In an effort to provide you with sufficient information to make the decision whether to use this vendor or not, here are some of the most common pros and cons of PayPal.
Perhaps the biggest benefit of doing business with PayPal is that they are a very established and recognised company worldwide. It got its start via a preferred relationship with eBay and has used that exposure to become the global leader in payment processing services. When potential customers visit your online store, a PayPal logo provides comfort and peace of mind.
As far as fees go, PayPal offers two options: a free merchant account or the upgraded Website Payments Pro. Their discount rates and fees are no more than most other vendors; which type of account you select depends largely on the needs of your online business and how many sales you expect to make.
Of course the Payments Pro account offers the most features but even the free merchant account includes some nifty extras such as the ability to create and send professional looking invoices and view transaction reports based on a number of variables.
Receiving prompt and relevant customer support from PayPal can be a challenge. The company prefers all communications to be sent online via a form, meaning that a response to your concerns is not immediate. This can be quite frustrating, especially if you are dealing with a customer disgruntled due to some fault of PayPal.
PayPal can lock out your account for up to six months if they feel you, as the merchant, have performed any questionable actions. There is little that can be done to refute this assessment, particularly since communication is often limited to the online form. There is a phone number available on the PayPal website but it can be quite difficult to actually reach a customer service representative and even then your side of the story is not guaranteed to be heard or considered.
Some customers have reported that they could not even get an explanation of the reason the company locked out their account, only that they had to wait for the account to be reviewed before their funds could be released.
PayPal also charges a rather hefty discount rate, usually about 4%, for accepting merchant payments that are not funded through a credit card. This is certainly something an online business needs to take into account when setting pricing levels on their website; every transaction will be subject to at least a 4% fee and more if it is processed as a credit card.
Some merchants look to speak with PayPal before a major product launch in order to thwart frozen accounts and some will find more than one payment processor so that they have options on a per scenario basis.
While we have gone through some of the pros and cons of PayPal, remember that no company is perfect. The important to thing to remember about PayPal is that it is universally recognised and widely trusted.
There are other options for processing credit and debit cards through your e-commerce business, but none of them are guaranteed to provide better or more comprehensive service. Compare companies and make an educated decision based on rate and fee schedules as well as services provided.