Should We Give PayPal a Break?

40 replies
There are a lot of PayPal horror story websites out there. Most of these websites are run by merchant account companies or affiliates of merchant account companies. I am not saying that the stories are false, but I am saying that it is in their best interest to spotlight these complaints.

I know that many of these stories are true. I see them posted on chat forums like this one all the time... but, I also know that there are far more people that benefit from PayPal than those that have been burned by them.

Many folks tout that if you are going to do serious business online, then you should grow up and get yourself a merchant account. A merchant account is certainly a must have in most businesses, but in many niches, a PayPal account is also a must have.

If your primary business is selling on eBay, then you are a fool to think that a merchant account is better than a PayPal account.

Most Internet marketers are small time and make a few sales a week via PayPal. If you are marketing products to these people, then a PayPal account is also a must have. These guys usually have a set amount of cash sitting in their accounts that they use as mad money... and lots of mad money customers can be very profitable for you.

Many of the complaints that I read are about PayPal asking for your social security number or photocopy of your ID. Don't you think that a merchant account bank wants those same things?

The bottom line is that PayPal is the largest peer to peer and B to C payment service in the world. This is not going to change anytime soon, so rather than harping on the horror stories, forums like this one should focus on ways to avoid getting yourself into these horror story situations.

There are many, many serious marketers that use PayPal to generate tens of thousands of dollars in sales a week. I'm willing to bet that quite a few of these marketers would lose a substantial amount of business if they were to "grow up" and start using a merchant account.

Let the flaming begin
#break #give #paypal
  • Profile picture of the author paul wolfe
    Brian

    I've been using Paypal for 18 months now. And found them to be a great service. So much easier to deal with than a merchant account.

    The only issue I've found is that if you have subscriptions set up that these subscriptions automatically get cancelled if the subscriber has his paypal account linked to a credit card, and then said card either expires, or is updated or is changed.

    I've written to them a couple of times about it - didn't get a particularly satisfactory answer. So for now I just ride with it.
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  • Profile picture of the author Chris Worner
    Look, if PayPal was as evil as people say they are, then I would have thought that the FTC or some government body would have tried something to pull them into line if it was necessary.

    Tens of millions of people use PayPal, and their profit reports reflect that. If they were that bad, I am sure something bad would have happened to them by now considering how long they have been in operation.

    Chris
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    • Profile picture of the author rts2271
      The FTC has numerous cases against Paypal, you should do your research on this.

      If tens of millions of people used paypal the fed would step up and regulate them, that's just not true.
      By that argument you are also saying that if tens of millions of people set themselves on fire you would get the gas can and lighter out.

      Paypal has lost 3 class action law suits and has a number of suits pending.

      Finally no you should not give them a break. They are a unethical, money laundering operation.

      But any fanboys in here you just wait. Once you do a serious level of business with paypal and your account is frozen you will be in here chiming in, and I'll remind you of your love for paypal. No one who has used paypal for serious money, not pocket change has any love for paypal.

      Originally Posted by skyfox7 View Post

      Look, if PayPal was as evil as people say they are, then I would have thought that the FTC or some government body would have tried something to pull them into line if it was necessary.

      Tens of millions of people use PayPal, and their profit reports reflect that. If they were that bad, I am sure something bad would have happened to them by now considering how long they have been in operation.

      Chris
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      • Profile picture of the author E. Brian Rose
        Originally Posted by rts2271 View Post


        But any fanboys in here you just wait. Once you do a serious level of business with paypal and your account is frozen you will be in here chiming in, and I'll remind you of your love for paypal.
        Calling me a fanboy because I am making a case for something that could be of benefit to others is silly. I am quite certain that I done a serious level of business with PayPal and have yet to experience any wrong doing by them. I'm not saying that they have not done some people wrong, but I am saying that I have done serious business with them since 2001 and they have never done me wrong.


