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Is PayPal a Good Idea for Your Business?

PayPal is one of the more popular ways to complete transactions online today. The company has now been in operation for more than a decade, successfully establishing itself as reputable and reliable.

While PayPal is a good idea for the large majority of e-commerce websites today, it isn’t right for every business. We’ll give you the pros and cons of the PayPal system to help you decide if PayPal is the best choice for you.

Perception of PayPal

For some merchants, your target market might determine how successful PayPal will be for your business. Target markets that migrate into a slightly older demographic might be more suspicious of this payment system and less likely to use it. Those in the “Under 35” category generally see PayPal as a convenient system that they already use for a variety of transactions.

If your products tend to cater to an older crowd, you may not get much use out of your PayPal account, while merchandise that attracts younger generations might lose sales without the PayPal option.

Pros of PayPal

There are many benefits to PayPal, as opposed to a merchant account for your transactions. These benefits include:

  • Quicker approval for a PayPal account than a merchant account, which could take more paperwork and a number of days to complete
  • Fraud protection tools are in place to protect those conducting transactions through PayPal, including confirmation of shipping addresses and verification of accounts
  • PayPal charges transaction fees rather than set-up or monthly fees, so you only pay for what you actually use
  • PayPal can be set up so customers do not have to provide billing and shipping information more than once, making this a convenient solution for your shoppers
  • PayPal is perceived as one of the top payment systems around the world today, instilling consumer confidence in the process

Cons of PayPal

Despite the many advantages PayPal provides, there are some drawbacks as well. Some of the cons of PayPal include:

  • Shoppers must leave your website to pay, which disrupts the continuity of the transaction process
  • Transaction fees may be significantly higher than they would be with a merchant account
  • Consumers and merchants are not protected the same way they are with credit card purchases
  • PayPal is not subject to the same rules and regulations as banks, so disputes over transactions are settled at the discretion of PayPal employees
  • If fraudulent activity is detected on your account, PayPal will freeze your account, even if the customer was responsible for committing the fraud

Most online vendors that have a significant number of sales each month will probably want to have both a merchant and a PayPal account to accommodate the preferences of all their customers. The amount you pay in transaction fees will be much less than the sales you lose because you didn’t offer the payment option your customers wanted. For more information about how to use a PayPal account to your advantage, peruse this PayPal advice thread on our forum.

  • D
  • February 5th, 2011
Yes, PayPal is good for some businesses but as it expands without it you could loose customers as this seems to be the main way of paying on the internet.
  • S
  • February 22nd, 2011
Hi i totally agree with the comment from Dave.
We started with paypal on our website but as we have grown we found people wanting to pay over the phone etc so we opted to have a merchant account with google checkout & Sagepay.
My only qualm with paypal is there resolution centre which tends to favor the customer even if you provide proof of posting etc.
For a new business venture its great!
  • A
    Alberto Del Rio
  • October 25th, 2021
well it has made them felt it's importance as with the new features being introduced in mobile app, now you can have more opportunity to receive and sending money and say thanks. So that is how we leverage this for our assignment writing services business online.

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