What Is the Difference Between PayPal amp; a Merchant#039;s Account?

Start-up Fees and Software
One of the ways that PayPal differs from merchant accounts is that with PayPal, you will not be charged a setup fee or be required to purchase software. When applying for a merchant's account, you may often be required to spend between $100 and $395 to set up your account and buy the appropriate software to accept credit cards. Some merchant account providers may not charge a setup fee or may offer special promotions that reduce the cost of software, but with PayPal you will never have to pay a setup fee or purchase processing software.
Monthly and Per-Transaction Fees
Merchant accounts always charge a monthly membership fee that typically ranges from about $7.99 to $25 per month, with additional charges for monthly statements and a 1 to 4 percent charge for each transaction. Some merchant accounts may offer a flat rate instead of a percentage -- typically $0.05 to $0.25 per transaction -- but will also apply a monetary penalty to accounts that do not meet a certain quota of sales. PayPal charges no monthly rates, requires no minimum amount of sales, and in 2011 charges a flat rate of $0.30 per transaction plus 2.9 percent.
Offline Transactions
If you are using PayPal to process customer credit and debit cards, you are restricted to only processing online sales. All of your clients and customers will be required to make credit card purchases via the Web, and all of your face-to-face and order-by-mail transactions will have to be made by cash or check. Merchant's accounts offer the flexibility of adding a portable credit card terminal to process on-site credit and debit card transactions. Some merchant accounts allow you to process credit cards over the phone by entering the customer's credit card number through an automated system.
Approval Process
Though you will be required to complete an application and provide all pertinent information such as your full, legal name, address, Social Security number and banking information -- for funds transferring -- there really is no particular criteria to establish a PayPal account; nearly everyone over 18 years old is approved. Merchant's accounts often require a more scrutinizing application and approval process, and not all applicants are accepted. Merchant accounts often perform background checks, investigate your credit report and evaluate your website, products, services and sales volume before granting you approval. In some instances, you may even lose a portion of your setup fee if your application is denied.
Credit Card Number Disclosure
PayPal is a great alternative for shoppers who prefer not to disclose their credit card information. Credit card information is never disclosed to PayPal merchants under any circumstances. Merchant's accounts on the other hand, offer full disclosure to the business owner, making all credit card information available at each and every transaction.
Direct Deposit And Federal Banking Regulations
PayPal is not a bank and therefore is not obligated to abide by federal banking regulations. Your funds are deposited into PayPal's bank and held until you transfer them to your integrated personal savings or checking account, which can take three to five business days. PayPal also reserves the right to freeze your account activity -- and funds -- at any time for indefinite periods at their discretion for a number of reasons including accepting unusually large payments -- it's rumored that $2,000 or more will trigger this flag -- customer complaints, exorbitant shipping fees and logging in from an unfamiliar IP address. Merchant's account funds are deposited directly into your financial institution account within a 48-hour card processing period and cannot be withheld from you.