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2Checkout (2CO) Review

Category Breakdown
Sales & Marketing rated A plus
Costs & Contract rated B plus
Complaints & Service rated A minus
BBB Rating rated B

Overall Rating

"A-" Credit Card Processor Rating


2Checkout Logo

2Checkout Logo

2Checkout (2Checkout.com & 2CO.com) is an electronic payment service (merchant account alternative) founded in 2000 that allows online merchants to accept credit card payments from their customers. Also called “2CO,” 2Checkout offers similar services to those of PayPal, Google Checkout, and Amazon Payments with at least one major difference: unlike the others, 2Checkout does not solicit the merchant’s customer to sign up for a 2Checkout account and simply lets the customer pay by using a credit or debit card (among a few other options). For the purposes of this 2Checkout review, we’ll be focusing on the company’s credit card and debit card processing services.

2Checkout focuses its service solely on providing online payment options to small and mid-size businesses and claims to have much lower shopping cart abandonment rates than its competitors. This focus also allows 2Checkout’s services to be more feature-rich and centered on the needs of online sellers. The one feature that lacks with 2Checkout is a virtual terminal, unless your business is a non-profit. Therefore, as a default setting, merchants cannot use 2Checkout to enter credit card information by hand. Merchants who wish to use the virtual terminal will need to contact their 2Checkout account representative.

2Checkout customers can choose from eight different payment methods, 15 languages and 26 different currencies. 2Checkout also serves merchants in 25 other countries outside of the U.S. 2Checkout’s U.S. headquarters can be found at 855 Grandview Avenue, Suite 110, Columbus, Ohio 43215. The founder and chairman of 2Checkout is Alan Homewood, while the CEO is Shawn Budde.

2Checkout Products and Services:

  • Debit and credit card processing
  • International processing
  • Hosted online shopping cart (with integration for third-party carts)
  • PCI-compliant payment gateway
  • Dashboard with multi-level user access
  • Foreign language and currency support
  • Virtual terminal (activation required)
  • Recurring billing
  • Mobile app

Industries served:

  • E-commerce
  • International

2Checkout Video Introduction

Sales & Marketing | A+

Key Points – Sales & Marketing
Uses independent resellers? No
Promotes deceptive rate quotes? No
Discloses all important terms? Yes

2Checkout does not appear to use any misleading sales tactics or marketing in its official materials. The service is primarily marketed online through advertising and affiliates. All pricing is clearly displayed without hiding any processing fees or rate tiers, and there are no online complaints filed here or elsewhere that describe issues with the company’s sales staff.

2Checkout Marketing Example

Costs & Contract | B+

Key Points – Costs & Contract Terms
Domestic (U.S.) rate: 2.9% + $0.30
International rate: 3.9% + $0.30 or 5.5% + $0.45
Termination fee: None
PCI compliance fee: None
Equipment lease: None

2Checkout’s pricing and fees are fairly simple. The company offers month-to-month service with no cancellation fee, and its credit card processing transaction fee for U.S. merchants is 2.9% plus $0.30 for all transactions. For U.S. merchants to accept international cards, the transaction fee jumps to 3.9% plus $0.30, and for international sellers, a transaction fee of 5.5% plus $0.45 applies to all payments. There is also a $10.99 setup fee for international accounts. The company’s terms of use mention that 2Checkout may, at its sole discretion, charge a higher transaction fee than the one advertised if we determine that the sale of Products create a potential or actual financial or reputational risk to us, such as those in the Restricted Products List. It is unknown how the company calculates or enforces this potential rate increase, but there are not many merchant complaints about it at this time.

It is important to note that even though 2Checkout’s processing fee is somewhat high, 2Checkout offers several valuable services that are easy to use, and the company has no cancellation fees.

Other 2Checkout Fees

Account Changes
Change URL or Domain Name $19
Customer Charge Disputes (Chargebacks)
Percent of Disputes Incurred During Entire Account History Fee for each Dispute
Up to 0.5% $20
5 or more Chargebacks in last 30 days and Chargeback rate between 0.5% and 1% $30
5 or more Chargebacks in last 30 days and Chargeback rate between 1% and 2% $40
5 or more Chargebacks in last 30 days and Chargeback rate over 2% $50

There is an additional $15 fee for each charge dispute a merchant challenges.