        Originally Posted by rts2271 View Post


        No one who has used paypal for serious money, not pocket change has any love for paypal.
        Where did you do your research for this factoid?
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        • Profile picture of the author rts2271
          Originally Posted by E. Brian Rose View Post

          Calling me a fanboy because I am making a case for something that could be of benefit to others is silly. I am quite certain that I done a serious level of business with PayPal and have yet to experience any wrong doing by them. I'm not saying that they have not done some people wrong, but I am saying that I have done serious business with them since 2001 and they have never done me wrong.




          Where did you do your research for this factoid?
          Cause I know people who make real money and have experienced it myself. None of them like Paypal for the exact reasons I stated. Again like I said, hit the threshold of where you pulling in serious bank with them you will get flagged and frozen. What that level is depends on what niche your selling in.
          For me it was 80k in a day that started a 3 year fight with them for my money. I got every dime back from them and a interest based % for my troubles. It took 3 lawyers and 25k to fight them. We beat the snot out of them in court.
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          • Profile picture of the author E. Brian Rose
            Originally Posted by rts2271 View Post

            Cause I know people who make real money and have experienced it myself. None of them like Paypal for the exact reasons I stated. Again like I said, hit the threshold of where you pulling in serious bank with them you will get flagged and frozen. What that level is depends on what niche your selling in.
            For me it was 80k in a day that started a 3 year fight with them for my money. I got every dime back from them and a interest based % for my troubles. It took 3 lawyers and 25k to fight them. We beat the snot out of them in court.
            I'm glad you got your money and sorry to hear what you went through, but I can assure you that the same type of horror stories are being told about merchant account services around the world.
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            • Profile picture of the author Rob P
              Paypal would be fantasic if they could sort out their recurring payment capabilities. And, of course... their customer service.
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              • I'm ALWAYS glad to get on the bash Paypal bandwagon because they suck. As I said in a another thread - Paypal is a necessary evil Like having to scoop the litterpan if you want a cat. But tolerance is not acceptance.

                The problem with paypal is their inconsistency. With a regular merchant account you know up front when and if you will be subject to a reserve, what information will be required of you and so on. Paypal on the other hand will only tell you what you MAY be subject to but NEVER under what circumstances. So you're left to just hope for the best and walk on eggshells.

                Make no mistake I need Paypal like a model needs diet pills. It's an unhealthy but necessary relationship.
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                • Profile picture of the author E. Brian Rose
                  Originally Posted by ingeniousaffiliate View Post

                  I'm ALWAYS glad to get on the bash Paypal bandwagon because they suck. As I said in a another thread - Paypal is a necessary evil Like having to scoop the litterpan if you want a cat. But tolerance is not acceptance.

                  The problem with paypal is their inconsistency. With a regular merchant account you know up front when and if you will be subject to a reserve, what information will be required of you and so on. Paypal on the other hand will only tell you what you MAY be subject to but NEVER under what circumstances. So you're left to just hope for the best and walk on eggshells.

                  Make no mistake I need Paypal like a model needs diet pills. It's an unhealthy but necessary relationship.
                  Great post! I am glad that you recognize that it is a necessity to have a PayPal account when marketing online. Tolerance surely is not acceptance, as you said. Perhaps the title of this post was wrongly worded. I love the ease of use of my PayPal account, but I too walk on eggshells.
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                  • Profile picture of the author juvan.vesna
                    I'm just about to start my online business and I've been thinking if I use Paypall pro I don't need another merchant account, do I?

                    Thanks a lot for your thoughts.
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              • Profile picture of the author Alexa Smith
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                • Profile picture of the author Chris Worner
                  Originally Posted by Alexa Smith View Post

                  I strongly suspect that many of the "PayPal horror stories" are actually rather out of date, now.
                  Ironically, many of those sites about the evils of PayPal, more often than not, conveniently have a recommendation for an alternative no-name payments processor with an affiliate link as well.

                  And isn't it interesting how the only "haters" of PayPal happen to be unknown new guys to this forum?

                  Oh and by the way, you should send a warrior by the name of "Big Mike" a PM, he runs over a million dollars a year, relatively painlessly, and has been doing so for quite some time, through PayPal, I am willing to hazard a bet he has run more money through PayPal than you have.

