The evil paypal?

[Elite Skills]

This article is very creepy http://www.paypalsucks.com/forums/showthread.php?fid=6&tid=1529&old_block=0 . It basically states that paypal doesn't care about you and will grab your money if it feels like it and you can't do anything about it. I'm not too sure how the ebusiness things work as far as payments. Paypal takes a terrible percent of each transaction even if it's a quick alteration between 2 rows of it's database. How does everyone else do it? I know I have to have encryption but can peole signup with the credit card companies online to use them in ebusiness?

Thanks for your help and insights.

[Sualdam]

In my experience, the only disadvantage to signing up for a merchant account is the cost. You basically need to have quite a bit of business - or expect to build up to it quickly - for it to be worthwhile.

They still take a cut, but it is very small.

I think that's one of the reasons PayPal came along - it is cheap to set up and works if you only have one sale a year.

Something to bear in mind: in a free market economy the chances are you're charging as much as you can get away with for whatever it is you sell. You certainly aren't selling at a loss. Is it really so wrong that PayPal is trying to make a profit?

:)

[Unclefussy]

We use PayPal and Love it!!
To have a zon (credit card machine) in your business also cost money per transaction and you have to buy the equipment to make the transaction and they are not cheep.
We really like the eCheck feature on PayPal.

[Markll]

People who've had PayPay freeze their account probably aren't telling the whole story. I have yet to see this happen to a reputable business.

[Elite Skills]

You're probably right. The example they gave in that 'manager's account' was what would paypal like better: risk getting a sum of money over the next few years or getting it all instantly by freezing the account. Oviously it would exclude featured merchants and such but there's still that terrible risk. I've heard all kinds of horror stories. The thing that make it seem real is it's true that they don't have their customer service or some kind of way to contact them(it's not like they're too poor to afford that). The other thing that bothers me is the % they take from transactions between paypal accounts as donations. It's a simple change between 2 rows in their database but they charge pretty tough at small transactions.

The the credit card companies offer credit card validations and use for ebusiness? I can never seem to find where to go on this matter.

[Markll]

The other thing that bothers me is the % they take from transactions between paypal accounts as donations. It's a simple change between 2 rows in their database but they charge pretty tough at small transactions.


You take a narrow point of view regarding the work process PayPay takes their fees for.

It's not just changing lines in database. It is a product of doing a service. A service that incurrs real overhead. Office space, server space, maintenance, employee salaries & benefits, insurance, just to name a few.

Their actual net profit is probably less than 5% of what they have to charge to acommadate a transaction.

Business 101


http://mtheoryit.com
http://localshoppernetwork.com

[Sunshyn]

PayPal froze our account. We have had a regular merchant account since 1994 but also offered PayPal. They claimed we were selling restricted items through their service. We weren't.

We offer a small percentage of lingerie style items, which are not, in fact, restricted by PayPal. On top of that, our system was customized to not even offer PayPal for lingerie items as a - what we thought was an over the top - cautionary measure.

We finally came to the conclusion that the caution we set up for items displayed as lingerie must be the reason - not that they'd actually bother to give us a straight answer despite our many requests. We developed that caution so that jewelry shoppers, especially younger ones, don't accidentally run across them. Even though most of our customers feel our pictures are far too mild to necessitate a caution, I feel it's only courteous since my jewelry designs often appeal to teens. I'm certainly not removing it for a chance to have PayPal treat my customers as they did when they canceled our account days before alerting us to the fact. I'm actually more upset about that than the fact that they're *still* holding our money even though it's been months.
An unexpected problem is that I can't even know if a couple orders which had delivery problems have been refunded by PayPal or not.

The way PayPal handles their policies (and the way they treat a business's customers!) leaves a great deal to be desired. At the *very* least, a company deserves more explanation than repeated automatic responses regarding an account freeze or cancelation. The one response we received which seemed to be answered by an actual person managed to bypass my direct questions and, in fact, only created more confusion.

[rambodog]

Bottom line is "Are there good alternatives to PayPal?" or is PayPal the best solution. Seems a lot of people I deal with accept it if they are just getting going.

[matauri]

Guys, I have moved this topic from Internet Industry into ecommerce because I think this is where talk of the up & downside of Paypal will best benefit members.


Cindy

[DanThies]

I use Paypal, and I'm very happy with them. I don't leave large amounts of money sitting in my Paypal account, so I wouldn't be out of business or bankrupt if they closed my account.

