accepting credit cards at your brick-and-mortar location, at home, or on the go. The app can scan barcodes, send invoices and receipts, allow customers to enter debit card PINs and sign for credit cards. PayPal Here is available for iOS and Android mobile devices. [See Related Story: Credit Card Machines: Answers to Frequently Asked Questions]

A PayPal representative told us that you can use more than one payment-acceptance 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.

Editor's note: Looking for information on 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.

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In addition to credit card processing, PayPal is packed with features to help you grow your business. Here are a few that matter most for really small businesses:

PayPal gives you four card readers to choose from and is compatible with third-party receipt printers, cash drawers, stands and cases. You can start small, with just your phone and a card reader, or add accessories to build a checkout station. Here are the card readers PayPal offers:

  • Mobile card reader. The small triangle dongle plugs into the headphone jack of your phone or tablet. With it, you can accept magnetic stripe credit and debit cards. This model is the only one that isn't EMV compliant, as it doesn't accept chip cards. If you use it to accept $500 or more within a week, PayPal will hold your money in a reserve account for 30 days. It costs $14.99.
     
  • Chip and swipe card reader. This model connects to your phone or tablet via Bluetooth. With it, you can accept both magnetic stripe and chip cards. It costs $24.99.
     
  • Chip and tap card reader. This card reader uses Bluetooth to connect to your phone or tablet. With it, you can accept magnetic stripe, chip and contactless cards as well as mobile wallets such as Apple Pay and Google Pay.
     
  • Chip card reader. This card reader also connects to your phone or tablet using Bluetooth and can accept magnetic stripe, chip and contactless cards plus mobile wallets. It's has a screen and PIN pad, so you can accept PIN debit cards. It costs $79.99.

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 at any store 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. There's no annual fee for this card.

PayPal integrates with many business solutions, such as shopping carts, e-commerce platforms, POS systems and marketing solutions.

Whether you make one sale per month or process thousands of transactions daily, all merchants are responsible for making sure that both their own data and customers' information stay protected.

As a low-volume business, you likely don't have the resources or knowledge to secure transactions yourself. PayPal takes care of security for you: A PayPal representative told us this includes a wide range of safety measures, such as PCI compliance, encryption, seller protection and 24-hour fraud protection.

PayPal offers some unique services to its customers, such as the following:

  • International transaction support. Using PayPal as your processor, you can sell your products to international customers, and PayPal takes care of currency conversion. It processes and converts transactions in 25 currencies from more than 200 countries. In addition to the standard transaction fee, you pay 2.5 percent for currency conversion and a 1.5 percent international transaction fee.
     
  • PayPal Marketing Solutions. Online stores can get insights into customer behavior using this free tool. To install it, you copy and paste a small piece of code into your website.
     
  • Invoice and accept payments through Messenger. If you interact with customers using Facebook, you can use Messenger to create invoices and accept PayPal payments.
     
  • Extend credit to customers. You can offer financing options to customers with PayPal Credit. Not many credit card processors offer this service, making PayPal a good option if you want to increase sales and customer loyalty by offering flexible payment plans.
     
  • Business financing. PayPal offers working capital and small business loans to eligible merchants.

PayPal has been around for nearly two decades, and 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 support, though after-hours calls may be routed to one of the company's international call centers. Email support is also available.

Or, if you prefer to troubleshoot issues yourself, PayPal has a dedicated customer support center on its website. There, you'll find a searchable database of articles, how-to guides and frequently asked questions. The website also has a Resolution Center to help you handle customer disputes and a community forum, where you can browse common issues or ask other PayPal users for help.

Although PayPal makes it easy for low-volume businesses to accept credit card payments and has a lot of useful tools, several features cost extra. For instance, if you use PayPal to process credit cards for your online store, your customers are taken to the PayPal website to complete the purchase, which can be inconvenient. You can customize the checkout process on your own website by upgrading to PayPal Payments Pro, but this add-on costs $30 per month.

Other fees include the following:

  • 30 cents per uncaptured authorization (when a credit card is authorized, but the purchase is not complete) on PayPal Payments Pro
     
  • 30 cents for card verification transactions (used to verify whether a cardholder's account is in good standing but no purchase is made)
     
  • 30 cent refund fee for domestic transactions
     
  • 1 percent Instant Transfer fee for moving money from your PayPal balance to an eligible debit card in minutes rather than the standard timeframe of one business day
     
  • 1.5 percent for cross-border payments is added to the 2.7 percent transaction fee when you accept international credit cards in person using PayPal Here. A 2.5 percent fee for currency conversion may also apply
     
  • 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)
     
  • $10 per month for recurring billing
     
  • $10 per month plus 5 cents per transaction for advanced fraud protection services
     
  • $20 chargeback fee
     
  • $30 per month for a virtual terminal that lets you turn computers into credit card terminals and accept payments by phone

We 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 are no surprises if you take advantage of these features. To be fair, as a business with low-volume sales, you likely won't encounter many of these charges. But as your business grows, these costs can quickly add up if you need to use them, and you may eventually seek a more budget-friendly service.

Also, like many other merchant aggregators, PayPal has a lot of complaints online about funds being held in reserve accounts or accounts being frozen. If you sell higher-risk items, or there's something unusual about your transactions, such as an abnormally high number of transactions or dollar amounts within a short amount of time, or if you have a lot of chargebacks, the company may hold your funds.

By following PayPal's seller best practices, you can reduce your risk of having funds held. If the goods or services you sell are outside the acceptable use policy in the terms of use, your account may be frozen or closed without notice.

Additional reporting by Sara Angeles.

Ready to choose a credit card processing company? Here's a breakdown of our complete coverage:

Editor's note: Looking for information on credit card processors? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.

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Lori Fairbanks

Lori Fairbanks has years of experience writing and editing for both print and online publications. After graduating from Brigham Young University with a Bachelor of Arts in English, she worked as an editor for Creating Keepsakes magazine and then as a freelance writer and editor for a variety of companies, including marketing firms and a medical university. She joined Purch in 2014 as a senior writer for Top Ten Reviews and now writes for Business.com and Business News Daily.