If you’re selling products or services online, it’s important to make it easy for your clients to buy online.  There are two main options: PayPal and Merchant Accounts:


PayPal has been around for quite some time now and they certainly make it easy to accept credit card payments.

  1. Open a free business account
  2. Build Payment or Donation buttons through their website
  3. Put the button on your website

or, if you’re using a shopping cart, you simply put your PayPal userid in the shopping cart’s configuration. Unlike in the past, your users do NOT need a PayPal account.  They can pay directly with a credit card.

Here’s a diagram of how the process works

PayPal Fees (as of 8/21/08)

  • No setup fees
  • No monthly fees
  • 2.9% + $0.30 per transaction

What’s great about this is the setup time is very short.  You also don’t have to worry about security since all the credit card information is stored on PayPal’s secure servers.  The downside is the user leaves your site at that point and you lose control over the look and feel of the checkout process.  If a completely seamless checkout is important to you, you should consider setting up a Gateway and Merchant account.

Gateway and Merchant Accounts

If you want to handle the cards yourself and provide a seamless user-experience, then a Gateway and Merchant account is your next option. A Merchant account is simply a bank account designed especially for accepting credit card payments online.  They’re offered through banks or other financial institutions.  In order for your website to communicate with the Merchant account, you need a Gateway account.

Since you’re now accepting cards directly on one of your web pages, that page needs to be secure.  To secure the page, you need to purchase a server certificate.  The certificate allows your web page to be “https”.

Once you’re setup, your Gateway provider will give you an authorization code to use in your shopping cart system.  Most Gateways also provide ways to let you create payment or donations buttons as well.

Each Merchant and Gateway vendor sets their own fees.  As a ‘Preferred Reseller’, Frogtown recommends Authorize.net , so we’ll use their rates as an example.

Merchant Account

Setup = $0

Monthly = $9.95

Transaction Fee = $0.25

Discount Rate = 2.19%

Gateway Account

Setup = $99.00

Monthly = $17.95

Transaction Fee = $0.10

Secure Certificate

Annual Fee = $50 to $200 depending on the vendor

You’re encouraged to shop around to find the best rates from online providers, as well as local banks.


Accepting cards directly on your site is more involved and has a fixed monthly fee regardless of your sales.  We recommend starting off with Paypal to get up and running quickly.  You can consider switching to a Merchant/Gateway account as you build your business and sales volume.

Give us a call or send a note if you have any questions about Paypal or Merchant/Gateway accounts.