Accepting PayPal at Your Business
PayPal was founded to serve as an online money transfer service to replace traditional paper checks and money orders. While its initial success and implementation was highly tied to eBay sales, PayPal has since become a publicly traded independent company for broader online payments.
The main advantage that PayPal offers is utilizing customer information that is verified in their user profile for anti fraud and security measures. This means that customers can sign into their PayPal profile (as a third party) while making payments on a separate eCommerce site without having to enter private information onto that website’s payment portal.
This is especially attractive to consumers in light of numerous data breaches of retail companies, banks, and other financial institutions over the years. In other words, it allows customers to put their credit card and personal information on fewer websites while still enabling them to make more purchases. PayPal now has 426 million active users in 200 different countries, and they offer three different types of checkout options for businesses.
The Pros of Accepting PayPal
Streamlined Security With PayPal Accounts
PayPal checks and verifies sign-ins for its users before they make a purchase on your website. Therefore once the person is signed in using their browser (now increasingly their app), it is exceptionally easy and fast to make a purchase without having to enter any personal or credit card information. This is likely to increase conversion rates due to the added convenience and security of the payment process.
Low Fees For In-Person Transactions
PayPal’s in-person QR code-based payment processing offers very competitive rates, charging just $1.9% + $0.10 per transaction. This could work great for someone that is using their phone or tablet for a mobile business such as handmade crafts or barber services. However, in order to utilize any real customer purchasing or inventory data, you must use PayPal’s POS system, Zettle. This adds to the cost, however, and doesn’t provide a powerful point of sale solution.
Using PayPal as a Gateway
The fees that PayPal charges as an eCommerce credit card gateway service are similar or even lower than most payment processing fees. Thus, the main advantage it offers is allowing for consumers who use PayPal to use this option at your store. Open your business to as many customer purchase options as possible by adding PayPal as an additional option to your payment process.
PayPal Allows Cryptocurrency Payments
PayPal offers the option of paying for purchases in cryptocurrency, which can attract another segment of consumers. To learn more specifics check out this article: eCommerce and Cryptocurrency: Helping SMBs Navigate a Changing Payment Landscape.
Buy Now Pay Later Option
PayPal has a built in option for Buy Now Pay Later, which is proving to be an increasingly popular option for both in-person and eCommerce purchases amongst millennial and Gen Z shoppers, especially for more expensive goods.
The Cons to Accepting PayPal
As with any payment company, using PayPal has some cons to think about before using their service.
PayPal’s Transaction Limits
PayPal does have a per transaction limit of $10,000, but this can be worked around by contacting them and providing more advanced verification information.
Account Can Be Frozen
PayPal can be quick to freeze accounts that it considers potentially shady or fraudulent. But this can be triggered by something like disgruntled customers disputing charges. Be aware of the potential for your account to be frozen before committing fully to PayPal as your processor.
Subpar Customer Service
Many commenters online have mentioned that PayPal’s customer service is not the best. If you have a problem with your account, you might be locked out of making sales if PayPal is your only payment method.
Below is a price comparison chart for PayPal’s transaction fees across all of the services they offer:
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PayPal is a great option to add to eCommerce and some brick and mortar businesses. It has an abundance of users, enhanced security benefits, streamlined checkout process, and very competitive processing fees for certain purchases. As such it is a great tool to add to your website and/or in-person payment options. However, be aware that PayPal can lock you out or freeze your account if a security warning is triggered. Rectifying this through customer service can potentially be less than immediate. Therefore its best practice to keep other payment options open to maintain your sales flow.
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