Difference Between a PayPal Account & a Merchant Account

Difference Between a PayPal Account & a Merchant Account
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According to reports published by business consultant PwC, PayPal is the single most popular mobile wallet in use at the time of publication in 2013. With PayPal, you can buy and sell merchandise online without worrying about the safety of your personal information. If you own a business, you can also use PayPal as a merchant account, though it is notably different from most other merchant accounts.

About Merchant Accounts

A merchant account allows you to process credit card and debit card payments. Merchant accounts may be available from banks, such as Chase, or you can obtain one through a third-party company that focuses solely on processing electronic payments for businesses. Depending on the type of merchant account you choose, you can process payments in person, online, over the phone or by mail. Some merchant accounts may allow more than one type of processing.

PayPal Business Accounts

PayPal's business accounts allow merchants to process payments online, in person, by phone, by fax and by mail. You can process online payments using PayPal's interface, which can be linked to your company's website. You can process phone, fax and mail payments by entering the information into your computer. Finally, you can process in-person payments by entering the information into your computer or by using one of PayPal's card swipers. Card swipers are available for your computer or mobile phone.


Many of the services PayPal offers are similar to typical merchant accounts, but not every merchant account allows you to process payments both in person and online. PayPal also offers dispute resolution assistance, which isn't available from many other merchant accounts, and it offers help for business owners who are dealing with chargebacks. Finally, PayPal offers nonmerchant accounts that individuals can use to send or receive payments online.


PayPal's basic account doesn't cost a monthly fee and charges a lower transaction fee than most other merchant accounts. However, this account only allows you to refer customers to PayPal from your website and accept credit cards on your mobile phone. It doesn't allow you to process PayPal on your site or accept payment via phone, fax or mail. To take advantage of all of PayPal's features, merchants must pay a monthly fee of $30 and up to 3.1 percent plus $0.30 for each transaction, which is higher than most other merchant accounts charge.