The Pros And Cons of Accepting PayPal Payments For Your Online Business
by Carrie Hinkel on October 30th, 2007
PayPal may be owned by eBay, but a growing number of non-eBay online businesses are Accepting PayPal as payment for their goods and services. But, are they making the right decision?
With more than 100 million accounts, PayPal is one of the most popular online wallets available today. PayPal’s original growth came from the online auction industry, but today many online retailers are using PayPal as a way of accepting payments from their customers. Whether your company is selling products or services, PayPal is worth considering as a way to receive payments from customers.
PayPal’s fee structure:
Monthly Sales /Price Per Transaction
$0.00 USD-$3,000.00 USD / 2.9% + $0.30 USD
$3,000.01 USD-$10,000.00 / USD2.5% + $0.30 USD
$10,000.01 USD-$100,000.00 / USD 2.2% + $0.30 USD
> $100,000.00 USD / 1.9% + $0.30 USD
Before you begin accepting PayPal as payment for goods or services on your e-commerce website, here are some of the pros and cons of using the service:
The Pros of Accepting PayPal:
* It’s fast and easy to set up an account.
* Customers can send payments to you directly, or you can create and send an invoice.
* There are no monthly fees or set up fees – you only pay Paypal on a per-transaction basis.
* It’s integrated with USPS so you can print shipping labels right from the PayPal website.
The Cons of Accepting PayPal:
* PayPal’s Seller Protection policies do not cover intangible goods or goods that are “not as described”.
* There is a limit (around $2000) that can be sent in one payment.
* PayPal has built-in security features that will decline cards from certain places.
* Just like with credit cards, customers can request a charge-back. In which case, PayPal charges a $10 charge-back fee.
* Accounts with high transaction volumes can be blocked (as part of their anti-fraud protection).
Before deciding to use PayPal for your business, you might want to also consider a merchant account that will allow you to accept major credit cards directly. You should compare transaction fees and ease of transaction, and also see if there are any set-up or monthly fees with various merchant accounts. Be sure to check with several merchant account companies, as they will most likely have different fee structures and options. You may also want to ask around in various e-commerce forums about good and reliable merchant account companies. There’s a good chance you’ll get some great recommendations from experienced small business owners who are willing to help.
There are plenty of online options for accepting payments from your customers. Paypal seems to be one of the easiest ways to accept online payments but it may also be seen as a hassle if customers aren’t already Paypal members. There’s a chance that some customers will just purchase from another retailer where they can use their credit cards directly – now that’s something to consider.