6 ms·

PayPal Upgrade Calculator

137 points by sachinag 16y ago

seanharper 16y ago
This says "paypal upgrade calculator", which makes it sound more biased than it really is - it's actually a very fair comparison.
- ComputerGuru 16y ago
  Yep. I used it to gauge the donations I get, and because of the smaller single-donation average, PayPal is the better option.
- mmelin 16y ago
  Yeah, but the premise is that people start off with Paypal when they have low volume and this calculator helps them figure out when they should be starting to look at "real" merchant accounts. I'm pretty sure the number of people who willingly go from merchant account -> Paypal is close to zero.
Suekhim 16y ago
Cool.
jasonkester 16y ago
Wow, that's pretty. I like this sort of advertisement. It's just a useful thing that people using PayPal will discover at some point and start playing around with. Naturally, they'll realize that they should get themselves a merchant account and... hey whaddayaknow, that link up at the top takes me to a place where I can get one. I think the earliest and most successful implementation of this idea was that "What's your political affiliation" test from the 90's that framed all the questions so that you'd end up discovering that you were a Libertarian. Who knew? Better follow this link that tells me who I should be voting for...
- leftnode 16y ago
  Exactly, I love this type of advertising. It's useful, pretty, non-intrusive and works well. It's the same way Mint advertises by having large infographics. They're pretty to look at and advertise Mint at the same time.
gbhn 16y ago
When I did some website commerce programming a while back, the merchant account we had came with a monthly fee that for many just-starting situations would be a sizable fraction of the total fees ($70/mo or so). Perhaps this has changed, but it isn't accounted in the app. I was struck by how close the levels were until revenue gets quite high. The convenience of Paypal probably wins in most cases until the mid-to-upper six figures.
- seanharper 16y ago
  The average monthly fee (including gateway) on the transfs marketplace is $16 / month, which is included in the calculation (try putting the volume slider to $0). Likewise, Paypal Pro (which you need if you want to accept payment without sending the user off-site) has a $30 / month fixed fee. Of course there are certainly crooked merchant account providers that will hose you with bigger monthly fees, so it pays to be careful. The last thing a startup needs is extra fees.
maushu 16y ago
Of course they forgot to add an "I'm outside of the USA." checkbox which would always make paypal the winner. Just my small rant.
- dchest 16y ago
  Of course they forgot to add an "I'm outside of the USA, and PayPal doesn't work in my country" checkbox which would always make PayPal the looser.
smokinn 16y ago
It's pretty buggy. It refuses to update if it'll cost you over 100k in fees. Try an average transaction size of 3$ and a total monthly volume of 1,000,000$ for example. If you're going to provide a slider with only a few pre-set values you should at least support all its combinations.
- ten7 16y ago
  Who do you know does $3 per user with $1M per month?
  - robin_reala 16y ago
    Apple? Not that they’re using Paypal.
  - smokinn 16y ago
    That's hardly the point. If you're going to make a mini-app and don't want to support certain values just don't make them possible rather than have buggy/wrong behavior. If at least both refused to update it would be a little better than now where one of the prices can update with the other staying the same and thereby throwing the comparison completely out of whack.
borism 16y ago
So this is essentially somebody whom I never heard about charging the same price (ie 478 vs 500) that PayPal does? Why am I supposed to chose them now?
karsa 16y ago
The do not mention: 1) You will need to be PCI compliant (cost 2k +) 2) You will may need to spend 30 days going through due diligence 3) You may be considered high risk and have to pay much more 4) You may have a high rolling reserve (up to 10% for 6 months). 5) You will need to redesign according the merchants API, while paypal is pretty much 1,2,3. 6) You will probably be not taken on if you have no previous history...
- seanharper 16y ago
  Yah, getting a merchant account is a pain in the butt, but I think you are overstating it a little. The jury is out on whether merchant accounts or paypal have more onerous reserves. There is a wide ecosystem of payment processors that like to sign up startup ecommerce businesses. Note, your local bank isn't included in that group, they probably won't want you as a customer. If you use tokenization or recurring transactions and don't store the card data on your local server (same situation as paypal, btw) PCI requirements are very minimal and won't cost you anywhere near $2k.
