As you probably already know, owning a service-based small business involves a lot more than just doing jobs and making payments. You’re managing your employees, stocking inventory, scheduling jobs, and trying to keep everything cool, calm, and collected — even when it’s not. The last thing you want to think stress about is how you’re going to pay your own expenses or how you’re going to get paid from customers.
While it’s true you need a service to facilitate your incoming and outgoing payments, we’re here to tell you PayPal is not your only option. Maybe you’ve been searching for a PayPal alternative or asking other business owners about sites like PayPal to help you better manage your payments and expenses. Or, perhaps you’re just getting your business off the ground and need a convenient online payment service to help you start turning jobs into profit. Whatever your current payment situation looks like, we’re here to help. We’re breaking down the pros and cons of using PayPal, evaluating PayPal alternatives, and giving you tips on how to choose and use your online payment service.
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What is PayPal?
If you’ve bought anything on the internet in the last ten years, chances are you’ve heard of PayPal. In technical terms, PayPal is considered an ACH (Automatic Clearing House) payment. And what on earth is an ACH payment you ask? ACH is used in banking to signify a payment that is taken directly out of one bank account, and deposited into the next.
These transactions, also known as direct transfers, make it easy for customers to make payments and for you as the business owner to receive that payment. You may be wondering— if PayPal can transfer money, does that mean it’s a bank? Nope— not in the eyes of the Federal Deposit Insurance Corp.® ,anyway. So don’t close your business bank account just yet. While we’re on the topic, let’s cover the basics of what PayPal is and isn’t.
An online payment service connected to your bank account
An online payment service used to pay and receive money (buying and selling)
A way to quickly deposit your funds
Used by merchants and buyers to pay for goods and services
A professional business financing solution
A checking or savings account— it is simply connected to your bank account (not a bank)
A point of sale (POS) system. While PayPal can process refunds, it doesn’t work like a POS to return your inventory if it’s been refunded.
Free— if you’re using PayPal to sell your services, you can expect to be charged 2.9% + 0.30 cents per sale
Bulletproof. As with most things, PayPal isn’t perfect and sometimes things go wrong, leaving you with a frozen account or other technological issues.
What do businesses use PayPal for?
Although PayPal launched a platform for businesses to send and receive invoices, it’s generally used as a tool for merchants who sell their goods and services online— making it most popular for online retailers. PayPal can be used to pay independent contractors for work and to sell or buy goods or services. If your company accepts other forms of payment however, like cash or check— you’ll probably want to turn to another online payment application...but we’ll get into PayPal alternatives a bit later.
Pros and Cons
So we know what PayPal is and we know what PayPal isn’t— but why so much talk about this online payment tool, anyway? With 7.6 billion payments processed in 2017 , there’s no denying that this online payment application has taken over online commerce. Let’s take a look at the advantages and disadvantages of using PayPal.
It’s easy to set up and use
You can send money to anyone with an email address. In other words, they don’t need to have a PayPal account.
PayPal offers buyer’s protection
You can set up recurring payments
PayPal can easily be installed on your website platforms
If you want to receive money, you do need to have a PayPal account
PayPal’s seller protection doesn’t protect online goods
It can be difficult to contact PayPal’s customer service
PayPal does not accept cash or check— making bookkeeping complicated
Most common PayPal issues
A simple Google search of “PayPal alternatives” and you’ll likely see a number of grievances about PayPal’s lack of reliability, non-human and unhelpful customer service help line, and you might even happen upon the infamous PayPal sucks website. But in a sea of bad reviews and angry Facebook posts, one thing remains consistent— customers are telling you why you should stop using PayPal .
So, what are the common issues among PayPal complaints?
Expensive transaction fees
Poor customer service
Account freezes that restrict access from funds
Credit cards permanently linked to email addresses
As a result of complaints like these, PayPal has faced multiple class action lawsuits including a $3.2 million class action settlement in 2016 . The settlement money was issued to PayPal customers who experienced mishandling of disputed transactions or had holds, reserves, or restrictions placed on their account without prior notice. While you may not necessarily experience these same issues working with PayPal, it is worth looking into PayPal alternatives to make sure you’re using the best online payment processing service for your small business.
What you need to know about using online payment processing
Anytime your personal or business money is involved, security and reliability are key. So how do you know what online payment service to use? Here are some things to ask your online payment service representative— or better yet, make sure they meet this criteria before you even sign on with them.
1) Be Secure
If you’re looking for a payment service to collect money from your customers, you’ve got two bank accounts to worry about— your bank account and your customer’s account. Besides providing excellent customer service, your customers expect you to handle their payment information appropriately. The last thing you need on your hands is a Target style data breach that resulted in the corporation paying $18.5 million in settlement fees . And while you might not have millions of customers like Target does, even just one mishandled payment could end up hurting your local reputation.
