PayPal is an extremely popular tool that allows small business owners to be able to accept credit card payments on their web site. Their payment processing service has a much smaller entry price point than setting up a full-fledged shopping cart and establishing a merchant account with your bank. If you’re only selling occasionally, or selling only low cost items it is often one of the most cost effective ways to set up an e-commerce web site and allow your customers to pay online using a credit card.
How it works & some history
Just to explain… Originally, PayPal was a way to send and receive payments by linking one’s bank account to one’s PayPal account and paying using PayPal itself. This would be an alternative to using a credit card. This service is still offered and is touted by PayPal as a way to “Pay without revealing your credit card or bank information.”
However, what I described above, is using PayPal’s merchant services as a way to accept credit card payments on one’s web site. To do this, the customer/buyer does not need to give any banking information to PayPal. The web site owner sets up a PayPal account to be able to generate the code for the “buy now” type of buttons and to be able to receive payments from PayPal. Instead of setting up a merchant account (a type of bank account that receives credit card payments), the owner has PayPal process the transactions and then a standard check is received from PayPal.
How PayPal’s brand can help you
PayPal has been around and it has strong brand recognition. If someone is coming to your site, and they know little or nothing about you, using the PayPal name can help them feel comfortable about entering credit card information. During the payment process, the user is actually transferred to the PayPal servers during the financial transaction and then sent back to the host site at the end.
Confusion prevails and a negative reputation can affect your own image
Because PayPal established its brand with their PayPal account service, there are many people who still don’t understand that PayPal is now in the business of doing fairly straight forward credit card processing. These original PayPal accounts have much different regulations than a credit card account and unfortunately, PayPal has had a bad history with freezing accounts and blocking payments. There are many people who have a strong dislike for PayPal based on using it in this way. You may want to check out: PayPalwarning.com; or PayPalSucks.com to get an idea. Whereas PayPal started as a way to protect buyers from giving their financial information to unknown vendors, some users now have a distrust of giving their financial data to PayPal itself.
According to PayPal’s site, users “can pay with their credit/debit card (Visa, MasterCard, American Express, and Discover) — all without having a PayPal account.” So this shouldn’t be an issue, but this is where reputation (mostly negative) & branding lives strong in consumers’ memory.
I don’t have a history of problems with PayPal, and I’ve never set-up a traditional account with them. I have, however, entered my credit card information on several sites who use PayPal for their processing.
Recently, I wanted to buy a rain barrel from my local water district, and they were using the PayPal credit card processing. I went through the check-out and was asked to enter my email address. Once I entered that email, it said I had a PayPal account linked to that address and I needed to login using that. But when I tried to login, I was asked my password, which I didn’t know. I tried to start over and leave the email spot blank, but that was not an option. I had to enter an email address, and every time I was forced to use my PayPal login which I didn’t know.
So, I used the link for them to help me re-set my password. I waited for the email to come, but ran out of time before I was able to complete the transaction. About a week later, I realized that I still have “Buy rain barrel” on my to-do list. I return to the site and as soon as I see the PayPal logo pop up I roll my eyes because I remember why I couldn’t complete the order the first time.
I search my junk mail folder for PayPal’s email. It is there, but now the link has expired. So I have to go through the whole process again, and again wait for the email to reset the password.
In this case, I was pretty tied to getting the rain barrel from this particular vendor. But if I weren’t, I probably would have found someone else to deal with. It seems that while you don’t have to have a full-fledged PayPal account (linked to a banking account), you are required to continue using a PayPal member account to use their service.
The bottom line
The bottom line is that in any large group you will find PayPal haters. Whether payments were delayed by PayPal years ago while trying to complete an E-Bay transaction, or they are just a frustrated user, many people do not like them. Therefore, you need to open your eyes to the pros and cons of the partnership. At this time, it is still a low-cost way to create an e-commerce web site & it is a well-recognized name. Just realize that much of that name recognition is of the negative variety.
What’s your opinion of PayPal?