Should I accept paypal for B2C? Is it worth the account freezes?

**wallstreet** · Jun 12th, 2011, 03:22 PM

I've heard a lot of terrible things regarding using paypal, especially for high volume sellers.

However, there is no denying that people love to use paypal because it's fast and easy. Some even say it's a standard when selling B2C because of the impluse buying possibility. In my last business of selling a 400 USD info package I noticed that about 40% of my sales came via paypal every time. However, there is no way to tell if paypal increases conversions or not because I always offered paypal.

Has anyone ever experimented? Does anyone have an opinion?

**eBayMafia** · Jun 12th, 2011, 06:52 PM

Well, most businesses (B2B) don't want PayPal (mine included) because PayPal simply sides with whoever sent the money and PayPal is weary of any transactions of over $200. Especially when it comes to purchasing stuff in China.

For B2C, I'm a high volume seller on eBay (multiple accounts), Amazon, and my own eCommerce websites, and a couple other selling platforms like Bonanza. On eBay, I have to use a couple PayPal accounts but mostly I use a merchant account along with the rotation of services like CCNow which accept PayPal, and PayFlow Pro which is a gateway along with my actual merchant account.

As I tell my students, accept PayPal until you hit about $9,000 in gross sales, then start looking for an actual merchant and payment gateway quickly. PayPal is great for when you are just starting off, but they are very limiting and offer no personal interaction and no safety or fraud prevention. You can have all of your money frozen at any time, no matter if you call ahead and tell them you expect a surge in sales in the next week. I've had tens of thousands frozen, and all I can do is pursue them legally for a couple months or until they release the funds to me in 6 months while directing my sales to another account.

**wallstreet** · Jun 12th, 2011, 07:13 PM

It just seems like a nightmare Apparent Software blog » Blog Archive » “Is PayPal good for your microISV business?” A short PayPal horror story

**valuegiver** · Jun 12th, 2011, 10:20 PM

No, don't depend on Paypal. Get yourself a payment processor/gateway.

**cashflow3000** · Jun 13th, 2011, 05:33 PM

hey Wallstreet -

PayPal sucks but people (Cs) still love to use it.

Refuse PayPal at your own risk.

I think Google Checkout is a good alternative to PayPal but have only had limited experience with it.

When you use PayPal make sure you take some precautions. Link it to your BUSINESS account not your personal account. (you *do* use an LLC don't you?)

Also, "sweep" the funds frequently.

Depending on the volume you do you may want to clear out your account once a week, once a month, or daily.

That will limit the amount of fund they can freeze and yes you can count on it happening to you at least once.

Have fun, and good luck!

James Hagarty
Dover, DE, USA

**aptohosting** · Jun 15th, 2011, 03:49 PM

Depending on the volume you do you may want to clear out your account once a week, once a month, or daily.

That will limit the amount of fund they can freeze and yes you can count on it happening to you at least once.

This doesn't mean anything, PayPal has no problem dipping into your check/credit account to get money that you owe them.

I have used PayPal & Authorize.net for the last 5 years and never had my account frozen. As long as you don't break their rules you will be fine. Granted they will ALWAYS give the buyer the benefit of the doubt, but the same will happen if you use authorize.net/merchant account. If you sell a product for $400 and the client charges back, there is not much you can do. So don't use paypal if the following applies

1) If you sell shady products
2) You sell high risk/high chargeback products/services
3) You don't follow paypal rules

**cashflow3000** · Jun 15th, 2011, 05:41 PM

My point in sweeping the accounts is this:

PayPal has the greatest control over the funds that you leave in their hands (your PayPal balance).

If you sweep the funds into your bank account, then they reach in to take them out, you can possibly get help from your bank.

If you keep your business funds separate from your personal funds then you are further protected.

For example:

Johnny Customer pays me $500 USD today via PayPal.
I sweep the funds out to my business account.
I sweep the funds out again to my personal account.

At this point, where/how is PayPal going to get that $500 back from me?

Think about it.