2) Fast, Convenient
It should be easy for your customers to pay their invoices. If you’re used to accepting only cash and check before today, you’re going to want to step into the modern age and offer ACH and credit card payments. And just like getting paid should be easy, sending money should be easy for you. Whether you have employees on your payroll or you’re using independent contractors, it should be simple for you to send payment to them! We’re sure your employees love working for you anyway, but a timely paycheck deposited directly into their bank account certainly sweetens the deal.
When shopping for an online payment processing service, you should look into the restrictions on who you can or cannot pay. As we mentioned before, you should be able to both receive and make payments with your online payment service. Do you need to make transfers overseas? You may want to double check that the service you’re evaluating offers overseas transactions— and if so, what the cost looks like. Look for an online payment app that’s built with your trade in mind, and you’ll find that they probably thought of all the financial features you need to operate your small business.
4) Access to payment
Now that you know ACH payments transfer funds directly from bank account A to bank account B, you might be wondering— why not just take credit card payments, isn’t that the same thing? Nope! ACH payments are generally a cheaper alternative to credit card payment processing fees and oftentimes the funds are transferred more quickly, giving you faster access to deposited funds.
Credit card companies have to check the credit card holder’s limits and ultimately approve the transaction. ACH payments generally go through within one business day so long as the account holder has sufficient funds. The main benefit of accepting ACH is that the processing fees are cheaper which makes a huge difference for small business owners who are constantly receiving and transferring funds!
5) Payment Insurance
While we hope you never experience an issue with your purchases or worse— a fraudulent charge, it’s important to make sure the online payment processing program you’re using offers buyer’s protection. As we mentioned before, PayPal does offer their customers payment insurance on qualified purchases. If you’re wondering what you can do to protect yourself when you’re using online payment, stick with us for some helpful tips!
If your business is accepting credit card payments, you will need to make sure you’re operating in compliance with PCI standards. What’s PCI? PCI stands for Payment Card Industry . What does it do? PCI holds all businesses that accept credit card payments to certain data standards to protect cardholder data and processing. Using a PCI compliant service such as PayPal or alternatives like Square or Stripe can help you ensure that your business is abiding by PCI standards to protect you and your customers. One step businesses must take to ensure they’re charging credit cards properly is by getting proper authorization. Reference a credit card authorization template to make sure you’re processing payments properly!
Now that you know what to look for in an online payment processing system, let’s talk about what PayPal alternatives for small businesses are available on the market.
Here are some of the top PayPal competitors giving them a run for their money:
Housecall Pro My Money
Are you a small business owner in the service industry? Maybe you run a pest control company or an HVAC repair service. If this sounds like you, you may want to check out Housecall Pro’s new payment option My Money— built for service industry pros. You can create professional invoices based on jobs and send them to customers via text or email.
This eliminates the need for your technicians to have plug in card readers to get payment at the job site and customers can pay with card, cash, or check— making bookkeeping for your business easy and can be integrated with your QuickBooks account.
The coolest features about Housecall Pro My Money? It encompasses everything you need to run your service-based small business— beyond just getting paid. Things happen (sometimes it feels like everyday a new issue pops up) when you’re running a small business. Equipment gets broken, tools need to be repaired, and when those emergencies happen, you may not always have the funds to pay the bills.
This is where Fundbox for small businesses comes in. This feature is a part of Housecall Pro’s My Money app and can be used for quick small business lending when you need a helping hand to pay those surprise expenses. Fundbox is a great, professional GoFundMe alternative for business owners who need temporary lending.
Housecall Pro is the top rated field service software to manage and optimize your daily workflow. You can now streamline your business to schedule and dispatch jobs easily, receive payments faster, and automate marketing to gain more business. Start free 14 day trial now.
Been to a farmer’s market or outdoor vendor event lately? If so, you’ve probably seen or even bought something from a merchant using Square. Square is free for customers to use while merchants contribute a flat rate of 2.75% for all swiped transactions, 3.5% + 0.15 cents for keyed transactions, and 2.9% + 0.30 cents for online transactions. Square is a versatile option for businesses that need to process online and in-person payments.
If you run your business online, such as an online retail shop, Stripe may be a great alternative to PayPal for your small business. While it isn’t a cheaper alternative to PayPal (it charges the same 2.9% + 0.30 cents per transaction), Stripe is becoming a hugely popular option for online businesses. Why? Stripe can be embedded on your website so that customers can complete payments without ever leaving your website.
