Authorize.Net versus PayPal – your industry matters –
The nuances of your website’s marketing methods and, above all, whether or not your business is considered high-risk play a large role in whether Authorize.Net (when paired with an appropriate merchant account) or PayPal is best for your business.
Choosing the wrong one can mean the difference between eating into profit margins versus growing your business. In fact, it can decide whether you’re capable of processing payments at all or whether your processing ability might shut down entirely. This is why we want to compare two popular methods by looking at Authorize.Net versus PayPal.
It might sound dramatic, and to an extent, it can be. However, we’re here to help you along the way. We want to give you some insight that you might not be aware of so you can avoid mistakes that are, unfortunately, all too common.
A+ Rated, and BBB Accredited, Tasker Payment Gateways LLC, specializes in providing expert high-risk friendly payment gateway advice and recommendations for businesses that sell high-risk products online. Since 2002, we’ve gained invaluable experience and helped countless site owners sell their products successfully and grow their businesses. Check out our About Us page to learn more.
When it comes to establishing which online payment method is best, we need to compare the benefits and drawbacks of PayPal and a traditional merchant account integrated with Authorize.Net.
Note: If you would like to learn more about Authorize.Net, merchant accounts, and how high-risk businesses accept credit card payments, please read our Authorize.Net for high-risk businesses page.
The benefits and attributes of PayPal
PayPal is an extraordinarily popular payment processing method. PayPal is so familiar to people that its name recognition is a benefit in itself. In addition, it offers comfort and provides a sense of trust that secure payments are safe and reliable.
Additionally, PayPal makes it extremely easy to accept payments and make payments online from a merchant and consumer perspective.
In terms of selling online, PayPal is fast to set up and get going. This comes as a result of their business model. PayPal is what’s known as a payment aggregator, meaning that it manages risk differently from a merchant account provider – like the type that connects via Authorize.Net. Essentially, it weighs the risk of one business along with the hundreds of thousands of other businesses it has under its aggregated merchant account umbrella.
As a result of aggregating multiple businesses under one merchant portfolio, so to speak, they don’t need to perform a complete, upfront underwriting process in the same way a high-risk processor would. This means you “skip the line” and can usually start accepting credit and debit card payments online the same day you open an account.
In terms of assessing Authorize.Net versus PayPal, PayPal is by far the quickest route to processing payments. In general, we advise you to read PayPal’s terms and conditions or even reach out to them to ensure you are not violating their terms. However, there are some benefits and drawbacks that you should be aware of, which we’ll explain fully later on.
Note: PayPal is not a good fit for most high-risk business types, including FFL dealers, alcohol, vape, CBD, hemp, pipes, glass, cigar, and tactical businesses. You can learn exactly what is and is not allowed on PayPal by reviewing PayPal’s acceptable use policy.
With the combination of a high-risk friendly merchant account and the Authorize.Net payment gateway, you’re in a much firmer position for conducting your regulated business with confidence.
At the same time, with Authorize.Net, you’ll be able to accept credit cards online in a seamless manner. In addition, Authorize.Net allows you to choose which back-end payment provider you connect with – PayPal does not. This is Authorize.Net’s biggest benefit – especially if you sell regulated or high-risk products and services.
Learn more about high-risk merchant processing by checking out the Common High-risk E-commerce Questions section of our home page.
Accepting payments online can be a bit daunting if you’re unfamiliar with credit card processing and gateways. However, it doesn’t need to be unnecessarily complicated. We’re more than happy to help set it all up for you and make sure it works as it should with your products, e-commerce software, and platform. All you need to do is contact us here or reach us through the contact form at the bottom of this page.
This is one area where there is little difference as both PayPal and Authorize.Net integrate with the two largest shopping cart/site builders – WordPress/WooCommerce, and Shopify. Beyond that, hundreds of other shopping carts, like BigCommerce and PrestaShop, integrate with both PayPal and Authorize.Net. Check out our High-risk Resource Guide to learn more about your shopping cart.
Wix, Weebly, GoDaddy, and SquareSpace all integrate natively with PayPal. Authorize.Net can be integrated with all three, but there is an extra step involved. If you are selling a simple, low-risk product on one of these 4 website builders, PayPal is probably a good fit. However, if your products are high-risk, please read about our preferred high-risk work-around method, Foxy.
Payment methods for high-risk businesses
In evaluating Authorize.Net versus PayPal for high-risk businesses, we need to look at the underwriting processes and the nature of high-risk e-commerce.
PayPal is inherently less familiar with your business type, industry, and specifics because it doesn’t perform an upfront, personalized underwriting process to the same extent as a high-risk processor does. This means that PayPal has fewer options for handling issues that naturally occur within certain industries and business types. Having said that, we encourage you to read their terms or contact them to make sure you can use them safely and without violating any of their terms. If they give you the all-clear, you’ll find PayPal to be an excellent alternative.
On the other hand, if you run an FFL to FFL business or an online cigar website, you’re running what’s called a high-risk business. While there are many reasons why a business might classify as high-risk, the general consequences follow similar lines.
As a high-risk business, you’re far more likely to experience chargebacks and transaction disputes. Of course, that isn’t the end of the world, but the issue here is that PayPal doesn’t have many options and actions available to manage these situations. By and large, their choices are limited to freezing the account, holding funds, or closing the account entirely. Additionally, you’re likely to break their terms and conditions if you sell regulated items.
Payment gateways and merchant accounts are better for high-risk businesses
The potential drawback of using PayPal can be substantial if you’re a high-risk business and break their T&Cs. This is where the major difference lies when looking into Authorize.Net versus PayPal.
Whereas PayPal is a payment aggregator, Authorize.Net is a payment gateway. It processes your payments and connects your online store with your merchant account. Consequently, you’ll need to have a merchant account to accept credit cards using a payment gateway like Authorize.Net. Often these two items are sold together, but the difference is important, and an Authorize.Net account with a low-risk merchant account is no better than PayPal in terms of its risk of getting shut down.
Setting Authorize.Net up is a more involved experience than signing up for a payment aggregator, as it involves an underwriting process, but it is a far more robust payment method. With a high-risk friendly merchant account, you’ll have much more security when it comes to processing payments. In addition, a high-risk provider is much more capable of handling the challenges that you’ll inevitably experience to some degree as a high-risk business.
If you’re unsure how to find a high-risk merchant account so that you can take advantage of the Authorize.Net payment gateway, don’t worry. Get in touch with us here or at the bottom of this page.
We strongly recommend using Authorize.Net for businesses in the high-risk category. But, again, make sure you take the time to read their T&Cs to make sure you’re not violating their terms. Generally speaking. However, you’ll be on a better footing while growing your business and successfully processing transactions with a high-risk merchant account and Authorize.Net. On the other hand, low-risk businesses, especially small entities, are generally better served by PayPal.
If you need any assistance setting up your Authorize.Net payment gateway for high-risk processing, don’t hesitate to get in touch. We’re more than happy to help and give some free advice. We can also give you some tips and insights if you need help finding a high-risk friendly merchant account as well. We look forward to helping you and your high-risk business!