                  The there is Allen, The Admin, all those War Room memberships, WSO fees, classified ads and related subforum fees, I am pretty certain they must be making a pretty penny every year, I notice his account for the Warrior forum hasn't been frozen.

                  And I could keep the list going but I am tired.

                  In fact, now that I think about it, weren't you the guy who started that thread earlier I reported for making slanderous accusations about PayPal without providing any evidence?

                  Good day to you.
                  Chris
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                  • Profile picture of the author BrittyBritt
                    I've never had a problem with Paypal that I couldn't resolve. And it seems that every time I've had to call customer service, I've always gotten a helpful and friendly rep.

                    Maybe I've just been lucky.

                    However, with any bank/merchant service/financial institution, there's going to be good and bad, and you're always going to have disgruntled customers. It comes with the territory.

                    However, no matter how good or bad a company may seem, always remember to never put all of your eggs in one basket (or at least have a backup basket just in case).
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        • Profile picture of the author Super Affiliate
          Originally Posted by E. Brian Rose View Post

          but I am saying that I have done serious business with them since 2001 and they have never done me wrong.
          Are you sure? I'm not trying to go against what you said about PayPal and PP is great most of the time but didn't PayPal just shut you down your Google News membership site just a while ago when you didn't do anything wrong?
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      • Profile picture of the author JayXtreme
        Originally Posted by rts2271 View Post

        Once you do a serious level of business with paypal and your account is frozen you will be in here chiming in, and I'll remind you of your love for paypal. No one who has used paypal for serious money, not pocket change has any love for paypal.
        This is wrong.

        I have, and I've not had my account frozen.

        They even keep a big fat percentage on hold... "just in case".. and I'm still using them.
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        • Profile picture of the author rts2271
          Sorry Jay, but your not making any serious money with them then. Come back to this conversation when you have something to ad.
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          • Profile picture of the author JayXtreme
            Originally Posted by rts2271 View Post

            Sorry Jay, but your not making any serious money with them then. .
            :rolleyes:
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      • Profile picture of the author seasoned
        Originally Posted by rts2271 View Post

        Finally no you should not give them a break. They are a unethical, money laundering operation.
        I have seen people here arguing AGAINST paypal while ****THEY****, the people arguing AGAINST, were doing MONEY LAUNDERING! It is ILLEGAL! And they pull LOTS of tricks to try to get paypal to FACILITATE it! Some argue that it is because paypal won't let them do it any other way. SO?

        Look at that garbage STORM PAY had! Some MORON started a PONZI scheme, got stormpay in trouble, and started telling her followers that STORM PAY was the problem. She even got shut down by the FTC and her followers STILL said it was because storm pay cut her off. Paypal certainly wants to avoid that. For a time, storm pay mayy have been paypals most viable competitor. They came closest based on cost, simplicity, and capability.

        And recently a guy here claimed PAYPAL took his money. He was not even 18! Minors can NOT enter into legal contracts!!!! So he was causing paypal to assume ALL risks! And he had NO credit score. Do you know what happened when I got paypal pro? WELLS FARGO MADE AN INQUIRY on my credit. Gee, do you think the rumor of them using wells fargo for merchant accounts was true? HEY, credit card companies even run your credit.

        So people BREAK THE LAW, LAUNDER FUNDS, Have PAYPAL assume the risks, use PAYPALS credit, not pay any fees other than continuing costs, they don't even pay GATEWAY FEES!, and accuse paypal of wrong doing when they are cut off.

        I had a company once that ****COULD**** have been INTERNATIONAL! It COULD have made some large sales. There were a lot of COULDS! I checked several banks, etc... And I couldn't get a merchant account. WHY!?!?? Because:

        1. I had to have a store front.
        2. had to be in business 2 years or more.
        3. a couple other things, but the first two basically put me out of business with CC. I was running it from my apartment.

        The reason given for their crazy treatment? Too many scammers caused them trouble in the early 80s. Of course THAT was a different era. You couldn't really get involved in buying until you made sure they accepted credit. NOW it seems that ALL stores accept credit.

