Paypal is no Friend to Small Business Owners

by Andre Bell

Published on this site: January 30th, 2006 - See more articles from this month

You already know how frustrating it can be.

Trying to get a merchant account from a bank to operate your online business can be more difficult than trying to change dirt to gold.

When PayPal came on the scene, many people began to say this is the end of the greedy banks that make it difficult to do business online.

Small merchants everywhere began to speak of PayPal as a long-term relationship that can never be broken.

But is that true?

Hardly.

Once you begin to ship a high volume of products through PayPal, you will quickly find that there are a ton of scumbags (dishonest buyers) out there who will buy things online and then claim they never got it.

Or worse, you may ship the product with adult signature required as proof of delivery and PayPal will still charge it back to your account when the 'scumbag' claims it was an unauthorized charge.

It doesn't matter that he signed for the package or that you have an adult signature and a valid matching shipping address to prove your delivery. PayPal may still make you eat the charge.

And if that isn't frustrating enough, PayPal won't even go to bat for you against the credit card company to prove your claim. They just deduct money from your account and make you have to deal with it. Case closed.

This means the scum bag buyer will get and keep your product and you will have to eat the charge back and eat the loss of whatever you shipped (hopefully it wasn't hundreds or thousands of dollars worth of stuff). Oh, don't think you're going to get your stuff back. The scumbag operates like this regularly. He got what he wanted and there's no way he's going to return it to you.

You may think this credit card scam scenario is the same with all merchant accounts.

It isn't.

Many banks that offer credit card processing to online merchants are very aware of the online scams people play against merchants.

These banks are more on your side than PayPal ever will be.

If you have signed proof of delivery to an address that matches the credit card info then guess what. You've got a sale.

But if you have PayPal, guess what... you can still lose the product you shipped plus you will have to give a refund.

And if you don't feel jilted enough... you will still have to pay PayPal's processing fees for the "transaction".

If that isn't grounds for "divorcing" a provider, I don't know what is.

Failure to go to bat for you plus merchant fees that are higher than banks charge is why PayPal usually is not the best choice for serious merchants.

What other choices do you have? Here are four tips.

1. Accept checks by mail or by fax.
   
   
2. Accept credit cards through a "real" merchant account.
   
   
3. Make certain absolutely everything you ship is shipped "adult signature required"
   
   
4. Add these words to every package to avoid scams from credit card thieves: "Do Not Forward"

The last tip is important because the thieves will use valid credit cards then have all mail from the victim forwarded to some other address. To protect yourself don't allow your shipping company to forward packages.

Of course, you can never guarantee a scum bag won't rip you off. It's just a matter of time before it happens.

That's why PayPal may make sense as a 'first date' while you get your business off the ground. But for my money, I'd never recommend PayPal as a long-term companion.

At least not until she mends her ways.

Andre Bell is an author, copywriter, and marketing advisor. Andre is committed to helping entrepreneurs like himself discover what it takes to maximize profits from every marketing communication and effort. Visit his official http://www.AndreBell.com Copywriting and Marketing Strategy site for fresh marketing tips and resources.