For what's still basically a one-person shop (I handle all the management), the ease of integrating our back-end systems & affiliate programs with Paypal has made my life a lot easier.

There are a lot of stories out there, but we just don't know the facts behind them. Having worked on email support and call centers, I know that a lot of people will flat out lie to get what they want.

I have never had any issues with customers or with Paypal that couldn't be resolved very quickly by their support staff. We'll be adding a regular credit card payment gateway soon (after incorporating), but even then Paypal will still be our first option for payment.

[Corey Bryant]

Actually Paypal does not take that much for being a third party processor. There are others that take a higher percentage.

I actually know one person whose bank account was frozen. Her Paypal account was hacked into & for 6 months she could not use Paypal or her bank account. I have always suggested to get another bank account only for Paypal.

Third party processors can be good for businesses that are just starting out. Usually you have very low or no start-up costs. The discount rate & transaction rates though are usually higher. Once you start to process over $1,000 a month - you should consider getting your own merchant account.

[shaz1104]

hi ive had a paypal account for 6 months now i have had no problems up to now and am pleased with it its a lot easier and quicker than waiting for cheques to arrive and makes more buisness the only thing i will say is CHANGE YOUR PASS WORD VERY REGULAR as ive had a few friend who had there accounts hacked in to and all your bank details are in there also i dont leave more than 100 in at a time before i transfer it (which is free over £50 )
i think there charges are good compared to other companies out there

[kjohnson5576]

I use a third party merchant account and Paypal. Never had any problems with Paypal and their rates are better than the 3rd party merchant account, i.e. no fees for reports, statements, etc. The 3rd party accounts are 2.6% plus $0.35 per transaction. If you do over $3000 a month with PayPal and are a Business Account holder, the rates move down to $2.6%.

I've only had one person complain to PayPal about me and I handled it the way I would any other complaint, with a refund after the goods were returned. They had bought the insurance also. PayPal never shut me down and as a matter of fact, told me not to worry about anything until their investigation was done. I think the person was trying to get a refund from me and the insurance from paypal. Didn't work.

I've heard all this..."You need to get your own Merchant Account" talk. What is your own Merchant Account and what are the fees? Just want to know some rates, set up fees, etc. My sales are well over 5K a month and if there is a way I can save on the discount rate..I'd certainly like to know it.

[redcircle]

The only advantage a normal merchant account would be if you had a normal brick and mortar plus online sales. With paypal you can't punch in someone elses credit card info.

I've been using paypal for about a year and have had no problems. My suggestion is to get the paypal debit card. you receive 1.5% back when you use it. which means I'm only getting charged .35+ 1.5% a transaction. which is darn good.

For those that say you need equipment to take CC's with a normal merchant account that is false. Authorize.net has solutions that all you need is a computer and you can do all that with them.

Although I haven't setup our authoize.net account yet we do have our merchant account through First Data and have been very pleased.

[kjohnson5576]

RedCircle

I currently use Authorizenet also with Total Merchant Services. What kind of rates does First Data have? And is it a Merchant Account or a third party account? I've got some trouble discerning the two.

[Elite Skills]

computermark:

Their actual net profit is probably less than 5% of what they have to charge to acommadate a transaction. With the amount of transactions going through that site everyday their expenses should be very well paid for. They are basically a bank, a big huge psycho bank that has probably grown too large and messy to properly maintain order. I'm not sure how you could take that kind of stand behind them as if they were some charitable organization. Don't underestimate their size.

I wouldn't receive big donations for my site. I'd get a dollar and get 67 cents of it. The amount charged in small transactions is rude. It's just a quick change between two entrees in their database. It is logged and and recorded on a secure server, big deal. My site has had several hundred submissions, new users, and user interactions but it hasn't cost me more than the initial $100 a year for the host(3% of possible bandwidth used per month). It's just a number alteration in their database. Hell, they could even make money if they wanted to, and spend it all on the accounts. All it takes is an evil person with a high level ranking in the paypal corporation. I really wish I knew a better way... I'm setting up an amazon account but I hear they can be just as bad.

kjohnson5576, I think you should put your site up for review. If it's that profitable you could be making even more with a bit of feedback. Your sites a bit big in filesize and it could use some minor tweaks. Not to be rude or anything, just could be impoved.

[kjohnson5576]

Computermark...profitability and amount of sales aren't necessarily the same. My heads above water...but I could still stand to be more profitable, hence fees charged by credit card companies.