        Steve
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  • Profile picture of the author baggieboyblue
    Paypal are good for nothing cheats. I have been using them for over 2 years and then 2 months ago they decide to put all the funds I receive on 21 days hold. So at anyone time they are keeping over £300 of my money which should be in my bank account.
    When you try to get a reason why , they fail to deliver. Nothing had changed in my business so they had no justification to do what they did. So all you paypal lovers who are having no problems with paypal......... your turn will come.
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  • Profile picture of the author havplenty
    Originally Posted by E. Brian Rose View Post


    The bottom line is that PayPal is the largest peer to peer and B to C payment service in the world. This is not going to change anytime soon, so rather than harping on the horror stories, forums like this one should focus on ways to avoid getting yourself into these horror story situations.

    There are many, many serious marketers that use PayPal to generate tens of thousands of dollars in sales a week. I'm willing to bet that quite a few of these marketers would lose a substantial amount of business if they were to "grow up" and start using a merchant account.
    I have stashed away the petrol for now, but seriously you are absolutely right. Paypal will continue to hold sway for a long time so the best we can do as marketers is find ways to keep Paypal 'happy'.
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  • Profile picture of the author TristanPerry
    PayPal are an awful company. Decent service, but God-awful 'support'.

    Have used them for around 8 years (unfortunately I still have to since loads of people use them/rely on them), and in that time have been screwed around by them numerous times.
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  • Profile picture of the author John Rogers
    Originally Posted by E. Brian Rose View Post

    These guys usually have a set amount of cash sitting in their accounts that they use as mad money... and lots of mad money customers can be very profitable for you.
    Most people who were ebay sellers prior to Paypal totally understand the Paypal mad money factor.

    There are a ton of people who sell using Paypal and don't even know what a merchant account is.

    There are a ton of people who buy using Paypal that don't know they don't need a Paypal account to buy from a merchant who uses only Paypal to process payments.

    Many people who have become comfortable with Paypal are uncomfortable using anything but Paypal for online transactions.

    Food for thought...

    John
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    • Profile picture of the author Chris Worner
      Originally Posted by John Rogers View Post

      There are a ton of people who buy using Paypal that don't know they don't need a Paypal account to buy from a merchant who uses only Paypal to process payments.

      Many people who have become comfortable with PayPal are uncomfortable using anything but PayPal for online transactions.
      And this is the crux of the issue, damned if you use PayPal, damned if you don't.

      Chris
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      • Profile picture of the author Lance K
        Anybody here tried using www.dwolla.com? It's a peer to peer payment platform like PayPal, but they only charge a flat fee per transaction ($0.25).

        I just read about them for the first time in the Business section of my Sunday paper today. A fairly new company, but I'm going to conduct a little more due dilligence on them to see if they may be a good alternative to PayPal. Would be interested in hearing about anyone's first hand experience with them.
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      • Profile picture of the author Black Hat Cat
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        Paypal haters really need to get out a little more.

        Merchant Credit Card Processing Horror Stories

        And by the way, you ain't seen nothing yet. Wait until the "we hate banks and Wall Street" financial "reform" bill kicks in.
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  • Profile picture of the author R Hagel
    Maaaany years ago I had my account frozen. It wasn't a lot of money, relatively speaking ('bout $1000). But at that time, it was EVERYTHING I had.

    I was selling off all my personal possessions on eBay just to put food on the table. No money for groceries, rent, etc. That money was supposed to pay for it. So when I couldn't access the money it really was a big deal for me at that point in my life.

    Yeah, I was pissed when it happened. For a few weeks or so I became a "hater." But then I calmly worked through the issues, talked to numerous people at PP, and finally got to the top of the food chain with someone who had the authority to do something. Turns out (surprise!) that the issue I was having was mentioned in their TOS.

    (Long story short, a friend with an account in poor standing logged in from my house... which made 'em think our accounts were linked.)

    Anyway, the point is that I was one of those "horror stories." But I'm not a hater. And I still use PP today. Like E. Brian Rose said, a merchant account needs to have you do these same sort of verifications. And a lot of problems would be eliminated if folks would read and understand the TOS before signing up.