  - karsa 16y ago
    Note: I am one of the people who have moved away from Paypal, I have become PCI compliant (which I did myself for 250 euros) but this I think would really cost 2k plus for any company. It took me a week to navigate. I ended up setting up a simple solution for others to help them efficiently with this http://www.pcicompliancesaq.com http://www.pcicompliancesaq.com However, the whole process was tedious, I went all the way through due diligence which took about 4 weeks with one merchant who then wanted a 5.25% rate plus about 500 month in fees. I finally found a sensible merchant who offered me 3.5% and sensible rates, who I am extremely pleased with, their support is great and now I'm through the other side I am very pleased I have. The payment gateway is much quicker and smother than sending clients to Paypal and then having them be returned to my site (which in a small % fails because clients interrupt the process needing me to manually configure). But all in all it's easier to start your company with Paypal then move to a merchant account later when you have some trading history and the time and resources to invest. But don't be under the impression that you will get going as simple as you did with Paypal.
invisible 16y ago
So pretty much: if you make >= $1,000 from a site you should use a merchant account (if the amount is really close to $1,000, you may want to use Paypal if the transaction amount is above $10) otherwise you are better off with Paypal Standard.
ladyada 16y ago
This is misleading. The 1.9% interchange fee is going the MINIMUM of many many different interchange fees especially Amex's and the vast number of 'rewards' cards. For online 'e-retail', expect at least 2.5% as well as many new and exciting monthly fees that have been recently added by visa/mc and your processor. Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one.
- jonknee 16y ago
  > Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one. You don't need a PayPal account to pay with PayPal.
  - nhebb 16y ago
    Unfortunately, many customers don't know that.
    - adammichaelc 16y ago
      With PayPal PayFlow Pro you can set up PayPal so that the customer never even sees a PayPal logo. They just go through the payment process as if you had a regular merchant set-up. https://www.paypal.com/cgi-bin/webscr?cmd=_payflow-pro-overview-outside https://www.paypal.com/cgi-bin/webscr?cmd=_payflow-pro-overv...
      - jonknee 16y ago
        ... Except you do need to have a regular merchant set up. PayFlow is just a gateway like any other (Authorize.net, Braintree, etc). One difference is that they now require you to accept PayPal to get the lowest rates. One of my clients is going through that now, if it's not up by the end of July their rates go up.
- jsankey 16y ago
KevinMS 16y ago
Couldn't work for me because I use the micropayment mode in paypal and charge $2. Both of those don't seem to be options.
aresant 16y ago
Rates are important but not everything. In PayPal's court, they don't have a merchant reserve - typically your merchant account will require 5 - 10% of your monthly processing to be held for up to 6 months after your last transaction is processed. On the other end of things most Merchant accounts offer substantially better chargeback resolution, customer service, and flexibility.
thinkcomp 16y ago
Can't resist... FaceCash (http://www.facecash.com http://www.facecash.com) is cheaper than both options at 1.5% flat, though we haven't launched an internet payment solution yet.
midnightmonster 16y ago
Sliders are nice large targets and look very touchable, but don't actually work at all on my iPad.
boredguy8 16y ago
$3 / transaction @ $1m volume shows PayPal as cheaper. I think it's an overflow error.
- pjeide 16y ago
  I saw the same thing. http://twitpic.com/211wd7 http://twitpic.com/211wd7
bdickason 16y ago
I put together a google docs spreadsheet that is similar but built for subscription startups: http://spreadsheets.google.com/ccc?key=0AumfOxrn5FGtdEN5U21LTks4QzFnTHBNZDhCaThZSHc&hl=en http://spreadsheets.google.com/ccc?key=0AumfOxrn5FGtdEN5U21L... You enter your subscription tiers (3 by default) and what percentage of users will choose each tier. It spits out projected revenue, Braintree fees, paypal fees, and then adds Spreedly/Chargify into the mix so you can switch seamlessly.
portman 16y ago
PayPal has a "micropayment" option where the transaction fee is only $0.05. https://micropayments.paypal-labs.com/ https://micropayments.paypal-labs.com/ This changes the equation at the low end ($1 and $2 transaction sizes) and makes PayPal come up extremely favorably when compared to the merchant account. I understand the point of this site is actively encourage people to switch away from PayPal, but in the interest of fairness, it would be nice if the author factored in the micropayment rate when you move the slider to $1.

