Thursday, November 25, 2010

The Problem With Paypal

Many small businesses use PayPal because they are not familiar with a traditional merchant account. PayPal may be a cheaper option for someone that only processes $500 a month, since there are no monthly fees. PayPal makes money on their high percentage rates which range from 3-4% depending on the credit card type. One of the major issues with Papypal is their lack of real customer service and thier ability to just hold on to your money with little reason. Take this email I recently recieved:

Your payments will be held in a pending balance
We're writing to let you know about a change to your PayPal account.
Starting Nov/23/2010, money from payments you receive will be placed in a pending balance for up to 21days. By doing this, we're making sure that there's enough money in your account to cover potential refunds or claims.
Even though you can't access the money right away, please ship orders quickly and communicate with your customers. After 21 days, you can withdraw money from each payment as long as the customer hasn't filed a dispute, chargeback, claim, return, or reversal.
The money may be available sooner if:
  1. We can confirm that the item was delivered.
  2. Your buyer leaves positive feedback. (Applies only to eBay items)
This change isn't necessarily permanent. We'll review your account every 35 days and re-evaluate if we should continue to hold your payments. If we decide to stop holding payments, we'll email you to let you know.
Why are my payments being held?
We reviewed your account and determined that there's a relatively higher than average risk of future transaction issues (such as claims, or chargebacks, or payment reversals). We understand that it may be inconvenient to have your payments temporarily held but please know that we didn't make this decision lightly.
Before deciding to hold payments, we consider many factors. These factors include account and transaction activity, the rate of customer disputes, the type of business a seller runs, average delivery timeframes, customer satisfaction, performance and history.

Many people after seeing letters like these,  will see the light and switch to a traditional merchant service provider. Try to find the phone number to PayPal and you"ll begin to understand why it's so hard to find.

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