    Becky
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  • Profile picture of the author createyouwealth
    I never had a problem with paypal as I have been using them for a few years and IMHO, they have great customer service and they are very trusted by me and a lot of other marketers/customers. This will most definitely not change anytime in the near future.
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  • Profile picture of the author Thomas Wilkinson
    I'm amazed at how much their customer service has improved. Two minor glitches in the past year resolved in five minutes on the phone. I leave reserves in my account, observe their TOS, treat my customers well and so far, so good.
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  • Profile picture of the author SeanyG
    This is a great post!

    I have been considering switching FROM my merchant account TO PayPal.

    I've read all of the horror stories and there is always missing information. I called Paypal and talked to 3 account reps and each of them explained it well:

    PayPal will do what it needs to do to cover its ass. This means holding reservers and freezing accounts that violate their TOS.

    One of the guys gave me one great example. A travel company that was doing all of its business through PayPal went under. They filed for bankruptcy and PayPal was out to the tune of 2 Billion Dollars because they had to cover all of the refunds / chargebacks for all of the trips that weren't valid any more. Ouch!

    So PayPal will hold a % of funds to cover potential chargebacks. PayPal will freeze your account if you do a "launch" and don't tell them ahead of time via the phone (with a confirmation number so you can prove it). If you are in an industry that they get burned on regularly (travel for example) and you have suspicious account activity, your account will be frozen until you send them the info you need.

    I did a launch in January that brought in 5 figures through PayPal when my average Paypal monthly revs were a 1/4 of that. My account wasn't frozen. Funds weren't held. No reserve was put in place.

    The other side of the story is merchant account issues. I am with Elavon.com / Authorize.net and its NOT a walk in the park.

    As someone said above, the people posting horror stories are all new additions to the forum "launching" 37 ebooks. What you don't hear about are all of the top players here that rely on PayPal for their part or whole payment solution!

    PayPal has 200,000,000+ active accounts and are the 2nd most used payment solution only to Visa. If 200,000,000 people use PayPal that means there are a whole lot of merchants as well. If they just shut down accounts and held funds at random do you really think there would be millions of merchants supporting all of these paypal users?
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  • Profile picture of the author Lee Wilson
    You know the saying, "if I knew then what I know now?"
    Nothing beats experience and the most valuable lesson I've learnt through years of being in business is this ... every company is crap and will cause you problems in one way or another. If you haven't been hit with something from one company then it's probably because you haven't stumbled into it yet. Paypal, Natwest, Barclays, Cardnet, eBay, or whoever, they all have their problems.

    It will never stop until you learn to get over it, adapt and move on quickly. Accept it and over time it will stop happening to you, not because you found Company X is better than Company Y but, because you just have to learn the hard way and eventually run your business in line with everything else you are dependant on.

    It might not be what you want but it is what it is. The worst that can happen with Paypal is they put you on a 90 day turnaround. If you can't survive that then you are already on a slippery slope. You are not imune from chargebacks from any card merchant. Other than fraudulent purchases, you will always get your money even if you have to wait for it.

    I used to have a hundred horror stories about suppliers, manufactures, banks, card processors, eBay, and many many others. After years of bitterness I finally grew up and realised they were not horror stories but valuable lessons that I ignored. Expect problems from every company you deal with. When you don't get them, consider it a bonus. When you do get them, save your energy and immediately move on, find a workaround and expect to adapt continously.
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  • Profile picture of the author Mark Jordan
    I hope there are other mode of payments that will really replace Paypal. As of now, even if I have a lot of misgivings when it comes to paypal, they are still the only one who can really service my need.
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  • Profile picture of the author madno
    I think now Paypal is doing OPS. To clear out suspicious account annually. Just like adsense.
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  • Profile picture of the author MerchantGuy
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  • Profile picture of the author Derek S
    Fact is if you don't offer paypal to your clients, you will be leaving money on the table

    BUT...

    If you are using paypal to accept credit cards, you are leaving money on the table.

    Conversions skyrocket when you give them an option to use paypal but accept credit cards on your own site. My checkout page consists of additional testimonials, reinstating and drawing attention to my money back guarantee and VeriSign secured button.

