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ProPay Review

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

Overall Rating

"A" Credit Card Processor Rating


Overview

ProPay Logo

ProPay Logo

Founded in 1997 and based in Lehi, Utah, ProPay (propay.com) is a merchant account provider that shares attributes of both a traditional credit card processor and services like PayPal, Stripe2Checkout, and Google Checkout. ProPay was acquired by TSYS in late 2012 and now operates under the ProPay name as “a TSYS Company.” Dave Duncan is the president of ProPay.

ProPay’s similarities with a traditional merchant account include the ability to swipe credit cards at the point of sale, which can result in a lower processing fee, as well as the ability to accept payments for other purposes such as e-commerce and mail order/telephone order sales. Unlike a traditional merchant services provider, ProPay does not support the use of desktop credit card terminals like the type used at most retailers. However, like PayPal and 2Checkout, ProPay has an easy signup process and is open to non-traditional merchants such as direct sellers and micro-merchants. Like PayPal, ProPay acts as its own holding account and merchants must manually transfer their money to a linked checking account.

ProPay offers several ways to accept credit card payments, including mobile options. The first, “ProPay Jak,” is a service similar to that of GoPayment, Square, and Pay Anywhere in which merchants can use a card reader with a smartphone to accept credit cards. However, unlike the other three options, ProPay Jak includes a variety of other services which are not offered by its competitors, such as access to a virtual terminal.

The second mobile option that ProPay offers uses a small skimming device called the “ProPay FLASH Card Reader” (formerly known as the MicroSecure Card Reader) which allows merchants to collect credit card data by swiping the card’s magnetic strip and storing it for later processing when the merchant has access to an internet-connected computer. Merchants can also use the ProPay FLASH device to process real-time sales through ProPay’s virtual terminal once the device is connected to the Internet. Lastly, ProPay offers an automated phone system where merchants can call in to process real-time sales.

ProPay Jak Video Introduction

ProPay Products and Services:

Industries served

  • E-commerce
  • Mobile
  • International
  • Non-profit
  • MOTO

Sales & Marketing | A+

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

ProPay does not use any deceptive marketing or sales tactics that are apparent to this reviewer. The entire signup process is handled in-house and on the company’s website. Additionally, ProPay’s displayed pricing is transparent and does not hide fees. We are not seeing any merchant complaints at this time that accuse the company of deceptive advertising strategies.

ProPay Marketing Example

Costs & Contract | A-

Key Points – Costs & Contract Terms
Swiped rate: 2.60%
Keyed-in rate: 3.40%
Termination fee: None
PCI compliance fee: None
Equipment lease: None

ProPay offers an annual agreement with an annual fee but no monthly fees, monthly minimums, gateway fees, or statement fees. We are unable to determine at this time whether the company charges a cancellation fee for merchants who terminate their contracts early, but ProPay has not charged such a fee in the past. We also have not seen any complaints regarding a termination fee.

Since this review’s initial publication, ProPay has made it difficult to locate the pricing of all of its services on its website; however, the company offers simple processing fees with a single rate that is set by how the card is transacted (either typed-in or swiped through a card reader). For instance, the company’s “Merchant Account” page currently lists a fixed swiped rate of 2.60% and a fixed keyed-in rate of 3.40%, and we have found no merchant complaints indicating that these fees are deceptively quoted. One exception to this rate structure is American Express Cards, in which the rate is the same under both transaction types. Fees and rates also vary based on the account type the merchant chooses with ProPay. Additionally, ProPay can customize rates for high-volume businesses. This page appears to be ProPay’s current pricing for its merchant account options.

ProPay’s rates and fees are competitive with most traditional three-tier merchant account setups, and probably less expensive in many cases. However, ProPay is more expensive than Interchange Pass-through rate pricing.

Complaints & Service | A

Key Points – Complaints & Service
Total complaints: 25+
Live customer support? Yes
Most common complaint: Fund holds

ProPay has very few complaints for a company of its size, and most of these complaints were filed before 2014. Many of the complaints that it does have appear to be filed by merchants that have a limited understanding of how credit card processing fees are assessed and would experience the same issues with any provider.

The one common theme in the legitimate complaints filed against that company is that ProPay has a tendency to hold funds and freeze accounts if a merchant starts making charges that differ from its normal transaction history, or if the merchant suffers a chargeback. It some cases, it appears that ProPay will suddenly terminate an account without notice, thereby leaving the merchant without a way to accept credit cards. Understandably, these same merchants complain of receiving poor customer service.

ProPay appears to be very cautious about how much risk it is willing accept from a merchant, so higher risk businesses may want to look elsewhere. It is also wise to avoid chargebacks at all costs if you choose to go with ProPay.

Generally, we do not count complaints regarding fund holding against a providers unless there is a clear pattern of abuse or deception. It is a standard industry practice for providers to hold funds in the event they suspect high risk transactions or fraud. In ProPay’s case, it appears that it is operating within normal guidelines when choosing to hold funds. To learn more about fund holds, see this post: Why Credit Card Processors Hold Funds.

BBB Report | A-*

Key Points – BBB Report
Product/service: 20
Billing/collection: 12
Advertising/sales: 2
Guarantee/warranty: 0
Delivery: 0

As of this update, ProPay is accredited with the Better Business Bureau and holds an “A+” rating. The company has 34 reports filed in the last 36 months, which is unchanged from the time of our last review. Of the 34 complaints, 20 are due to problems with products and services, 12 to billing and collections disputes, and two have to do with advertising or sales issues. All complaints were resolved to the merchants’ satisfaction except two. We have adjusted the BBB‘s rating for the purposes of our review based on our own rating criteria. For more on why we adjust BBB ratings, please see our rating criteria.

* Denotes CPO-adjusted BBB score

Bottom Line


ProPay Review

Rated 4.4 out of 5 Stars
Reviewed by Phillip Parker
Reviewed on 2015-01-06

ProPay is a great credit card processing option for small businesses looking to avoid a traditional merchant account or looking for ease-of-use and simple pricing. ProPay’s services are particularly well suited for mobile merchants, e-commerce merchants, service-based businesses, mail/telephone order companies, and single register retailers that have internet access. ProPay does not supply traditional credit card terminals or POS systems, so it may not be the best option for restaurants or busy retailers. High risk merchants and those that have a higher chance of chargebacks may want to look elsewhere because ProPay appears to act swiftly by freezing accounts that it suspects to be a threat for losses.

This review was originally published on 10/14/10 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


Overview

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.

Leave your review of PayPal in the comment section below:

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