137 points by sachinag 16y ago

This says "paypal upgrade calculator", which makes it sound more biased than it really is - it's actually a very fair comparison.

ComputerGuru 16y ago
Yep. I used it to gauge the donations I get, and because of the smaller single-donation average, PayPal is the better option.
mmelin 16y ago
Yeah, but the premise is that people start off with Paypal when they have low volume and this calculator helps them figure out when they should be starting to look at "real" merchant accounts. I'm pretty sure the number of people who willingly go from merchant account -> Paypal is close to zero.

Suekhim 16y ago

Cool.

jasonkester 16y ago

Wow, that's pretty. I like this sort of advertisement. It's just a useful thing that people using PayPal will discover at some point and start playing around with. Naturally, they'll realize that they should get themselves a merchant account and... hey whaddayaknow, that link up at the top takes me to a place where I can get one. I think the earliest and most successful implementation of this idea was that "What's your political affiliation" test from the 90's that framed all the questions so that you'd end up discovering that you were a Libertarian. Who knew? Better follow this link that tells me who I should be voting for...

leftnode 16y ago
Exactly, I love this type of advertising. It's useful, pretty, non-intrusive and works well. It's the same way Mint advertises by having large infographics. They're pretty to look at and advertise Mint at the same time.

gbhn 16y ago

When I did some website commerce programming a while back, the merchant account we had came with a monthly fee that for many just-starting situations would be a sizable fraction of the total fees ($70/mo or so). Perhaps this has changed, but it isn't accounted in the app. I was struck by how close the levels were until revenue gets quite high. The convenience of Paypal probably wins in most cases until the mid-to-upper six figures.

seanharper 16y ago
The average monthly fee (including gateway) on the transfs marketplace is $16 / month, which is included in the calculation (try putting the volume slider to $0). Likewise, Paypal Pro (which you need if you want to accept payment without sending the user off-site) has a $30 / month fixed fee. Of course there are certainly crooked merchant account providers that will hose you with bigger monthly fees, so it pays to be careful. The last thing a startup needs is extra fees.

maushu 16y ago

Of course they forgot to add an "I'm outside of the USA." checkbox which would always make paypal the winner. Just my small rant.

dchest 16y ago
Of course they forgot to add an "I'm outside of the USA, and PayPal doesn't work in my country" checkbox which would always make PayPal the looser.

smokinn 16y ago

It's pretty buggy. It refuses to update if it'll cost you over 100k in fees. Try an average transaction size of 3$ and a total monthly volume of 1,000,000$ for example. If you're going to provide a slider with only a few pre-set values you should at least support all its combinations.

ten7 16y ago
Who do you know does $3 per user with $1M per month?
- robin_reala 16y ago
  Apple? Not that they’re using Paypal.
- smokinn 16y ago
  That's hardly the point. If you're going to make a mini-app and don't want to support certain values just don't make them possible rather than have buggy/wrong behavior. If at least both refused to update it would be a little better than now where one of the prices can update with the other staying the same and thereby throwing the comparison completely out of whack.

borism 16y ago

So this is essentially somebody whom I never heard about charging the same price (ie 478 vs 500) that PayPal does? Why am I supposed to chose them now?

karsa 16y ago

The do not mention: 1) You will need to be PCI compliant (cost 2k +) 2) You will may need to spend 30 days going through due diligence 3) You may be considered high risk and have to pay much more 4) You may have a high rolling reserve (up to 10% for 6 months). 5) You will need to redesign according the merchants API, while paypal is pretty much 1,2,3. 6) You will probably be not taken on if you have no previous history...

