It’s no secret that offering Paypal as a payment gateway has become hugely influential to the success of any business that sells products or services online. There are even certain websites, eBay being the largest, where a Paypal account is required in order for you to make use of their various selling tools. While your hand may be forced in terms of creating an account, it’s important to know the advantages and disadvantages associated with Paypal, as well as how to deal with certain situations – Give this article a read and you’re ready to go!
Pro #1 – Global Usage
Paypal is used around the world, with 286 million active users across 200 countries (Active users are defined as personal or business accounts that make a minimum of 1 transaction per month). It is estimated that over 87% of ALL online shoppers have an account with Paypal, making them a huge staple in the realms of ecommerce.
Pro #2 – Safety
Your information is kept safe on Paypal, mainly due to the high level of encryption on all files. They also pride themselves on using the latest in data protection technology – This greatly benefits both buyers and sellers. As long as you have chosen a secure password, a breach on your account is VERY unlikely.
Pro #3 – Easy To Use
After the initial set up of your account, accepting payments is incredibly easy. There are many options to choose from, including:
- Payments Via Email Address – This is the most common integration with selling platforms such as eBay and Shopify. Enter the email address linked to your Paypal account and you’re ready to sell!
- HTML Buttons – Paypal asks some basic questions about the product/service you provide and creates a button automatically (You can edit basic elements such as colour and size). Click ‘save’ and you will be given a snippet of HTML code that can be pasted directly into the backend of your website.
- Direct Link – Upon upgrading to a business account, you unlock tools that allow you create a payment link. Simply send this link to a customer and they can pay in 2 clicks.
Con #1 – Chargebacks
In general, you are protected against most chargebacks if you sell physical products (As long as you remember to keep proof of postage after dispatching each item). However, if you offer a service, things can get a little complicated. Paypal rely on sellers providing undeniable proof in order to award a case in their favour – How do you prove, without a doubt, that you worked on a project for a certain amount of time? Unless you keep recordings or can somehow pull up an event log (If the work was done online), you’re in a tough spot.
Con #2 – Fees
Is it even possible to write an article about selling with Paypal and not mention their steep fees? We think not. In the UK, Paypal charge a 2.9% transaction fee AND 30p, which is deducted from the amount the seller will receive. This might not seem like a lot; however, it is much steeper than other payment providers and certainly adds up in the long run. To avoid making a loss due to unexpected fees, use an online calculator such as this one created by Cloth Nappy Tree.
Con #3 – Scaling Issues
If you have a fast-growing business, accepting Paypal as your primary payment gateway is a risky choice. Issues with scaling are not uncommon with the California based provider – Here’s a breakdown of what typically happens:
Step 1 – After an influx of payments, an email is sent from Paypal explaining that they are performing a ‘routine check’ on your account.
Step 2 – This check is completed 2-4 business days later. You are then asked to provide additional information such as your business address and an overview of what you sell.
Step 3 – Paypal review this information, but as so many businesses experience this, there is often a huge backlog of applicants. At present, the waiting list appears to be 3-4 weeks in length.
Step 4 – If your information is accepted by Paypal, you can go on selling as usual. If they deem your business to be too ‘risky’, they can impose limits or even suspend your account.
Sadly, your Paypal is frozen throughout this entire process – meaning you cannot receive payments or make withdrawals until you’re given the green light.
In conclusion, Paypal is a solid choice for business owners that want to put an emphasis on safety and usability. While you may not experience any issues with their services, we would always recommend checking out alternative payment providers and implementing as many as possible.