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Paypal: The Good, The Bad, And The Ridiculous
WHAT YOU GET
Paypal in essence is a good idea. People want to use the internet to it's full potential as a business and so if you are selling online you need a cheap and easy way to get paid online. Paypal is just that, cheap and easy. You do need a credit card to sign up and have to verify your info and connect a bank account to the Paypal account to withdraw money but it serves it's purpose.
The majority of the selling being done online is through Ebay, (there are other alternatives which I have posted articles on previously) and Paypal works very well with Ebay as it is owned by Ebay. It also works across the web in many different sites, platforms, etc. Suffice to say you can embed paypal buttons just about anywhere so people can pay you for items services and more. I won't get into every detail of Paypal's features as most people reading this probably already have a paypal account but if you don't the next section is more of what you need to hear.
THE PROBLEM WITH PAYPAL IS...
The 'problems,' and I do mean to emphasize, 'problems,' is:
1) It is owned by Ebay. If you get paid through Paypal and there is a dispute between you and the platform on which you sell (aka Ebay) who wins the dispute? You? Not really Paypal is owned by Ebay and so will yield to whatever Ebay says vetoing any selling rights they may have given you whenever they feel like it.
2) Paypal isn't a bank. I'll give you a scenario. If your bank decided to at random remove payments from your bank account putting money 'onhold' until you showed them proof of what the payment was for do you think that would be ok? Paypal does this, without reason, simply as they say to keep Ebay and Paypal a safe market place to consumers. But it happens all the time and at random. Paypal is a private corporation and as such doesn't have to follow legislation that banks must follow by law.
3) Paypal used to be an option to pay on Ebay but you could also sell and be paid by moneyorder, cashiers check and other methods. Now you are forced to use Paypal on Ebay. You may take no other payment except credit card through a merchant account (which most people do not have and which is much more expensive than paypal).
4) If you ship items to countries that do not use electronic scans that post online in their postal services and someone enters a dispute saying they didn't receive their item you will lose your money. Even if you file a dispute with your postal service and they confirm with that countries postal service that it was delivered and you receive documentation Paypal will not accept documentation and will not bother to contact the customer. They will allow the customer to keep their items and the money, they will only accept the online electronic stamp.
There are many more issue and I expect this list to grow so check back often.
PERSONAL EXPERIENCES WITH EBAY
In this case I will keep it to one big issue I had with them. Keep in mind I have been selling on Ebay and elsewhere using Paypal for 9 years so there is a lot of bad to write about I simply don't want this article to be so long that no one will read it. But please read on.
I once sold an order of items totaling approximately $400. They were paid for through paypal and I sent them to the confirmed address in Paypal. I obtained a tracking number when I posted the items. A few weeks later the customer entered a dispute in paypal saying he didn't receive his items. As he lived in eastern europe I was not surprised. Most items shipping surface to Europe from North America by surface take several weeks.
He left the dispute open for awhile and then escalated it to a claim saying he still never received it. I entered the tracking number which showed it was shipped. After a couple more weeks Paypal returned his money to him.
I filed a dispute with Canada Post to recover the money as I had insurance on the package. They took a few weeks and eventually were able to get answers from the Poland postal service. They said that they had contacted the customer directly and he advised them that he did receive his items. I attempted to email him and of course got no response. Canada Post sent me 3 pages of documentation sent from the Poland postal service that was stamped and had signatures guaranteeing me that it was delivered.
I contacted Paypal and advised them that I had documentation proving that the customer did receive the items. It contained stamps, signatures and numbers where they could verify if they needed. Paypal would not accept anything less than the online tracking showing delivered. The only way that could happen is if at the time of delivery an electronic signature had been taken from the customer upon delivery. But Poland had no such devices at the time and so that couldn't have happened anyway. So as paypal was unwilling to accept documentation I had to lose $400 even after all my due diligence.
Below is a video that describes another situation that outlines a serious problem with Paypal and ultimately Ebay as well.