Paypal

good or evil?

[sleepy_eye]

Hi there
We are about to use paypal on our site for taking payments. We do about 50k/month selling clothing items visa/mc.

We have adds that spill over onto ebay and sometimes ebay customers call us. Generally they tend to want special deals, bargain, price haggle and be pains.

Do any of you have experience in this or any good advise on dealing with paypal.. ie we are setting up a separate bank account just for paypal so they can't get into our main accounts.

Thank you for any advise/suggestions.

[MrHard]

Ebay customers are pains. Fortunately, I have found that "normal" customers from other venues are not this way at all.

Same with PayPal. It's a pain in generally the same manner that Ebay customers are.

The more professionally you do business the more professional your dealings with customers and financial organizations are likely to be. Getting a real merchant account with a bank would be a nice step if you find you don't want to deal with the irritations and loss of reputation a third party payment service will bring you.

Yes, that's third party. Just to clarify, PayPal and places like it such as Authorize.net, World Pay, etc. etc. etc. are letting you use their bank merchant account, so they are a third party provider. They simply process your funds through another account and take a cut along the way.

The more middlemen you have in the feeding chain, the more likely someone is to see you as unimportant and therefore less likely to want to refund or cooperate when something goes wrong.

If you want to cut out some of the fat and be treated more fairly with disputes and such you need to apply for your own merchant account with a bank.

[BeeDeeDubbleU]

Getting a real merchant account with a bank would be a nice step if you find you don't want to deal with the irritations and loss of reputation a third party payment service will bring you.

This is not a defence but nowadays you are more likely to damage your reputation if you don't use Paypal. Many people now expect to be able to use it and many major companies are now offering it. This opinion that Paypal is anything other than a "real" payment method tends to be held by people in the web design and ecommerce community but certainly not by the general public.

[HRoth]

Paypal was problematic for me when I first started with it ten years ago, but it has changed a lot. No evil eye, I have not had any problems with it for several years now and it brings me about 1/3 of my business. It can be frustrating, but so can any business. And I am not someone who goes around sticking up for Paypal. To my mind, not taking Paypal because someone thinks it is dorky is just foolish. I shop a lot online and when I see that someone offers me a choice of regular cc or Paypal, I will take Paypal every time. It's faster and I don't have to trust some site other than Paypal with my card number. Plus plenty of people like me are running a small business and take Paypal and let money acrrue in Paypal and then there it is, begging to be spent. I notice that a substantial number of my purchasers using Paypal are themselves in business. Yes, small businesses, not huge businesses like some people have, and yes, those businesses might be dorky, but their money is just as green.

Authorize.net is a gateway, not a processor.

[Lovejoy]

Paypal is all I've used since it became available, and I've never had any real issues with it. The fee's as far as I know are comparable or cheaper than a merchant account.

[sleepy_eye]

Thank you all for the replies.

Looks like we will just have to be firm with those ebay type customers.
We have a merchant account but since so many people email asking if we take paypal we thought it would be a good idea to try it. A few other people I've talked to say about a third of their orders also use paypal.
I set up a separate bank account for paypal to deposit into, and will sweep the funds from it daily. As I've read so much about paypal chargebacks, for mysterious reasons or legit ones, I kinda don't trust paypal. We will see. Thanks again.

[tangor]

Paypal, in recent days, has gone the Google route of "do evil"... Just be aware of their new rules regarding consumer dissatisfaction. Can bite when you're not looking. Still, it is a fair method of accepting payment world wide.

[BeeDeeDubbleU]

Not recent days, AFAIC recall they have always had this bad reputation. (I have been using them for years.) ;)

[StoutFiles]

Not accepting PayPal is like owning a store in a mall that doesn't accept credit cards. Yes, there is a restaurant in my neighborhood that does this because they do great business and don't want to share the cut with the third party credit card company.

They are an exception though. Even so, there are many times I haven't gone there because of the hassle of having enough cash with me to go there.

[piatkow]

Not accepting PayPal is like owning a store in a mall that doesn't accept credit cards.

More like the ones that accept cards but not cheques.

[Wlauzon]

We have been using PP for years, and never had any problems. Nor have we ever had any problems such as described about eBay with customers haggling etc.

I think this year our PayPal orders will just about equal our regular CC orders.

[Essex_boy]

Its funny you know, I steered clear of paypal for several years as I saw ita s kiide option for non serious business, however I have just recently reopened an account with them and buy when I can through it.

You know why ? Cos I feel safer buying through them than anyone else.

Merchant support is very weak though

[sleepy_eye]

So it looks like mostly positive experiences then....

