Best Merchant Accounts Compared: Our Verdict
Payment processors can unlock growth for your business, but which one is best for you? Payment
PayPal for Business: The Best No Credit Check Merchant Account?
PayPal isn't as strict when it comes to businesses with poor credit. Read about the best no credit check merchant account here...
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PayPal for Business: The Best No Credit Check Merchant Account?
PayPal isn't as strict when it comes to businesses with poor credit. Read about the best no credit check merchant account here...
Last updated 29/08/2025
While a completely no-credit-check merchant account is rare, especially for high-risk businesses, there are options available.Â
Some payment processors don’t rely on traditional credit checks for the businesses they work with. These types of payment processors are ideal for companies with either a poor credit rating or a lack of trading history.Â
One of the leading processors in this area is a company you’ve probably heard of… PayPal.Â
PayPal Vs Merchant Accounts: Explained
While a merchant account is usually provided by an acquiring bank, acting as a middleman between your business’s bank and your customer’s bank, PayPal provides a way to take payments without the requirement to even have a merchant account.Â
It works similarly to the kind of merchant account provided by Stripe or Takepayments (both of which are great options for larger businesses), at least in that it allows your business to take payments from customers using a card. There is, however, an important distinction between PayPal and what we will call ‘traditional’ merchant accounts.Â
PayPal is a payment aggregator, not a merchant account. This means all of the businesses that use PayPal have their payments processed through its single payment system. Importantly, this single payment system has a single merchant ID. Think of PayPal’s model as a big cash deposit, from which it pays all of the businesses that use it.Â
As you might have guessed, this is not how traditional merchant accounts work. Instead, they work by issuing each business that uses them a unique merchant ID, which works as a kind of digital identifier. The merchant account uses your merchant ID to funnel funds to your business bank account. The distinction is fairly technical, but it’s what divides a PayPal business account and a traditional merchant account.Â
In practical terms, if you and the business next door both have the same acquiring bank, you’ll have payments funnelled to you via two unique merchant IDs. If, however, you both use PayPal, you’ll have the same merchant ID.Â
Taking payments with PayPal simplifies the whole process of taking card payments; cutting out long applications, waiting periods and, most importantly, credit checks. Â
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The Best No-Credit-Check Merchant Account
If you’ve found this page, you probably already know that many of the traditional merchant accounts are more likely to turn down applications from businesses with bad credit, so simplified options like PayPal can often look more attractive.Â
We’ve explored PayPal as an alternative option to a traditional merchant account, so you don’t have to. One thing that is clear from the outset is that, while PayPal falls down in some ways when compared to traditional merchant accounts, it is certainly the best choice of payment aggregators.Â
Its universal appeal, ease of use, compatibility, and ability to offer physical card machines (two of which made it onto our list of best card machines for small businesses) make PayPal stand above other payment aggregators and no-credit-check merchant accounts. Â
PayPal For Business: At a Glance
Easy to make, easy to manage, and easy for customers to trust.
With PayPal for business, you’re able to connect with millions of PayPal users and give them an easy way to pay. If you’re online, PayPal can be integrated with your website’s checkout page, offering an easy and trustworthy way to pay for your customers.
PayPal also offers physical ways to pay with its range of card readers, some of which can be highly customised to create a purpose-built point of sale on your shop floor.
How do PayPal Payments Work?
As stated above, PayPal business accounts are not merchant accounts, but do work in a similar way. Payments made to your business go through its system before they get to you, just as they would with a merchant account. The differences are found in how your payments are funnelled into your business bank account.Â
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You know how merchant accounts keep hold of payments while they’re processed? Well, PayPal keeps hold of them until you ask for them to be sent to your business bank account. There’s no automation, which, while it’s not a massive problem, can be a bit of an inconvenience.
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While we’re on the drawbacks of PayPal, it’s a good time to bring up merchant IDs. We mentioned them earlier; they’re the digital identifiers used by payment processors and merchant accounts to identify where to send payments. As we said earlier, PayPal doesn’t assign each business a unique merchant ID, which can mean payments are less secure and can therefore be more susceptible to security issues and even fraud, which, should such a thing arise, would be far more than a bit of an inconvenience. Â
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Having said all that, PayPal does work well for many small businesses and can, importantly, provide you with a card machine. These machines (explored further down) have simplicity at their heart, and can slot into the vast majority of small businesses with ease.
