Hi:

I'm at the same junction you're at with ecommerce but have made some decisions based off some information that I was given. From what I understand, you have correctly identified the differences between Paypal and a gateway.

Last month, a Tax Accountant told me that a client used PayPal and it took him 1 year to clean up the mess. (That's a scary thought!) I mentioned this to my bank and the person who has been doing merchant accts for 7 years told me the same thing!  .  Customers have told her nightmerish stories. Over a period of time, Paypal will start to ding you with overcharges or undercharges. For this reason, PayPal is out not an option for me. BTW, PayPal bought out VeriSign which was highly respected, is now showing bad signs. Here's a blog:
http://www.secondsite.biz/blog/article/is-paypal-dropping-the-ball.html

My bank works with www.authorize.net for payment gateways. Authorize checks out these companies. I went thru about 30 listings on their site this weekend. Some have good prices and some are expensive, depends on what you need. There are a few that I glanced at and liked but need to look into them more thoroughly to see what will and will not work. Overall, the gateway seems to be the better option especially avoiding the tax nightmare with Paypal.    Perhaps a little extra $$ for services is not so bad afterall.

Hope that helps. 

I am also a happy Pay Pal user. I think a big part of the decision is the amount of volume of sales you expect to have. Ours are pretty minimal, but steady. We clear between $200 and $400 a month. That hasn't been enough to justify paying the monthly charges, etc. for a gateway to me. If you are bringing in considerably more than that, then the extra hassle might be worth it to you. There are still a lot of people who won't use Pay Pal.

I'd have to agree with you both on this, if ecommerce is fairly low, Paypal would be the way to go.

In my case, however, I'm expecting a high volume base over a period of time and this is where I would run into problems with Paypal and unexpected extra charges. Thru my bank, I incur no extra fees for minimum/maximum monthly charges.

I also found free software, if anyone is interested, on managing ecommerce.