[LifeinAsia]

We had several negative experiences (including pretty blatant fraud that PP should have caught) and have since stopped offering it as a payment option. It may be okay on the product selling side, but it's too much of risk on the service or intangible product side.

We still use it to send/receive money to/from vendors. But we only use it now for transactions with someone with whom we have already done business.

[dpd1]

Used it for ten years... Other than a couple hiccups that you'll get with just about anybody... Never a major problem. Their email support is worthless, but what else is new. Never had a problem calling them. I sell stuff overseas all the time and it is worth it just for that. I don't think I could do that easily without it.

[jecasc]

We have been offering Paypal besides several other payment options for six years now. At the beginning we had a lot of customers who had problems with paypal. Often they would switch to other payment options after trying Paypal because they could for some reason not complete their payment. However in the last two years the number of paypal payments have spiked to about 30% of our total sales and we rarely have any customers who had problems with completing their payment.

You should however be prepared that you might face the usual problems: A customer might dispute the payment or Paypal might withold a payment for investigation for some time. For us this happens lesser than one in a thousand payments, and usually it's sorted out after a few days. That a payment is disputed can happen with any merchant account however this is what freaks out many beginners. You have to keep your eyes open for fraudsters and if you feel that a sale is fraudulent you better refuse a sale once in a while and not let greed get the better of you. The Anti-Paypal forums are full of people who made their first sale to some obscure African Country and then start whining when the credit card turned out to be stolen.

[BeeDeeDubbleU]

Yes, I find that Paypal can take ages to complete an enquiry and they withhold payment while this is taking place. Some of this delay is down to the fact that they have to deal with both the buyers and their CC companies.

The last time I had a problem it took about three months to sort out but it does not happen often and the sum in question was only £60 so it was never going to sink my business. ;)

[directwheels]

I like the convenience of paypal. But I hate how easy it for customers to rip you off and be unreasonable.

Instead of emailing me with a question, some people just open a dispute and escalate it immediately. Some customers are aware that they can easily rip you off by doing this after an item is shipped, even if you have a tracking number.

Also, people sometimes give me a wrong address to ship to and the order gets returned to me after 1-2 weeks. They swear they gave me the correct address, of course. Then they open a dispute and make me pay for shipping again to ship the order to them, so I am stuck paying the shipping costs twice.

Another thing is people open disputes when you tell them there is a 15% restocking fee for returns and shipping is not refundable. They just don't feel like paying it even though it's stated in the terms when they made the purchase. With Paypal on their site, they will get their refund with shipping, plus keep the products.

I think with a merchant account, you at least make it harder and more work for customers to open a dispute. They have to call their credit card company and the whole process can easily take 10 minutes on the phone. With Paypal, opening a dispute takes all of 30 seconds.

[HRoth]

My experience has been the opposite of yours re chargebacks, jecasc. I have had way more chargebacks with regular credit cards than with Paypal. I like that people can open a dispute with Paypal without doing a chargeback. Sometimes orders slip through the cracks. No evil eye, I have never had anyone who opened a dispute with Paypal whom I could not cozen into dropping it.

[sleepy_eye]

Nice replies, very informative. Thanks guys !

[Digmen1]

@Sleepyeye

Sales of 50K a month on clothing that is very good.
Well done and congratulations.

[directwheels]

Just read your post again and realized that you sell clothes. How often do you deal with returns? I know that with all the sizes for clothing, people tend to return products more often.

I am assuming you make the customers pay for shipping on returned shipping and/or make them pay for shipping again when you ship out the 2nd time? If so, that might anger some customers who don't bother reading the return/exchange policies and cause disputes to take place more often. Just something to think about.

[Digmen1]

He is selling 50K a month, so he is obviously doing OK.

[sleepy_eye]

@Digmen1 Thanks, working like a madman, but getting there.

@directwheels Returns/Exchanges are actually low. As a small store and good customer service, we try to anticipate possible problems people might have/have had in the past, and include that info in product descriptions and images. Basically we try to let the customer know upfront what they are buying and or how to size, wear and fit ..etc. Also if people order strangely, because they picked the default size on one item and not the rest, we also call to ask them about that (good way to spot fraud also).
We have a prominent link to our return policy literally on every page, products, shoppingcart and contact pages.
Exchanges they pay to ship to us, we pay shipping back, 99% people are happy(don't complain) about that. Refunds they ship it back.

[Ramses]

I would recommend you to move your money always as quick as possible to your normal bank account because it could happen that they freez your account if things go wrong.