There are a few other fees only charged in circumstances unrelated to credit card processing. Merchants wishing to accept electronic checks and other forms of payment will want to inquire about the associated fees.

Complaints & Service | A-

Key Points – Complaints & Service
Total complaints: Over 30
Live customer support? Yes
Most common complaint: Fund holds

Like other popular merchant account alternatives, 2Checkout suffers from the problem of being available to just about anyone who wants to accept payments and therefore has a few dozen complaints filed online. Of the complaints, many appear to have originated from people that did not understand, or take the time to understand, the company’s fees and services. Other complaints seem to have been filed by customers who purchased goods from a 2Checkout merchant and mistakenly filed complaints against 2CO itself.

Of the valid complaints, the two common types are of 2Checkout holding a merchant’s funds or cancelling a merchant’s account, both of which are likely due to the merchant engaging in a business with a high risk of fraud or chargebacks. Although it is generally not our policy to lower a company’s score for having stringent fraud prevention policies, it does appear that 2Checkout could do a better job of communicating to merchants that any pending payments will not be released for 90 days after cancellation.

BBB Report | B*

Key Points – BBB Report
Product/service: 50
Billing/collection: 14
Advertising/sales: 3
Guarantee/warranty: 1
Delivery: 2

2Checkout has been accredited with the Better Business Bureau since 2001 and, as of this review, holds an “A+” rating with 70 complaints filed in the last 36 months. Of the complaints, 50 are regarding problems with service, 14 with billing and collection disputes, three with advertising or sales issues, two with delivery problems, and one with a warranty or guarantee issue. 2Checkout has been able to resolve 53 out of the 70 complaints. The company has also received nine informal complaints against its BBB profile. In light of these figures, we have adjusted the BBB’s rating to a “B.” For more on why we adjust BBB ratings, please see our rating criteria.

* Denotes CPO-adjusted BBB score

Bottom Line

2Checkout Review

Rated 4.1 out of 5 Stars
Reviewed by Phillip Parker
Reviewed on 2015-01-06

2Checkout offers an easy-to-use electronic payment alternative for accepting online payments and e-commerce transactions. Overall, the company scores well in customer satisfaction compared to similar providers of its size. To avoid problems, merchants should take care in understanding 2Checkout’s policies and procedures, especially regarding acceptable business types and transactions. 2Checkout’s processing fees are slightly higher than average, but the added cost also comes with a feature-rich service that is customizable to most online retailers’ needs. Visit 2Checkout at: http://www.2checkout.com.

This review was originally published on 12/12/12 and was last updated on 1/6/15.

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PayPal Review

Category Breakdown
Sales & Marketing rated A plus
Costs & Contract rated B
Complaints & Service rated C
BBB Rating rated C

Overall Rating

"B" Credit Card Processor Rating


PayPal Logo

PayPal Logo

This PayPal (paypal.com) review is intended primarily for small business owners who accept credit card payments on a regular basis and for those starting new businesses that will need to accept credit cards. Due to this focus, the content of this review will cover the factors that are most important to merchants who are interested in using PayPal for the purpose of accepting credit card payments from their customers.

PayPal is a wholly owned subsidiary of eBay—although it is expected to be split off into its own company by mid-2015—and is heavily used for payments between buyers and sellers of eBay auctions. The service is one of the most accessible electronic payment methods in the industry because it allows anyone with an email address to sign up to send and receive payments from other individuals. Additionally, PayPal has a “merchant services” division that allows businesses of all sizes to accept credit card payments, much like a normal merchant account.

PayPal is unlike traditional credit card processors because merchants cannot use PayPal with typical credit card processing equipment. Instead, PayPal offers several other services including shopping cart integration, “buy now” buttons, and donation buttons that are primarily targeted towards merchants with an online presence. The company also offers a virtual terminal with an optional credit card reader that plugs into the USB port of most computers. The virtual terminal allows merchants to enter credit card data themselves to use PayPal much like a traditional merchant account. Additionally, PayPal has introduced a mobile payment app and card reader dubbed “PayPal Here” that allow anyone with a compatible smartphone to accept credit card payments.

