PayPal Merchant Accounts – Make an Informed Decision

Do not open a PayPal merchant account or process another PayPal transaction until you read this! Make an informed decision.

Ask Yourself These Questions

Can PayPal hold my money with no explanation?
Can PayPal freeze my account for no reason?
Can PayPal take money out of my account without my knowledge?

Unfortunately, the answer to all three questions is YES.

Instead, you should consider a real merchant account.  With a real merchant account your funds are directly deposited into your personal or business bank account, which you control and which is also protected by Federal Banking Regulations.

A real merchant account is best for e-commerce and phone order merchants that need merchant executed transactions and process over $1000 a month.

Fair Warning

PayPal is not a bank; it’s a money service that is not under the jurisdiction of federal banking regulators and financial protection banking laws that protect an individual’s bank account from being frozen without warning, explanation, or recourse, for months at a time.

Paypal routinely freezes the funds of their merchants for six months or longer and pockets the interest; its part of the business model.

PayPal claims to fight chargebacks but we found 100,000s of complaints and a history of unwillingness to side with the seller; just search the message boards on anti-PayPal sites.

PayPal is not that cheap.  They advertise low tiered flat rates but do not disclose downgrade higher fees for American Express and phone order corporate purchasing cards; 3.5%.  Most net effective rates are over 3% if you include the $30 monthly merchant account fee.

Transferring money from your PayPal account to your real bank account all the time is a hassle and often funds availability can be three days or more.

Get a Real Merchant Account

There are several high quality, secure, online virtual terminal alternatives to PayPal available that offer better merchant protections, two day funds availability directly in your checking account, and offer rates as low as 1.99% for qualified merchants.  There are better alternatives to PayPal and if you are here you probably know that by now.

The applicable net effective rate for your business will depending on the types of cards accepted; whether you take a lot of debit cards or mostly accept business reward cards.

Accept credit cards with a real merchant account; Contact Us!


The Lawsuit You Should Know About

As you will discover while browsing through the many horror stories posted on,, or other anti-PayPal sites by current and former PayPal users, PayPal has some tough allegations to deal with. Allegations of mishandling money, unnecessarily locking funds, not providing adequate customer support, freezing accounts with no explanation and disregarding customer complaints, just to name a few.

In early 2002, Plaintiffs Roberta Toher and Jeffrey Resnick filed separate lawsuits against PayPal, Inc. These two cases were later consolidated into one lawsuit in the United States District Court for the Northern District of California.

The lawsuit alleges, among several other issues, that PayPal has placed inappropriate restrictions or other limits on customers’ accounts and engaged in several other improper practices. Based on these improper practices, the lawsuit sought damages for money unjustly held, negligence, and violations of consumer protection statutes.

Rather than dealing with a lengthy public trial and being forced to clean up their act, PayPal decided to settle out of court and pay $9.25 Million Dollars to Tens of Thousands of PayPal merchants who processed with PayPal between October 1, 1999 and January 31, 2004. (A mere slap on the hand for a company this size)

Instead of a Judge forcing PayPal to change their questionable business practices, PayPal agreed to pay the settlement and walk away from the entire allegation.

So what does this mean to current PayPal merchants? Unfortunately, this means that PayPal is free to continue operating in the exact same way it always has. Judging by the number of PayPal horror stories out there it appears that the situation has only gotten worse since the settlement.


Choose a Payments Partner That Works for You

If you need an experienced, trusted merchant services provider that will personally resolve any issues with your processor and help you fight chargebacks, you’ve come to the right place.  We are knowledgeable and fair.  We believe in doing good business.

We are independent agents of a well respected payment industry leader known for their high-quality, easy-to-use, secure online virtual terminal alternative to PayPal.  We thoroughly evaluated the best all-around PayPal merchant account alternative so you don’t have to.  There are a lot of fly by night operations out there on the internet so be cautious.  Instead, go with a trusted, well respected, bank sponsored processor that specializes in software-based payment systems and offers an industry leading free virtual terminal that is compatible with twenty plus top shopping carts.  It is perfect for the MOTO (mail order telephone order) and e-commerce merchant that regularly processes more than $1000 a month.

Get a better overall deal with more merchant protections; accept credit cards with a real merchant account.  Contact us and tell us about your business.  We will recommend the best solution/processor for you specific needs.  The process to open a new merchant account is fast and simple.