In the Trenches: The Good and the Bad of Paypal

I’m fairly certain that there is nothing more complicated than figuring out which credit card processor to use for your business. It seems that the industry has made this as complicated as possible in order to prevent people from actually learning how much they’re paying in fees, and that’s why people gravitate to the ease of Paypal. But there are problems with Paypal, and that’s why I’ve been looking elsewhere.

When my business started, I did what most small businesses do. I went to Paypal, because Paypal just makes life easy. All you have to do is stick a button on your website and Paypal can handle the processing for you. Then your money shows up and you do what you want with it. The fee is flat and that makes it easy to understand. They also have a virtual terminal that lets you process payments over the phone. Why wouldn’t you use Paypal, right? That’s what I used to think as well.

But there are a couple reasons not to use Paypal. First, Paypal sits on your money. Instead of directing it into your bank account immediately, Paypal keeps it in your Paypal account. If you want to remove your money without paying a fee, you have to wait for three or four days for them to transfer it. They make money by sitting on your money. Second, the simplest way to use Paypal, slapping that button your website, isn’t great for converting customers.

There’s something about the Paypal interface that turns people off. It seems amateurish, so people might question the legitimacy of the business. And the fact that you have to send customers off your site to make a purchase is off-putting. In addition, people often assume that they need to have a Paypal account if they want to pay you. In fact, that isn’t the case, but people don’t know that. It’s problematic.

Paypal does have a way to integrate with its services doing your own development work, but that defeats the purpose of Paypal in the first place, right? I mean, once you start doing that, it’s no longer so easy. So I’ve started looking for alternates. And that’s when I realized how incredibly difficult the credit card processing industry can be to understand. I’ll talk about that next week.

About Brett Snyder

Brett is the Founder and President of Cranky Concierge air travel assistance. He also writes the consumer air travel blog, The Cranky Flier.
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8 comments
Brett Snyder
Brett Snyder

@Scott - I haven't heard of Braintree, but I'll certainly check it out. Looks like they have a pretty impressive roster of companies.

Jim
Jim

Actually, it's not true that people don't need to have a Paypal account if they want to pay you. Paypal will allow a certain number of transactions on a given credit card, and then they will block that card until the owner signs up for a Paypal account.

Zack Rules
Zack Rules

I have not used Paypal but I am in complete agreement about an offsite payment system turning off customers. I tried to buy a Skype subscription with a debit card and they directed me to their payment system, Moneybookers.com (Never, never use these guys Cranky). I put all of my information in only to discover that I had to transfer money direct from my account instead of simply entering my card information. I eventually gave up as I could not figure out how to transfer money direct so I tried a credit card which they said was not legitimate, triggering the fine folks at Visa to out a 24h hold on my account.Accept payment directly on your website, make as simple and easy as possible, and any money saved by using Paypal or an alternative will be well worth what Mastercard, Visa and Discover charge for the privilege.

Bill
Bill

I got ripped off by Paypal for over $1,000. It was their fault, they admitted in writing it was their fault and they still turned to a collections agency to collect. It took an attorney to put them in their place. Never again.

Ed F London
Ed F London

Following on to Steve's comment, I, too, have had fraudulent activity on both a credit card and a checking account, a checking account I used only for Paypal. And Paypal is the only link where the two pieces of information are co-resident.Paypal was very efficient in fixing the problem but my suspicions remain.Also, if anyone has ever had a problem with Paypal, other than the fraud I just mentioned, it becomes difficult. They lock the email use on their site and won't link more than one account to any single checking account or card.Concerning the comments in the article about amateurish, yes, I agree. There are so many small and medium size sellers on eBay who use only Paypal, so it seems the boot-sale/garage-sale online seller is also using Paypal. The connection, while probably coincidental, still suggests small-time.

Steve
Steve

A few years ago I signed up for a Paypal account to make a purchase on eBay. Within days my credit card information was stolen and thousands of dollars in charges appeared on my account. I didn't believe this was a coincidence...and I've refused to do any transaction through Paypal since.

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  1. [...] In the Trenches: The Good and the Bad of Paypal – Intuit Small Business Blog I’ve been using Paypal since the beginning for Cranky Concierge, but there is some good and some bad in that. [...]