I had my site up for review about 4 months ago, and took some of the advice to heart, new logo, background color, etc. Things are so busy with after Christmas sales and stuff that I haven't had a chance to update it or get a slew of new products on yet. I'm planning a major update in the near future and may put it back in again for review.

I'll admit, it is a bit heavy, but it's gotten me top ranking (#1 spots) in Google for the major keywords that I look to, and usually top 10 spots in most other keyword catagories. This was a main goal, as well as ease of use for customers. I've gotten anonymous feedback on the site from buyers through Shopping.com. I was surprised, because I didn't think the design was all that good, but over 98% of the acutal customers said the site was easy to use, and was as good or better than most sites they have shopped at before. The only negative rating was small amount of product offered on the site.

Thanks for the advice. I think I'll throw it in for critique before the next update. I can think of lots of things I would like to do different, but the search word ranking is really great, and I shutter to think about tampering with the site too much.

[kimbecker1]

Well most of the time! Easy to use and doesn't really cost any more than Visa, Amex or MC accounts for fees.

BUT ... we had a dishonest customer make a huge order and after delivery do a charge back it was $600+.

Paypal claims to protect merchants but when it came down to it the small print kept us from getting the $ returned to us.

Credit Card companies and Paypal have to start doing something about protecting Merchants from dishonest buyers.

[Elite Skills]

I bet paypal has some kind of statistical result that says people are far less likely to persue legal matters under $1000 than those over. It is not beneficial for them to persue such claims due to this fact(all about probability of losing money). I'm not all to sure how the ebusiness transactions work yet. I don't understand why most merchants don't give out contact information and offer payment through a cashiers check mailed directly. Why just the 3rd person median?

kjohnson5576: use tools like http://www.designerwiz.com/test/keyword_density_check.htm and http://www.keywordcount.com/ on keywords that are turning up high ranking. Count the repetitions in the description, keywords, title, and body and keep them the same. Use
http://www.widexl.com/remote/search-engines/metatag-analyzer.html to keep the relavance up. Delete the words that don't yield high results and that will raise your results in the search engine because of the newly optimised focus you put on your keywords. If you take the time and use the proper tools it won't be so much of a risk and you may significantly increase sales in the longrun.

[leatherblues]

I read on another forum about http://www.pay-line.com/

Has anyone ever used this service either to sell or to buy something?

Do you think it would be a good idea to use it as a second alternative. I already use Paypal on my site.

[Elite Skills]

4% is a bit steep. The "contact us" page looks very encouraging. Checking by alexa.com it says they've been online since 96 and only have a rank of 2-3 million and it has no reviews. It looks like people don't "prefer" it due to that fact, but only speculating. An angry reviewer is more likely to review than an satisfied user so it looks fairly promising in that aspect. I can't say it looks like a scam. It seems to be small so far so that's good in that scammers will be less likely to jump to it and bad in that it has less reliability in it's financial situation and (possibility)security.

[redcircle]

RedCircle

I currently use Authorizenet also with Total Merchant Services. What kind of rates does First Data have? And is it a Merchant Account or a third party account? I've got some trouble discerning the two.

I'm not sure on the rates.. not my job to handle it but it is an actual merchant account with them. Authorize.net would handle the ecommerce if we choose to use the First Data merchant account with them. We are still very small.. We needed a brick and mortar solution and we found First Data through a number of different referrals. It's probably out of his territory but I could have our account rep contact you if you have any questions.

[kjohnson5576]

Thanks Redcircle, no need to contact them. I took a look at them through the net. Roughly the same as I'm using.

[autolink]

I have used PayPal and I HATE it! They don't give you near as many options as a real ecommerce company does and they charge alot for small amounts also. I found a company called www.opticommerce.com. They are a real ecommerce compnay and provide the shopping cart for you and you can put your logos and your information on it and its completely customizable. If you go to their live chat program and either leave a message or talk to someone just ask for Steven and he will waive your sign up fee.

[kjohnson5576]

5.5% !!!!! Plus $0.45 per transaction ?????

Are you being Paid by opticommerce?

PayPal is a lot more reasonable than that. The Merchant Account I use charges less than half that rate and is $0.20 less per transaction. Setup wasn't that bad.

Small site..PayPal is still free to set up and works just fine.

[Elite Skills]

Are you being Paid by opticommerce?


just ask for Steven and he will waive your sign up fee.

