There is a very good article published at Trade Show Tips in which author Merle of MC Promotions outlines many of the features and advantages for small entrepreneurs of using PayPal.
If you have considered using PayPal as an alternative to getting a merchant account, or if you have held off on getting into online sales because of a lack of a merchant account, you really should read this article.
Bottom line: you don't need a merchant account to do online sales.
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