    I can split test "Complete Order" button designs, track shopping cart behavior with Google Analytics and easily do cross sales...

    When you get to a advanced level, using PayPal on its own is plain bad business and actually unprofessional.
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    • Profile picture of the author CASimmons
      Originally Posted by Derek S View Post

      Fact is if you don't offer paypal to your clients, you will be leaving money on the table

      BUT...

      If you are using paypal to accept credit cards, you are leaving money on the table.

      Conversions skyrocket when you give them an option to use paypal but accept credit cards on your own site. My checkout page consists of additional testimonials, reinstating and drawing attention to my money back guarantee and VeriSign secured button.

      I can split test "Complete Order" button designs, track shopping cart behavior with Google Analytics and easily do cross sales...

      When you get to a advanced level, using PayPal on its own is plain bad business and actually unprofessional.
      So far this has been he most realistic outlook on this whole Paypal thing. Paypal fills a need for most online businesses but there should come a point where most businesses will need to expand to offer more payment choices. Not to mention, aside from it's conveniences, at 2.9% and $.30 per transaction Paypal isn't the most economical solution. Once you reach a certain level of success you can get some pretty good rates for a merchant account that Paypal just can't match thus keeping more of your profits in your pocket.
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  • Profile picture of the author Alfred Shelver
    Brian ... I agree with your original OP I just wonder if you still feel the same way. I see this is nearly 2 months old and you have had a Little misfortune yourself with Paypal since.

    Genuinely wanting to know, I am not saying told you so because I cannot make anything without Paypal and have had nothing bad happen as yet.
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  • Profile picture of the author Sardent
    Sooner or later, when enough complaints are received by the FTC and individual State’s Attorneys General someone will note that PayPal is only licensed as a money transmitter and is required by law to transmit monies within a legally defined period of time, usually 10 days. Not one State’s statute that I have read mentions the permissibility of holding reserves or freezing accounts for 180 days.

    PayPal is not a Merchant Credit Card Payment Processor. PayPal processes credit cards through Wells Fargo, PayPal is a service reseller or middleman.
    However their TOS (update 2-11-09) allows them to run a credit check on you at any time they desire. BTW thjs is a hard credit check so yes, it dings your account.

    We haven't begun to see the complaints or lawsuits this is going to generate.

    Paypal is great if you're a buyer. But their seller protection is convoluted and you can think you're covered when you're not. Most of the time not.

    --Former heavy ebay seller put out of business by scammers who used Paypal to not only keep my merchandise, but retrieve their money as well. No, having tracking numbers showing the items delivered meant nothing to Paypal.
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    • Profile picture of the author Hrhfish
      Pay Pal is a service that holds up cash transactions way to long. First cash has to clear from your bank account into pay pal account. Then it's 7 days to clear in the recipients account. Like all banks the money while they are holding it is invested. So they profit from the interest that generates and then charge the person recieving the cash a percentage.

      Okay your money is safe and protected but why bother when you can pay via bank transfer. If the person you are paying is in your country you can walk into the branch that the recipient banks with and wire them direct to their account. This is an option with many online buisnesses and they get the cash in 3 days in the UK. Also this service is free and the recipient is not charged. Your moneys safe. You get a reciept from the bank should you want a refund.

      I also think that ebay are in cahoots with pay pal or have a major investment in shares as they are promoting a points system. Pay pal is like a condom machine in the vatican !! If you do sell on ebay you can't get away from using pay pal. I have a thing about banks and financial institutions here in the UK. They make money out of your money and then when you want a substantial amount you have to give them 24 hours to access your own funds !!!
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  • Profile picture of the author Super Affiliate
    Sorry Brian. I didn't know it was an OLD post. I apologize. I'm sure you have changed your mind about PP by now.
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  • Profile picture of the author misterhu
    Based from my experience, I still find Paypal effective for me in collecting money from them. Although I want to try other services, this approach is still working for me well. There are other similar sites but I think Paypal is the most reliable one in terms of its market value and years when it’s established..
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