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EcommerceBytes-Update, Number 282 - March 06, 2011 - ISSN 1528-6703     6 of 9

Sellers Choice Online Payment Ratings: PayPal


By Ina & David Steiner
EcommerceBytes.com

March 06, 2011
 



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In February 2011, AuctionBytes surveyed readers and asked them to rate the online payment services they had experience using. We asked them to rate each service on a 10-point scale in four areas: fee structure; dispute resolution process; account holds, rolling reserves and restrictions; and popularity among customers (buyers). We also asked them to indicate how likely they were to recommend the service to a friend or colleague. Nearly 1,000 online sellers responded. The introduction to the Sellers Choice - Online Payments ratings are found here. It contains a summary of the overall ratings along with links to individual results for each of the six online payment services included in the survey.

Fee Structure:

Dispute Resolution:

Holds, Reserves, Restrictions:

Buyer Popularity:

Would you recommend:

PayPal
Year Established: 2000
More Info


Summary:
PayPal came in fifth place with an overall rating of 4.6. eBay owns PayPal and, with a few exceptions, requires sellers to accept it as a payment method. Its highest rating was for popularity with buyers (7.22), which was the highest of the six services. PayPal's lowest ratings were for "account holds, rolling reserves, restrictions" (3.33) and dispute resolution process (3.45).

PayPal generated the largest number of comments of all six online payment services, and many were critical of its fees and policies. "PayPal's fees are way too high and the dispute process is horrible," said one. Many respondents said PayPal automatically sided with buyers in disputes, making it risky for sellers, and also cited account holds. "PayPal offers no genuine seller protection at all and actually encourages buyers to defraud sellers while they illegally earn interest on held seller funds," said one respondent.

Despite the criticism, a majority of respondents said they used PayPal - many said they had to use it because buyers have adopted it and/or because eBay requires them to accept it.

