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Should you use PayPal or a Payment Gateway

One of the questions that many clients have is how they should accept payments and/or donations on their website. There are essentially two options. The first option is probably the easiest way to do it--create a PayPal account and let your end-users pay them through PayPal's trusted 3rd party service. However, many clients see this as a disadvantage because then users can't simply do things through their site. So, the second option is to use a "Payment Gateway" service. By utilizing a Payment Gateway, you are able to accept and process credit card transactions directly on your site.

So, which one do you choose? I believe the answer comes down to what the goals for your site will be. If you are a church that just wants to accept donations, which may be irregular, then PayPal is probably your best bet. However, if you are a bigger corporation, or want to appear as a bigger corporation, utilizing PayPal will make you look a little smaller. In any case, I believe that there are pros and cons to both options. So, here is a list that I have compiled of reasons that I have found for or against utlizing a Gateway service instead of PayPal.

PROs to Gateway Service

  • You have full control of transactions on your own site. The customer doesn't have to go through a 3rd party service to pay you.
  • This is viewed by many as the more "professional" image to present to the customer.
  • If you need to "track" transactions from users and setup user-accounts, etc., than the additional control of using a Gateway makes this much easier than working with PayPal's "Instant Payment Notification" system.

CONs to Gateway Service

  • Since the customer is giving YOU their credit card information you need to earn their trust so that they feel comfortable giving your site that information.
  • To protect your customer you need to pay for 128 bit SSL encryption certificates.
  • If you are doing a subscription service, you need to house the customer's credit card information on your own server, in your own database. This means that you are responsible for protecting this information, which means more meticulous programming to encrypt data before it's stored in the database, etc.
  • Payment Gateways cost more than PayPal. They usually charge a percentage "per-transaction" fee plus a monthly fee. PayPal's 3rd party service only charges a "per-transaction" fee.
  • A Gateway requires you to build your own forms to gather information from the user, which can take additional time--thus more money to your web developer.