It answers itself.

The site doesn't even have a PR. I do give it a mutated 3 thumbs up for the layout though ;). Pfft! Setup fee...

[autolink]

No I don't work for them.

With PayPal your customers have to sign up with PayPal before they can buy your products. That turns you potintial clients away! Most people are not going to sign up with PayPal just to buy something.

[Elite Skills]

I think that's only for donations. A merchant account doesn't have to have that. I don't think paypal would overlook something like that.

[NOS]

I use both PayPal and a merchant account with Authorize.Net as the processor.

Many buyers like PayPal because it gives them a sense of security since they don't have to give the credit card information to the seller, but I would be out of business if I depended on PayPal for all my payments. 90% of our website buyers still prefer using the ole credit or debit card. About 40% of our ebay customers use PayPal. 40% use the credit card and 20% mail in the payment.

PayPal is bigger on the auctions than anywhere else and I don't see that changing. If you have a website that only takes PayPal, you are losing most of your business.

The PayPal sign-up process would turn away most of the website buyers that use their credit cards and are not familiar with PayPal. It takes time and the sign-up process can be somewhat intimidating. It's much easier just to enter your credit card info and finish the order.

I don't mind PayPal though I keep the account balance low. It does give me as the seller a lot of protection that credit card companies do not. Try to collect on a chargeback after you delivered merchandise to the other side of the country. It's next to impossible. Over the years I've been scammed with credit card payments, but I have never lost a PayPal payment. (though I had a few that tried).

I've heard of the PayPal horror stories and I had a 4 day horror story myself once which shows me that you can have your cash taken by PayPal.

We changed our company name a couple years ago. We also changed to a new ebay account and opened a new PayPal account to start all fresh. Because we had zero feedback but did run the normal amount of auctions that we were used to running, we received a lot of payments to a new PayPal account. Because of this large amount of payments coming into a new PayPal account from a new eBay account, it threw up PayPals red flags and they "restricted" my account.

"Restricted" is not a nice thing to be. What that means is that you can't withdraw funds, you can't pay out funds, and you can't give refunds, however, people can pay you. You also cannot shut down the account to stop payments coming in. So you continue to collect payments and have to ship out products, but you have no idea when or if you'll get paid.

I had to send in proof to verify who we were. This went into their computer system and would be looked at when they got around to it. I called ( they used to have a general phone number to use) and talked to a gal there, very upset of course. When I asked her about regulation, she flat out told me they could do what they want since they are not a bank and are not regulated by anyone.

After 3 days she still told me that the faxes I sent were not showing up on the system so I would just have to mail the info. I complained that that would take weeks to get this mess done. She said "I'll just have to make a note in your record that you are uncooperative" and she hung up on me.

By this time the account had several thousand dollars in it. I was getting nervous about this.

So I called back and finally got a break. I spoke to a guy this time who was actually polite. He had me fax the info to a fax machine behind him and he walked it to where it needed to go which was 50 feet away from him and the gal that gave me days of misery. Several hours later my account freed up.

I do have an advantage over many PayPal users now. I do enough volume with PayPal that I was assigned a rep with a number to call. He told me that he would have been able to clear that problem in a couple hours if he has been assigned to me then so I shouldn't run into problems like that again.

However, it still makes me nervous enough to empty my account daily. But if you sell on ebay, PayPal is a must with the bidders.

[acornwebworks]

5.5% !!!!! Plus $0.45 per transaction ?????

Are you being Paid by opticommerce?

PayPal is a lot more reasonable than that. The Merchant Account I use charges less than half that rate and is $0.20 less per transaction. Setup wasn't that bad.

Small site..PayPal is still free to set up and works just fine.

I pay the same rates with a place called 2Checkout. Yes, they are high. I also offer PayPal, with its lower rates, but most of my clients who want to pay online with a credit card want to do it without having to join PayPal. (Or they send me checks, which is always my favorite since there are no fees at all :-)

I like 2Checkout because of the options available. For example, not only can I sell products, but I could set up a membership site with passwords or have recurring fees for a classified ads site, or a variety of other things with no additional setup charges. (They have a one-time setup fee of $49.)

Not only that, but they seem to be popular enough that various scripts (like classified ad sites) are designed to incorporate 2Checkout credit card processing.

And I personally don't like monthly fees like Authorize.net has.

I think that anyone considering credit card processing services needs to factor in all costs as they relate to their sales to determine what is best for them, and not make a decision simply based on the transaction fees charged.

