How Cayan Compares to Competitors for Credit Card Processing

Modified on: 2017-04-11 12:51:59 -0400

How Cayan (formerly Merchant Warehouse) Compares to Competitors 



  1. Square is more expensive
  • Square 2.75% (swiped) and 3.50%/15 cents (keyed) 
  • Cayan/Merchant Warehouse 1.69%/21 cents (swiped) and 2.19%/25 cents (keyed)
  • For example, on a $50 transaction with Square swiped you pay: $1.38 and keyed you pay $1.90, but with Cayan/Merchant Warehouse swiped you pay: $1.06 and keyed you pay: $1.35.
  1. If you accept more than $2,002 in card-not-present payments during any trailing seven day period, Square will defer depositing the amount in excess of $2,002 for 30 days.- This is very important!
  1. Issues with funds being held, numerous complaints online
  1. Accounts can be terminated for “no reason”  Square’s Terms and Conditions say, “At any time and from time to time, we may temporarily suspend or delay payments to you and/or designate an amount of funds that we must maintain in your Square Account or in a separate reserve account (a “Reserve”) to secure the performance of your payment obligations under this Agreement.”
  1. Accounts are not underwritten when they are signed up
  1. Little to no customer service, email based or Twitter. Calling (415) 375-3176 has a recorded message that tells you to go to their help center website.
  1. Potential security flaws:



Real Life Example


Please see the below proposal. The client paid in full with AMEX, the amount highlighted of $1036.68. I received the amount of $1,000.25 which is the amount less the percentage charged for the transaction.

V. Volani-Inza, West Palm Beach, FL

Square charged her $36.43 on a 1036.68 transaction, which works out to 3.5%.

Cayan/Merchant Warehouse’s charge would have only been $22.95, that adds up quickly over time!


  1. PayPal is more expensive (see chart below, information on card reader, and the website
  2. For PayPal to PayPal transactions PayPal doesn't deposit your funds into your bank account but into your PayPal account
  3. You are limited to withdraw only $500 a day from your PayPal account and pay $1.50 to do so each time
  4. Because PayPal is not a Merchant Service provider, they do not require AVS.  Because they do not require AVS, in EVERY chargeback situation the merchant could lose that chargeback.  The vast majority of chargebacks are sided with the consumer NOT the seller
  5. PayPal has declared “they are not responsible for the problems between buyer and seller, refusing to participate in any efforts to retrieve funds or pursue fraud charges.”
  6. Lots of fraud issues and international scams, accounts frequently hacked
  7. The biggest criticism of PayPal is that it acts like a bank, but it isn't regulated like one. This means that PayPal offers none of the protection that real banks offer, and it isn't required to maintain any of the security, customer service or dispute resolution services that banks provide. At the same time, PayPal holds large amounts of their customers' money, makes millions of financial transactions, and even offers credit and debit cards.
  8. In 2002, the Federal Deposit Insurance Corporation (FDIC) declared that because PayPal didn't meet the federal definition of an entity accepting deposits as a bank, hold any physical money, or have a bank charter, it was not a bank [ref]. In other words, PayPal isn't a bank because it doesn't call itself a bank. As a result, most states license PayPal as a "money service.“

PayPal Card Reader for iPhone/iPad

  • Rates are 2.7% if swiped, 3.5% + $0.15 if keyed
  • If a merchant keys in more than $2500 in Card-Not-Present sales in any trailing 7 day period the excess will be held for 30 days
  • Blackberries and Android Tablets are not supported

PayPal acts as a middleman. Credit and debit card transactions travel on different networks. When a merchant accepts a charge from a card, the merchant pays an interchange, which is a small fee of about $0.30 plus approximately 2.9%. The interchange is made up of a variety of small fees paid to all the different companies that have a part in the transaction --the merchant's bank, the credit card association and the company that issued the card. If someone pays by check, a different network is used, one that costs the merchant less but moves more slowly.

What part does PayPal play in all this? Both buyer and seller deal with PayPal, having already provided their bank account or credit card information. PayPal, in turn, handles all the transactions with various banks and credit card companies, and pays the interchange. They make this back on the fees they charge for receiving money, as well as the interest they collect on money left in PayPal accounts.

All the money held in PayPal accounts is placed into one or more bank accounts, where PayPal collects interest. Account holders do not receive any of the interest gained on their money. Some PayPal critics claim that one of the reasons PayPal locks accounts and puts people through a long, frustrating appeal process is so they can keep the funds in the bank longer to collect more interest.

Below is a flow chart to illustrate it:

Rate Comparison:

Monthly Income
PayPal Rate Per Transaction
PayPal Cost Per Transaction
MerchantWarehouse Rate Per Transaction
MerchantWarehouse Cost Per Transaction
$0.00 USD -
$3,000.00 USD

You’ll pay $29.30 USD on a $1,000.00 USD transaction.
Depends on company but avg. rate is: 2.2%
(swiped is less 1.69%)
You’ll pay $22 USD on a $1,000.00 USD transaction.
3,000.01 USD -

$10,000.00 USD
2.5% + $0.30 USD
Merchant Rate qualification required

You’ll pay $250.30 USD on a $10,000.00 USD transaction.
Depends on company but avg. rate is: 2.2%
(swiped is less 1.69%)
You’ll pay $220 USD on a $10,000.00 USD transaction.
$10,000.01 USD -

$100,000.00 USD
2.2% + $0.30 USD
Merchant Rate qualification required
You’ll pay $2200.30 USD on a $100,000.00 USD transaction.
Depends on company but avg. rate is: 2.2%
(swiped is less 1.69%)
You’ll pay $2200 USD
on a $100,000.00 USD transaction.

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