What You Need to Know about Using PayPal for Your Business



If you plan to sell any of your products or services via the Internet or mobile device, you need to decide upon a way to accept customers’ card payments while remaining protected from fraudulent or unauthorized access to your account. PayPal is one of the most popular options, and it satisfies both of these criteria. But does it offer everything you need for you and your business?

What Does PayPal Offer?

In recent years, PayPal has become a household word in the realm of retail payment processing, used by small and some large companies as well as sole proprietors. What attracts so many companies and entrepreneurs to PayPal, and are these features all they’re really cracked up to be?

  • Set-up. If you have done any online shopping as a consumer, chances are good that you already have a PayPal account. All you need to do to begin using it for your business is to upgrade your personal account to a business account. Doing so is free; however, as a PayPal user you will pay fees for every credit or debit card transaction you make. These fees are often much higher than using a standard POS system. Over time this can add up to a lot of extra money you weren’t planning to spend.
  • Flexibility. PayPal allows you to accept payments from most major credit and debit cards as well as via customers’ PayPal accounts. But this is often where the flexibility ends. Especially if you are a retail business. You can gain the same flexibility and more using in-store and online processing accounts from other merchant services providers.
  • Different accounts for different needs. If you are more of a casual seller, a freelancer or a contractor, PayPal offers a premier account that lets you make and receive payments under your own personal name. If your company is larger and you instead want to operate under your business, corporate or group name, PayPal offers you the option to sign up for a business account. This can get tricky though as you have to remember passwords and emails for each of the accounts you set up.
  • Integrated solution. As a business owner, you have enough to do without wasting time scrambling around to find all of the different components you need to accept and process customer payments. This is where an integrated solution that combines a merchant account with a payment gateway is beneficial. A good merchant services provider can secure all customer data and handle all of the time-consuming interactions with banks and merchants that can bog you down and even make you vulnerable to data breaches.
  • Mobile solutions. Yes, there’s an app for that, and PayPal provides it. Thanks to their Android and iPhone solutions and PayPal Here reader, customers can safely make mobile purchases on their phones or tablets. But most merchant services companies can provide similar solutions with mobile e-readers or terminals to take your business on the go.

The Downside of PayPal

As you can see, PayPal brings many benefits to the table, but all of those benefits don’t end up being all that special once you really do your research. In addition to the negatives mentioned above, there are additional downsides to PayPal to be aware of before making it a part of your retail payment processing solutions.

  • Costs. While it is true that it costs nothing to sign up for PayPal and there aren’t maintenance or membership charges, you are required to pay them a fixed percentage of your sales price plus a small per-sale fee. For example, a sale made in the U.S. could carry with it a 2.9 percent surcharge and an additional $0.30 fee. International sales are even pricier. Furthermore, you will need to buy additional PayPal services should you wish to let your customers make payments on your website.
  • Frozen accounts. Ask around about PayPal and it won’t be long before some merchants tell you a horror story about their account being inexplicably frozen, leading to long delays before they could get their hands on their own money. If your account is flagged as suspicious, it can be frozen and your funds held without much of an explanation.
  • Doesn’t protect against unscrupulous customers. Although PayPal does a great job shielding you from data breaches and identity theft, the same cannot be said for its ability to keep you from being harmed by nasty buyers. The sad truth is that there are malicious customers who want nothing more than to cheat you. They might lie and say that you never sent the product they ordered, or they could claim that it was damaged or was not the same as was advertised. Whatever the case might be, PayPal does little or nothing to help you resolve these types of disputes. In the end, you might just have to refund the customer’s money even though you know very well that you were not at fault.

Should you use PayPal as your merchant account and payment gateway? Only you can make that decision. Weigh all of the pros and cons of PayPal, and look closely at other merchant account providers to see where the real benefits are.