One important difference between PayPal and a merchant account supplied by a credit card processor is that merchants must request the transfer of funds from their PayPal accounts to their checking accounts. Typically, most merchant account providers transfer the money as a “batch” automatically with 48 hours of the close of a business day. PayPal also offers payments by check and a debit card that can be used for purchases or withdrawing money from an ATM.

Related: Best Processors For E-Commerce Overall

Sales & Marketing | A+

Key Points – Sales & Marketing
Uses independent resellers? No
Promotes deceptive rate quotes? No
Discloses all important terms? Yes

PayPal scores well in this section because the company does not use independent sales agents or misleading sales tactics. PayPal primarily markets itself online and through eBay, and in many ways has become a household name. The company’s policies and pricing are transparent and easily understandable for anyone who takes the time to read them.

PayPal Marketing Example

Related: Best All-in-One E-Commerce Platforms

Costs & Contract Terms | B

Key Points – Costs & Contract Terms
Swiped rate: 2.7%
Keyed-in rate: Variable
Termination fee: None
Monthly minimum fee: Variable

In this section, only PayPal fees and contract terms associated with PayPal’s business account for accepting credit card payments are being considered. We will not be covering personal accounts in this review, nor will we be assessing PayPal’s value as an eBay payment method.

Basic Merchant Setup (aka: PayPal Payments Standard)

This account does not allow merchants to enter credit card data themselves online but does allow for customers to pay by credit card through a merchant’s website. However, if a merchant has set up a PayPal Here account, s/he can accept a credit card directly through the mobile app. For merchants wishing for an easy way to accept online payments, PayPal offers this basic setup with a few advantages over traditional merchant accounts.

First, there is no setup cost, no monthly fee, no time commitment, no PCI Compliance fee, and no cancellation fee. PayPal Payments Standard allows merchants to easily accept payments through their websites using “buy now,” “add to cart,” and “donate” buttons and recurring payments from other PayPal users (to accept recurring payments from non-PayPal customers, there is a $19.99 per month fee). This account is also compatible with most popular shopping carts. One of the disadvantages is that the customer must leave the merchant’s website and be redirected to PayPal to complete the transaction, which can reduce conversion rates and confuse customers. With no monthly fees, PayPal credit card acceptance does come at a higher than average processing rate. As of this review, PayPal is reporting the following rate structure for basic U.S. accounts transacting in U.S. dollars (international rates may differ):

PayPal Pricing

PayPal Pricing

*Note that PayPal charges different rate tiers based on sales volume whereas traditional merchant accounts charge different tiers based on the customers’ card types.

Advanced Merchant Setup (aka: PayPal Payments Advanced)

The next account up from the standard account allows merchants to keep the entire checkout process on their own site. Like PayPal Payments Standard, merchants cannot enter credit card data themselves, but they do get all the same features as the basic setup and can control the user experience throughout the entire online sales process. The PayPal rate tiers are the same as PayPal Payments Standard, but there is a $5 monthly fee. PayPal also offers additional services for data handling, PCI compliance, and customer support, but these come at extra costs.

Professional Setup (aka: PayPal Payments Pro)

PayPal Payments Pro comes with all of the same features as PayPal Payment Standard and PayPal Payment Advanced but with two extra features. The first is primarily of interest to high volume e-commerce retailers and web developers who want full control over the checkout process because it allows for custom design and self hosting of the checkout pages.

With the second extra feature of the Pro account, PayPal offers a virtual terminal for merchants that need to enter credit card data themselves for face-to-face transactions and/or mail orders and telephone orders. Merchants who wish to use this service will need to go through an extra application process even if they already have a PayPal account. Apparently, it takes about 48 hours to find out if you have been approved for a virtual terminal account. Generally speaking, the cost for this service is fairly high in comparison to other virtual terminals and merchant account providers. In addition to a $30 per month fee, US merchants will pay the follow processing fees:

PayPal Virtual Terminal Rates

PayPal Virtual Terminal Rates

*The crosses next to the fees indicate that merchants must be approved for those rates.

