Most people have heard of PayPal, the online payment service. It’s been around since 2000 and over 230 million PayPal accounts have been opened, both personal and business. PayPal makes taking online payment easy, but it’s not suitable for everyone. In this article we’ll looks at some of the advantages and disadvantages of using PayPal for business, so you can decide if it’s the right tool for you.
The advantages and disadvantages of using PayPal for business
The biggest advantage of PayPal is that it is really easy to use, both for sellers and buyers. Within the Merchant Services section you can create buttons that produce code you paste straight into your website to let people buy. The buttons are customisable – you can offer multiple price options, auto-renewing subscriptions and time-limited discounts, for example. You can also use PayPal to let people make online credit card payments even if they don’t have a PayPal account.
PayPal can also be very cost-effective as there are no subscription fees or ongoing charges – you simply pay a percentage of your sale price when you make the sale. If you only sell online occasionally, you won’t be paying for a service that you rarely use.
Using PayPal for business means that you can become a global company. PayPal accepts 24 currencies from 190 countries around the world, so it can be as easy for someone in America or Australia to purchase from you as someone down the road. However, some major currencies, such as the Indian rupee, are still not accepted, which could be an issue.
The other big advantage PayPal has is that it integrates into lots of existing platforms. It’s already fully integrated into eBay and makes buying and selling on the auction site a doddle. You can also download plugins to use it with platforms like WordPress and Joomla, and it also works well with other shopping cart services such as Roman Cart.
So what are the disadvantages of using Paypal? Perhaps the biggest one is the lack of good customer service. If you encounter a problem with a payment it’s difficult to find contact phone numbers on its website, and emails are usually responded to with automated replies rather than genuine advice. As a customer, it can be tricky to negotiate the website if, for example, you want to cancel a subscription via PayPal. And if you enter into a dispute with someone and payment was handled by PayPal they will take over the arbitration process, which can take a very long time.
Talking of things taking a long time, while it takes only minutes to set up an account and generate buttons, the PayPal verification system takes much more time, which can be very frustrating. When you link a bank account with your PayPal account, two small deposits are made into it, and you have to let PayPal know the amounts to verify you own the account. The deposits normally take up to 5 days to appear – five days when you can’t accept any payments online – and if you don’t have access to internet banking you could find yourself waiting a full month to receive a postal statement to check the amounts.
Another issue is the fee structure. While it can be cost-effective to use PayPal, it can also become very expensive. For example, if you sell a high volume of low cost, low profit products you may find your profit is almost entirely eaten up by PayPal fees – and the fees for non-PayPal account holders paying by credit card are even higher.
We think PayPal is a fantastic service, and for some companies it can revolutionise the way they do business – but we can also see that it’s not right for everyone. Make sure you understand exactly how it works, especially in relation to the fee structure, and weigh up the advantages and disadvantages of using PayPal for business.