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Benefits of Having a PayPal Business Account
If you’re new to taking card payments, or you’ve got an online shop and have fallen out with your current payment processor, a PayPal business account can go a long way in allowing your business to evolve in the way it takes and manages payments.Â
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In the online world, customers can pay in multiple ways, including with their email address or by a personalised link, offering a modern way to pay for your customers. Meanwhile, in the physical world, there’s no monthly card machine rental, no monthly merchant fees, and no requirement to sign any kind of contract. For these reasons, PayPal is often a good option for businesses that are just starting with card payments, or those that have a smaller-sized business.Â
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Want to know more about how card payments work?
If you’re confused about anything you’ve just read, don’t worry. While this article focuses on the best no-credit-check merchant accounts for your business, we also have in-depth guides that fully explain everything else you need to know about taking payments. Explore below:Â
PayPal's Card Machines
The PayPal Terminal
Offers a fully-fledged EPOS system, ideal for busy restaurants and shop floors.
Price: £149 (plus VAT)
At a Glance
- All-in-one EPOS system
- Connects through 3G/4G + wifi
- 12-hour battery life
- Barcode scanner
Starting with the more advanced option of a card machine, the PayPal terminal is great for small businesses that need a more feature-rich option. The terminal works as an all-in-one EPOS system, which allows you to manage stock levels, take bookings, and see sales reports on the go, making it ideal for fast-paced restaurants, bars, cafes, and shop floors.
Once you buy the reader outright, which will cost you a one-off £149, you will only pay the 1.75% transaction fee. There’s also the option to upgrade your system with a barcode scanner (for an extra £50), which elevates your customer experience with gift cards and vouchers. You can also use it with other accessories, like cash drawers and till systems, to create a fully purpose-built POS for your business.
PayPal Reader
Fast payouts and quick setup time make this reader ideal for smaller start-ups.
Price: £69 (plus VAT)
At a Glance
- Quick setup
- Connects via Bluetooth
- 8-hour battery life
- Contactless payments in 5 seconds
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The PayPal Reader’s low cost and lack of contract make it ideal for small businesses or start-ups. Once you buy the reader outright, which will cost you a one-off £69, you will only pay the 1.75% transaction fee. Although slightly higher than rates available elsewhere from traditional merchant accounts, it compares well to other machines that also come with a lack of a contract and is one of the simplest card machines on the market.Â
The machine’s fast payout time also compares well to other card machines available. Its fund transfer time is typically within two working days, which puts it days ahead of some of the other machines on the market. This, coupled with its ability to integrate with EPOS systems and other hardware like receipt printers and tablets, makes it a clear contender for your small business, as does its 12-month warranty.Â
Paypal or Traditional Merchant Account: Which is Better?
Both PayPal business accounts and traditional merchant accounts offer comprehensive solutions to businesses, and the better choice ultimately depends on the size, type, and ambitions of your business.
While both offer payment solutions and work in pretty similar ways, the differences between them are enough to easily separate them.Â
When to Choose a Traditional Merchant AccountÂ
- Your business is, or soon will be, on the larger size.
- You need a whole host of advanced features/a state-of-the-art EPOS system.
- You don’t mind paying monthly rental fees.
- You want variable transaction fees.
- Security is a priority.
When to Choose a PayPal Business Account
- You run a small business.
- You’re a freelancer.
- You want to keep monthly costs to a minimum.
- You don’t need particularly advanced software.
- Simplicity is a priority.
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How to get a PayPal Business Account
Securing a PayPal business account is a fairly simple process. As part of your application, you need to provide your basic information, including your business name, address, and tax ID number.Â
You’ll also need to provide an email address, a business phone number, your legal business name, and your bank account information so you can accept payments. Once you have provided the required information, you can create a PayPal business account. You can then accept payments for your goods and services.Â
If you’d like to do some more research on your options, we’ve written an article about how to open a merchant account, which could be helpful for you. As well as this, you can read our article on the best merchant accounts for small businesses.Â
FAQs
Are merchant accounts free?
Though many merchant accounts are free to set up, they will come with a basic fee that they charge for transactions. This will be a certain percentage of the purchase price and may change depending on the volume of transactions.Â
The fees a merchant account charges are an important consideration when it comes to choosing the merchant account for you.Â
What is a merchant account?
A merchant account allows you to securely accept credit and debit payments.Â
A merchant account is needed to facilitate the movement of money from your customer’s bank account to your bank account so, if you want to take electronic payments, you need to get yourself a merchant account.
Do all merchant accounts do a credit check?
No. While most merchant account providers will do a credit check on your business, some don’t have this as a requirement. Though you should do your own research to find the best merchant account for your business, we can help you access your options.Â
How much does a Paypal merchant account cost?
PayPal business accounts are free to open, but it charges a fee for each transaction processed through its merchant services.Â
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