TransferWise is specifically targeted to businesses who need to transfer or receive money overseas. The application charges roughly 1% per transaction, making it a great option for businesses looking for sites like PayPal with cheaper processing fees. While PayPal can complete transactions from out of the country, they charge a higher fee .
Similar to Stripe, Google Pay is designed to function as an online shopping cart for your business. It’s a free service to add to your website, but must be integrated by a website developer. While Google Pay may be a good solution for online vendors, processing payments on-the-go for service based industries or brick and mortar vendors becomes a little more complicated.
If you’ve talked to any millennials recently or even sat next to a group of 20-somethings at a restaurant, chances are you’ve heard of Venmo. It’s so popular with this generation that it’s actually become a verb— like so: “you can just Venmo me for dinner.” There’s no denying this online payment app has made splitting checks and completing IOUs easier than ever. But is Venmo right for your small business?
Security experts aren’t necessarily convinced. While Venmo puts a $3,000 cap on transactions, horror stories of hacked accounts are all over the internet. Investopedia says hackers can gain access to a user’s account, change the password info, and transfer the user’s balance to whatever bank account they choose (likely their own). Venmo isn’t necessarily built for small businesses, but many independent contractors do use the app to accept payment. Bottom line: using a payment service that’s designed for small businesses and has a good reputation is key.
How to keep your online accounts secure
Whether you’re using an online payment tool to make personal payments or using one to operate your business, there are some things you should know about protecting your information.
Here are some tips to help keep your information and finances secure:
Use credible financial services: The first step to making sure your customers’ and your own finances are safe is by using credible financial services. This includes your bank and online payment processing program! Anytime someone is handling your money, you want to make sure they’re a responsible agency. Make sure you do your own research before sending or holding money with the help of a third-party service.
Create strong passwords: The Financial Industry Regulatory Authority(FINRA) recommends changing your password regularly. A lot of us use the same password over and over for our social media accounts, bills, and email passwords— but this is probably one of the worst things you can do for your financial account security. If a hacker is able to get into one account, what’s stopping them from hacking into your other five accounts with “coolpassword123” as the key to your bank account and email. Use phrases instead of single words and make sure your password is unique for each service you’re using it for.
Be smart about who you do business with: If you’re making payments to others online, make sure they’re an agency you trust. Have you ever opened a spammy email? This tip is for you to keep you from falling for money scams. If an email or text seems weird, it probably is. Before you send any money or click on any links, consult your bank to make sure it’s legit. Chances are, they’re not going to request you wire money to an account abroad, so make sure to keep your wits about you— it will save your small business money and headaches.
Keep track of your transaction history: Make sure you’re always on top of your finances by checking your statements regularly. If you notice any odd charges or deposits, make sure to report them immediately to your bank as well as the online payment tool that was used.
Finding the Right Payment Service for Your Business
Every small business is unique, and every small business owner runs their business differently. This is true for every aspect of your business— including what payment processing tool you use. So while PayPal works perfectly for one business, it may be lacking for many others. So when you’re shopping for any service to help you run your business better, the most important thing to remember is: YOU! Think about your day-to-day operations, what you need help with, and consider what would help your customers. Once you’ve answered these questions for yourself, see what products seem best fit for you and your business.
Housecall Pro Solutions for Small Businesses
If you’re a service industry based small business owner, Housecall Pro’s My Money here to help. With easy invoicing, payment processing, and integrated bookkeeping — My Money has your business finance needs covered. Housecall Pro’s small business solutions don’t stop there. All of our My Money features are tailored specifically to help service industry small business owners run their business more efficiently from the moment you get the call for a new job until the moment you process your final payment.
If this sounds like you, take a look at some of the other awesome features you can expect with Housecall Pro business solutions:
My Money payment invoicing and processing
Job scheduling and dispatching
Live map feature
Access to the Housecall Pro professional community
Quickbooks integrated bookkeeping
As a small business owner, you’re constantly being sold on new tools that can help you with problem A or problem B — but with Housecall Pro, you’ve got all you need in one place. When you join the Housecall Pro community, you get access to quick payment processors and invoicing abilities. But, you also get streamlined business solutions all in one place — and what’s more valuable than that?
Housecall Pro is rated the #1 software to run your HVAC, Plumbing, Electrical, Carpet Cleaning and other home service businesses. Our features allow you to schedule and dispatch jobs, get booked online, send invoice and receive payment within minutes whether if you are in the office or out in the field. This comprehensive software can help you grow revenue by 30% in one year and save up to 500 hours a year. Join all the other successful home service businesses who have already started and try Housecall Pro for 14 days free today.