Reader Comments - The Good, The Bad, The Ugly:
Would switch if there was an alternative.
***
Seller fees are high.
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Too greedy!! Unnecessary long delays in $ transfers with bank. If Google can transfer in 24-48 hours, why take 4-5 days @ Paypal? Earning interest are we?
***
Never personally had any problems with PayPal, but have known of people that did. Most had problem due to lack of guarding their accounts. Not fault of PayPal.
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Other than a few minor skirmishes, I have had very good results working with Paypal. I do believe that sellers will receive better customer service by calling the toll number as opposed to the off sourced 1-800 option made available to sellers. PLUS, I provide myself with better documentation by being willing to pay for the call.
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With PayPal being required by eBay, there's not much else to say. On other sites, international buyers seem to prefer other payment companies.
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I have had no problems with PayPal, but have read so many horror stories that I am always a little nervous using this service. I do not like their 30 cent fee for refunds.
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Paypal is the ultimate rip off. They keep your money every chance they can no matter if you provide evidence that you are right. I hate using it but have to sell on a popular online site.
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A lot of people complain about PayPal, but I'm very happy with them. I only had one issue in the past 8 years and that was resolved quickly.
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Most of my customers use PP. The fees are high but I can offset by using my PP debit card for purchases. I like the ease of setting up a shopping cart for one or two items on a site. Some of my customers do not trust PP. I don't like the way eBay shoves PP down our throats. Personally I've not had a dispute in many years so I can't comment based on experience, but have sure read horror stories about account holds that worry me.
***
PayPal's 21 hold on funds is ridiculous!
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Loathe Paypal!
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I only use it as a seller because I have to on eBay. I don't have a merchant account to process my own payments. I never recommend to sellers, but do for buyers.
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I haven't had much experience with any other services to compare them with. The only real complaint I have is the dispute resolution process. I wish there was an alternative available for Canadian sellers.
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Wouldn't recommend due to account holds and Paypal's ability to block account and hold money hostage.
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Too beholden to eBay - needs to be independent. Also needs to sort out dispute process and treat sellers equally against buyers.
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No seller protection, paypal aka eBay always sides with the buyer even if tracking is available
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PayPal is my Merchant account for my business. I'm lucky not to have disputes on my site. I've had very few disputes, even on eBay but I know many people do. Maybe I'm just lucky I haven't had the problems I read about. Though I don't like them, they are the "Giant Gorilla" in the room and they can't be ignored. In business, you MUST offer PayPal, like it not.
***
PayPal charges "credit card level" fees for "bank to bank" transactions, so it overcharges sellers a lot. The fact that PayPal has made refunds dependent on our vendor eBay decisions is inappropriate. Card companies stay independent from vendors, otherwise they have a vested interest in unjustly rejecting appeals to chargebacks, which is what PayPal does.
***
PayPal's fees in addition to Ebay's fees take a huge bite out of my all my sales. Especially my low dollar sales. PayPal fees alone are very steep. Especially for my low dollar sales.
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Knock on wood; I've had no problems with PayPal. (Began selling on eBay in 1998; my own websites 2005). Most of my customers choose Paypal because they do not have to create an account, but can pay with credit card or bank transfer. Google's fees are less, but PayPal offers more (online shipping which I use)
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PayPal's resolution policy is insensitive and robotic and way out of point - filled only with canned responses that can be served by a computer even via telephone enquiries,
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PayPal's resolution system is the seller is always wrong. Sometimes a seller can get them to reverse their decision to return customer's money but only after putting the seller through a living hell. If there were other viable online options, I would refuse to accept PayPal at all.
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Use it as I have not investigated other payment methods. Have had two very bad experiences as a seller ... no real investigation to my documented shipping to buyer. They just go to the buyer immediately to support unfounded allegations ... seller's beware of PayPal.
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I have used this since 2001 and never had a problem
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While many bugs have been worked out, still room for improvement. It is the most recognizable online payment form. Would like to have some discounts when a large amount of money is pd. for 1 item (fee structure similar to eBay's final value fees but obviously not that expensive
***
Their customer service is non existent. Questions are never readily answered. You receive a scripted reply from a part time untrained associate in another country.
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PayPal's dispute resolution is too one sided in favor of the buyer. Your account can be closed for almost anything it seems and they will hold your funds for 6 months. Very unfair.
***
My buyers seem to prefer Google. As a seller I don't like their ability to place holds on my money. If one of my customers has a problem I will according to my terms of service issue a full refund when it's justified.
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This is the easiest and most popular of the online payment methods. In general, the fee structure makes PayPal an extremely cheap option for accepting credit cards.
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PP is popular with buyers so I continue to offer it as an option. As more people switch to other services I hope to eventually drop PP. Their service and support is not as responsive as they were years ago.
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I don't like the fact that PayPal usually sides with the buyer. I always hold my breath when a buyer does not have a confirmed address. I have not had any holds yet, but feel if I do experience this I will drop them as a payment option. I also wish they would automatically send our money collected straight to our account like Google Checkout does. I have heard some nightmare stories about PayPal but have been pretty lucky dealing with them so far.
***
I have used PayPal for years and have had issue after issue on things that were not relevant to my situation, I have since offered my customers the option to use Moneybookers and have nothing but positive experience with them!!! I love Moneybookers.
***
I don't care for PayPal's draconian policies siding with the customer even when they are in the wrong. PayPal enables fraud in my opinion. I will be glad when Visa/MC gets involved with this type of payment processing. PayPal needs strong competition.
***
PayPal is always on the side of the buyer. To much opportunity for fraud on the part of the buyer. As long as the buyer can provide a tracking number, even if it's for an empty box, they get their money back.
***
It is way to risky to use PayPal. Everytime I make a sale I have to hold my breath for the next 45 days praying I will not be scammed! Only accept PayPal if you can afford to lose what you sell!
***
I haven't had any problems with PayPal in my eCrater sales; only with my eBay sales. I always ship the same or next business day, and ALWAYS use Delivery Confirmation w/USPS. Even so, Buyers will still get anxious on eBay and open a case against me on PayPal. Then, no matter how great a service I've provided, PayPal will still put a hold on my money. The same is true with a Buyer complaining they didn't get what they paid for - in that case, they didn't even read the title of the listing, or they would have known exactly what they were getting. They may really have been a scammer, because right after I shipped, they opened a case on PayPal. So all that money was put on hold...and then they went NARU. At least I FINALLY got my money back. Then there was the case of me sending a pkg of shoes to Denmark. The Buyer told me AFTER I shipped that they were moving and hoped the pkg arrived before they moved. Even though I had proof of shipment, because they never rec'd their pkg (1st pkg USPS has lost from me in 10 years of selling), PayPal stole my money. The whole Buyer Protection scam is such a fraud. They portray it as PayPal will pay for your missing pkg., when they just take the money from the Seller, even if it was the shipper's fault.
***
Paypal has proven itself to have little interest in the seller and their problems with buyers, i.e. buyer always right, seller wrong. The Paypal solicitations for me to allow them further meddling in my finances are not well-received; I want as little involvement with Paypal as I can possibly manage. And they will never be allowed access in any form to my bank account. I harbor a very strong resentment against the policy that I HAVE TO USE Paypal for my eBay transactions. Since eBay has no money invested with me or my inventory, it is NOT NOW nor has it ever been any of eBay's business, nor of Paypal's, how I choose to receive payment for my items. This collusion between the two entities is a flagrant monopoly and should have been stopped from the get-go.
***
I always wish the fees were lower!
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PayPal is the only one with shipping service so it really helps.
***
I have not experienced many disputes or holds with PayPal. The few times I did, they were resolved to my satisfaction in a timely manner.
***
I have at least one buyer every week ask for alternate payment services. Even the buyers are now wanting to have no more to do with eBay and PayPal because of their draconian policies.
***
They charge too much for their service. I have never had them hold funds or restrict my account. I am not pleased with their new "Buyer Protection Plan" being extended outside of their partner eBay as it encourages dishonesty, and they don't have to send my item back any more.
***
As a website owner, I have no real problems with Paypal, although I do think that eBay+Paypal is a bad combination
***
I think PayPal is too arbitrary in how they put holds on accounts. Paypal is my least favorite ways to take money but a few customers ask for it.

Sellers Choice
We thank all readers who took the time to rate the online payment services. The introduction to the Sellers Choice - Online Payments ratings is found here. If you have comments about the survey results or the survey itself, please feel free to post them in the AuctionBytes Blog.

About the author:

Ina and David Steiner are publishers of EcommerceBytes.com and have been writing about ecommerce since 1999.


You may quote up to 50 words of any article on the condition that you attribute the article to EcommerceBytes.com and either link to the original article or to www.EcommerceBytes.com.
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