PayPal also has a “micropayment” fee of 5% + $0.05 for transactions under $10. Even though merchants can use an optional credit card reader that plugs into nearly any computer, the processing rates appear to be the same for swiped and keyed transactions. PayPal’s swipe rates are unusual because nearly all other merchant account providers offer lower processing fees for swiping a credit card through a reader.

Related: Best Processors For Subscription & Membership Businesses

Complaints & Service | C

Key Points – Complaints & Service
Total complaints: Thousands
Live customer support? Yes
Most common complaint: Fund holds

The grade for this section is difficult to assign because of PayPal’s unique position in the credit card processing industry. Unlike traditional merchant accounts, virtually anyone can sign up for a PayPal account, and PayPal has over 100 million users. As one could imagine, PayPal has thousands of complaints. The two most common that appear to come from actual merchants are complaints of sudden freezing of accounts that disable the merchant’s ability to accept further transactions and withdraw money, and poor experiences with customer service.

Merchants that complain of experiencing holds often report difficulty in getting explanations of why the hold was established and state that the money was held for long periods of time. Holds are a common practice in the credit card processing industry and are often used on merchants that are deemed as “high risk,” or have experienced numerous chargebacks or fraudulent transactions. Many merchants do not transfer their PayPal funds on a daily basis, so days’ or weeks’ worth of sales can get locked up during an account freeze. However, holds and account freezes are never a problem for most merchants, even though there are quite a few reported cases online.

As for complaints about customer support, PayPal offers several options for resolving problems, including a phone helpline. The basic support line is open to all account types and appears to suffer from periodic long wait times and poor service. Merchants can get higher levels of customer support by paying either $159 per month for “13X7 Enhanced” support, or $495 per month for” 24X7 Premium” support.

PayPal earns a “C“ in this section because it does a good job of providing many customer service options and has a small proportion of complaints in comparison to its user base, but the company still has room for improvement by working to reduce the amount of complaints being filed online.

Related: Best Processors For Quickbooks Integration

BBB Report | C*

Key Points – BBB Report
Product/service: 3,256
Billing/collection: 1,559
Advertising/sales: 558
Guarantee/warranty: 146
Delivery: 95
Other: 27

As of this review, PayPal is accredited with the Better Business Bureau (BBB) and maintains an “A+” rating despite having 5,641 complaints filed in the last 36 months. Of the complaints, 3,256 are related to problems with the service, 1,559 with billing and collection, 558 with advertising and sales issues, and 268 with other issues. PayPal has also received three informal reviews, with one being positive and two being negative. The BBB justifies the high rating with the length of time PayPal has been in business, the complaint volume versus PayPal’s size, the company’s response to complaints, the rate of resolution of those complaints, and that the BBB has sufficient background information on PayPal.

Based on PayPal’s complaint count, resolution ratio, and size, we are adjusting this section’s rating to a “C” for the purposes of this review. You can learn more about why we adjust BBB ratings in our rating criteria.

* Denotes CPO-adjusted BBB score

Related: Best Services For Combining Online & In-Person Sales

Bottom Line

PayPal Review
Rated 3.4 out of 5 Stars
Reviewed by Phillip Parker
Reviewed on 2015-01-01

PayPal is a huge company and in some circles has a bad reputation. In spite of this, the company remains one of the best options for easily accepting electronic payments and continues to gain popularity. PayPal is comparable in cost to many traditional merchant account setups, but is much more expensive than merchant accounts under the Interchange Pass-through pricing model. Although PayPal has a lot of complaints, most of them are due to the fact that even the most inexperienced and naïve business owners can set up an account in a matter of minutes. Overall, PayPal is a solid choice for accepting credit card payments and can be offered as an additional payment option alongside a normal merchant account and payment gateway setup.

This review was originally published on 8/4/11 and was last updated on 1/1/15.

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