Payment Gateway Services vs. Paypal Express and Google Checkout: What the Differences Mean for Businesses

It’s a necessity for many business owners to accept credit card payments through their websites. But knowing how to meet that demand can be challenging. Understanding the differences between payment gateway services, like those offered through Authorize.net, and Paypal Express or Google Checkout will help business owners make an informed decision and better serve their customers.

The difference between accepting payments through products like Paypal Express Checkout and Google Checkout or through a merchant account service providers such as Authorize.net or like comparing a giant bowl of iceberg lettuce with a bowl of mixed greens topped with fresh, garden grown vegetables. One option is moderatly healthy and tastes ok, especially if it’s covered with a tastey salad dressing, and the other is an excellent way to feed your body a vairiety of vitamin and mineral packed vegetables with or without the dressing.

To truly appreciate the differences, however, let’s first discuss merchant accounts and why they’re useful. A merchant account is a business bank account that allows you to accept payments from credit cards or consumer bank accounts. You can get a merchant account through what’s called the aquiring bank. It’s the acquiring bank’s job to verify fund availability, authorize transactions and receive or deposit funds from your customer’s bank account to your merchant account. When you have a merchant account, you can use traditional credit card processing machines that you find in physical retail locations and can cost lots of money to lease or purchase and maintain, or you can use what’s called a payment gateway that will allow you to reap the benefits of the traditional machines without the added hassle and cost using the machine can cause.

Without a credit card, consumers can buy next to nothing on the internet. So, if you have an online business and you want your customers to easily purchase from you, you will need to decide how you can accept credit cards. Options like Paypal Express Checkout or Google Checkout might work. Keep in mind that neither of those two options are regulated by a finacial institution and are not FDIC insured. Paypal takes 304 days to deposit funds into your account. It’s 5 for Google, and you may have limits on the amount of money you are permitted to deposit into your own account monthly. Plus, both Paypal and Google require users to create an account before they can use a credit card for purchases. Unless your customers already have one of those accounts, you will add an extra step to your check-out process and may turn away customers who just want to give you their credit card number and go about their day.

With Authorize.net, it’s a bit different and much less complex. The money from credit card purchases is automatically transferred to your account within 1-2 days of a customer’s purchase. Automatically. You don’t have to request to have your own money deposited into your account. Plus, your account is a merchant account through a bank or other financial institution. That means your money is FDIC insured. Plus, the rates you will pay for the convenience of using a payment gateway are competitive. With Paypal and Google, the rates are set by each company respectively and you can’t go shopping elsewhere for a better rate. It is what it is.

Probably the most compelling reason payment gateway services like Authorize.net stand out from Paypal and Google is that it is the preferred way to do business for both merchants and consumers. Shoppers often view Paypal or Google processing as tools used by amateurs and inexperienced business owners. When you can accept credit cards directly on your site, consumers often get the impression you are an established business with a strong customer base.

You know you need to accept credit cards through your website. What you don’t know is whether you need a merchant account and to use a payment gateway service like Authorize.net or if you should stick with Paypal Express Checkout or Google Checkout services. Your decision may affect the way your customers view your business.