For example, if you sell $750 worth of goods at $50 apiece every month, the higher rate of a 2Checkout, for example, is less actual money than you would spend using Authorize.net with its much lower rates but mandatory monthly fees.

[kjohnson5576]

I guess if you have a REALLY small web site, then some of these plans aren't too bad. $750 sales a month is really small even if you have high margins on your product. I would consider a $3000 sales per month e-commerce site to be a pretty small ecommerce site. At $3000 a month, a regular merchant account with authorize net would cost half as much as with opticommerce or 2checkout. I guess the catch here is where the breakeven point comes between the two systems? I don't know...but if you're using one of these systems as a stopgap before you go to a merchant account, I guess it makes sense. PayPal though is in this same catagory...a stopgap. I switched from PayPal exclusively to a merchant account after getting a couple of months of steady $5K sales with PayPal, and a few people who just wanted to order over the phone and not use the net plus a couple of other complaints about PayPal.

So I guess it boils down to, at what stage are you in your business...and for those who have many small websites that collect a little off each one, paying the extra probably isn't that big of a deal. Working with tight margins though..every little percent makes a difference.

[Elite Skills]

I'd like to thank everyone that followed up on this topic! I have truly learned much about how e-business transactions are handled. NOS' story bothered me a bit. I'm not sure if I would personally use them when I start an ebusiness because it would be supporting a company I could easily call corrupt(to some degree, but at the least, a company who sees their users as resources that are easily replaced, espacially if not agreeing with any action). I wish the credit card companies themselves would setup their own validation and transaction scripts. I'm sure if I could figure out how all that mess works it would be cheaper to setup your own "enter credit card information" setup. The disadvantage would be having to have a https://, the speed of validating a transaction and the customer 'trust' to give personal information. Does anyone know if it's possible to interact directly with credit card companies? Paypal still remains just an annoying middleman that can't always be trusted. Since they are NOT a bank, isn't it possible for everything that they do, we can also do?

[121merchantaccount]

I have page specifically comparing rates to this on my site. I repost here for your review.

:::::::::::::::::::::::::::::

Need an alternative to PayPal because they FROZE your account or your customers don't want to register with PayPal to buy your products?

This happens time and time again. That is why there is class action lawsuit against PayPal.

Furthermore, consumers do not trust merchants who only sell through PayPal. We surveyed random online shoppers of traditional goods and services. This is what they said about companies only selling though PayPal.

"If they don't have real credit card processing, then how good can their products and service be?"

"It's a pain to register for PayPal, to many clicks."

Additionally, PayPal costs more to process, than a real merchant account! They charge 2.90% when you could be paying 2.29% !

Though PayPal has no monthly min, or monthly fees. If you process less than 1K, I would suggest PayPal, but I've heard 100's of complaints about them. And, no, not all busineses that have their accoutns frozen are bad.

[Elite Skills]

You should have called your post "This is spam. I am targeting large sellers so I can get a good % of your profits."

"It's a pain to register for PayPal, to many clicks." = ridiculous.

The point was to have a reseller account and paypal or just get rid or paypal. Your rates are not much better and due to size I wouldn't put much reliability on your future success. An unknown company can be just as evil or more than a notorious one.

[MarketingMama]

PayPal but some of the other issues brought up in this discussion are of interest to me. I read through most of the posts and the issue of fraud and "I didn't do it" transactions was not really resolved not that any real resolution has to occur but I would like to bring up the Verified by Visa and MasterCard SecureCode programs ... is anybody familiar with these?

I have recently added eCommerce as part of the services we offer and am involved with both of the above programs. Here are some of the benefits and features:

Benefits

· Eliminate fraud liability
· Simple and low cost approach to implementation
· Virtually eliminate “I didn’t do it” transactions

Features

· Certified complaint to Visa specifications
· Certified complaint to MasterCard specifications
· Support for future payment initiatives already built in
· Validation of digital signature as required by Visa
· Generation of transaction logs for reporting/disputes
· Web-based registration
· Web-based reporting

If you would like to learn more visit my site at:

http://www.mst-enterprises.com/Commerce.htm or contact me directly at info@mst-enterprises.com

One other note - you don't have to switch banks to use our console so if you've got great rates you can keep them unfortunately being new we can't offer you the great rates yet but rest assured if and when we can we will :-)

Sincerely,

The MarketingMama