There are differences between Paypal and merchant accounts even if they may appear to be very similar on the surface of things. It is important to note the differences between the two in order to accurately see why one or another may be necessary for usage in certain situations.
Paypal is best used for payment between individuals online or otherwise. It is a processor of money that allows it to easily be transferred from one party to the next. That being said, it is not the same thing as merchant accounts. Paypal is beginning to move into the business credit card processing space but for these purposes, we focus on the consumer peer to peer version of Paypal.Merchant accounts have everything to do with credit card processing. Meanwhile, Paypal is just about transferring money from individual to individual. Typically, Paypal is used when it comes to auction sites such as eBay. This allows customers to send their money to the sellers that they are purchasing items from. It is a transaction between two individual parties, and this is the easiest way to make the money move from one source to the other.
In terms of credit card processing, using merchant accounts are what is necessary. For many businesses that are traditional brick and mortar enterprises, using an account for merchants is what is necessary. That allows them to collect on the credit card payments that are made by customers for the various goods that they are purchasing.
Obviously, those who walk into a traditional store are not going to be able to pay with Paypal. Doing this would slow down the pace of business tremendously. That is not something that is going to be encouraged at all. Rather, businesses will want their customers to be able to purchase the goods that they want with their credit cards. That money then flows into their accounts, and everyone is happy with the transaction.
Though Paypal does involve the transfer of money from one source to another, it is not the same thing as the accounts that collect the money that flows in from credit card payments.
Online stores will rely heavily on Paypal in many cases, but brick and mortar stores are going to trust their merchant account to get the money that they need from their customers.