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PayPal: Welcome to Hell

Phil Holt
Written by
Phil Holt
20th November

Over the past few years I've had a love/hate relationship with PayPal. On the one hand it can be the quickest, easiest way to get a client up and running with taking payments on their website. On the other hand it can result in misery further down the line when the limitations and frustrations become all too apparent.

What we have learned over the past few years is that PayPal can be a law unto itself and if things go wrong or you need help and support you can wait for literally weeks before things get resolved. When it's good, it's very good, but when it goes bad...

If your business takes small value payments and the risk of charge-backs is low then PayPal can be an attractive option. You can be up and running in no time at all and you can probably enjoy a trouble-free relationship. If on the other hand you sell high value goods or sell goods or services that could result in a high number of refunds (event tickets for instance, should the event not go ahead) then PayPal could have a shock in store for you.

We had a client last year that suffered a great deal because of PayPal's limit on transaction values where the customer is purchasing goods over a £1000. In the UK this is the maximum transaction value unless the customer has a PayPal account or unless your client has a PayPal Pro Business account (in which case the limit rises to £10k). This resulted in many transactions failing at the point of checkout - a surprise to us and our client. We have now wisely moved them over to Sage Pay.

Perhaps more shocking is when PayPal policy results in them holding on to your funds for an unreasonable amount of time and starving your business of much needed working capital. One particular case recently resulted in the Open Source Scotland event having to be cancelled thanks to PayPal freezing the funds from ticket purchases, which in turn meant that the event organisers were unable to use ticket sales revenue to fund critical operational costs. As a result a potentially exciting conference had to be cancelled and the organiser now faces a great deal of personal debt and anxiety as he attempts to repay debts out of his own pocket.

Of course there are many clients who receive a great service from PayPal, but my advice if you're thinking of using this for your own payment processing is that you go very carefully and consider the other options out there. Sometimes easiest isn't always best.

If you've had a good or bad experience then please post a comment - it will help others make a more informed decision. 

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