seanharper 16y ago
Yah, getting a merchant account is a pain in the butt, but I think you are overstating it a little. The jury is out on whether merchant accounts or paypal have more onerous reserves. There is a wide ecosystem of payment processors that like to sign up startup ecommerce businesses. Note, your local bank isn't included in that group, they probably won't want you as a customer. If you use tokenization or recurring transactions and don't store the card data on your local server (same situation as paypal, btw) PCI requirements are very minimal and won't cost you anywhere near $2k.
- karsa 16y ago
  Note: I am one of the people who have moved away from Paypal, I have become PCI compliant (which I did myself for 250 euros) but this I think would really cost 2k plus for any company. It took me a week to navigate. I ended up setting up a simple solution for others to help them efficiently with this http://www.pcicompliancesaq.com http://www.pcicompliancesaq.com However, the whole process was tedious, I went all the way through due diligence which took about 4 weeks with one merchant who then wanted a 5.25% rate plus about 500 month in fees. I finally found a sensible merchant who offered me 3.5% and sensible rates, who I am extremely pleased with, their support is great and now I'm through the other side I am very pleased I have. The payment gateway is much quicker and smother than sending clients to Paypal and then having them be returned to my site (which in a small % fails because clients interrupt the process needing me to manually configure). But all in all it's easier to start your company with Paypal then move to a merchant account later when you have some trading history and the time and resources to invest. But don't be under the impression that you will get going as simple as you did with Paypal.

invisible 16y ago

So pretty much: if you make >= $1,000 from a site you should use a merchant account (if the amount is really close to $1,000, you may want to use Paypal if the transaction amount is above $10) otherwise you are better off with Paypal Standard.

ladyada 16y ago

This is misleading. The 1.9% interchange fee is going the MINIMUM of many many different interchange fees especially Amex's and the vast number of 'rewards' cards. For online 'e-retail', expect at least 2.5% as well as many new and exciting monthly fees that have been recently added by visa/mc and your processor. Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one.

jonknee 16y ago
> Going with a merchant account probably wont save you money, but it does increase your purchase rate since many people may not have a paypal account and don't want to deal with getting one. You don't need a PayPal account to pay with PayPal.
- nhebb 16y ago
  Unfortunately, many customers don't know that.
  - adammichaelc 16y ago
    With PayPal PayFlow Pro you can set up PayPal so that the customer never even sees a PayPal logo. They just go through the payment process as if you had a regular merchant set-up. https://www.paypal.com/cgi-bin/webscr?cmd=_payflow-pro-overview-outside https://www.paypal.com/cgi-bin/webscr?cmd=_payflow-pro-overv...
    - jonknee 16y ago
      ... Except you do need to have a regular merchant set up. PayFlow is just a gateway like any other (Authorize.net, Braintree, etc). One difference is that they now require you to accept PayPal to get the lowest rates. One of my clients is going through that now, if it's not up by the end of July their rates go up.
jsankey 16y ago

KevinMS 16y ago

Couldn't work for me because I use the micropayment mode in paypal and charge $2. Both of those don't seem to be options.

aresant 16y ago

Rates are important but not everything. In PayPal's court, they don't have a merchant reserve - typically your merchant account will require 5 - 10% of your monthly processing to be held for up to 6 months after your last transaction is processed. On the other end of things most Merchant accounts offer substantially better chargeback resolution, customer service, and flexibility.

thinkcomp 16y ago

Can't resist... FaceCash (http://www.facecash.com http://www.facecash.com) is cheaper than both options at 1.5% flat, though we haven't launched an internet payment solution yet.

midnightmonster 16y ago

Sliders are nice large targets and look very touchable, but don't actually work at all on my iPad.

boredguy8 16y ago

$3 / transaction @ $1m volume shows PayPal as cheaper. I think it's an overflow error.

pjeide 16y ago
I saw the same thing. http://twitpic.com/211wd7 http://twitpic.com/211wd7

bdickason 16y ago

I put together a google docs spreadsheet that is similar but built for subscription startups: http://spreadsheets.google.com/ccc?key=0AumfOxrn5FGtdEN5U21LTks4QzFnTHBNZDhCaThZSHc&hl=en http://spreadsheets.google.com/ccc?key=0AumfOxrn5FGtdEN5U21L... You enter your subscription tiers (3 by default) and what percentage of users will choose each tier. It spits out projected revenue, Braintree fees, paypal fees, and then adds Spreedly/Chargify into the mix so you can switch seamlessly.

portman 16y ago

PayPal has a "micropayment" option where the transaction fee is only $0.05. https://micropayments.paypal-labs.com/ https://micropayments.paypal-labs.com/ This changes the equation at the low end ($1 and $2 transaction sizes) and makes PayPal come up extremely favorably when compared to the merchant account. I understand the point of this site is actively encourage people to switch away from PayPal, but in the interest of fairness, it would be nice if the author factored in the micropayment rate when you move the slider to $1.