Is PayPal hurting our business?

[BrightSparke]

October 27th, '05

Dear All:

During a conversation last night, a friend (who also sells her service via the Internet) described the (positive) difference she had experienced since moving from PayPal to Worldpay.

This chance remark really made me think. Our software has enjoyed good sales since our launch in April of this year, but have we been losing customers (without know it!!!) because PayPal is not - or is no longer - seen as a quality payment provider?

I realise that - initially - the problem with PayPal was that you had to be a member to purchase, but they changed this some time back and we have emphasised this aspect on our site: www.personal-software.com.

This is our first initiative on the Internet and we'd appreciate any comments or thoughts from others with more experience in this field.

Thanks & Regards, Peter

[Dread]

Well from what i gather, the general opinion is that if you use paypal then your not a serious business.

The idea solution would be to offer worldpay or another payment gateway (transparent would be better) and paypal very much as a secondary alternative.

[c2webdesign]

Feelings constantly fluctuate about this question - PayPal or WorldPay, or generally is PayPal hurting my business.

It's a two edged sword really. For example Napster currently allow you to purchase your tracks via PayPal. I find this very useful. I trust the source because Napster is a recognised brand.

On the other hand if a small business used PayPal, I may possibly think twice (particuarly if it was my first purchase). PayPal is cheap to set up and an easy option - but because of this people's opinions were that if a company was cutting corners with their own checkout system - what kind of corners are they cutting with my product/service?

I've taken a look at your site and can see they don't find out about needing to use PayPal until you have entered your details. Do you find many people reaching this point and abandoning the purchase? If not you may find this way or collecting funds works for you.

I have to admit actually looking through your site, I wouldn't be put off by the fact you used PayPal rather than WorldPay or merchant bank.

Hope this helps,
Dean
C2 Web Design
http://www.c2webdesign.co.uk

Web Design | Online Marketing | Search Engine Optimisation

[multilingual]

For us, it is simply not viable to set up an expensive bespoke credit card facility as only about 2% of our customers pay by card.

For this reason we use the Paypal 'Buy Now' buttons which basically means they go through a secure page on our site first, check that all their details are ok, and then click on a Visa/Mastercard sign to proceed.

Only then are they taken to a Paypal page which we can customise (to some extent) to look like our own site.

I have to say that for us it works well and most of the clients using that system keep coming back. We have never had anyone cancel an order or question our integrity because of using Paypal.

JB

[Eagle]

Offer as many payment options as you can. Simple. :)

[Richard Conyard]

I buy occassionally across the Internet, but am frustrated by paypal only sites.

I don't have a paypal account because of their conveluted sign up procedure which means if you don't have online banking you're screwed.

[Agri-Hire]

You don't have to be a member to pay by paypal and having an online bank isn't necessary either.

[Ozzy]

THere is more negative than positive thoughts on PayPal as a payment provider, and because of this I would strongly suggest using a recognised provider as a primary solution and PayPal as a second solution.
It doesnt have to be Worldpay, as there is many others such as SecPay, NoChex, etc.

[gcmorris]

Hello,

I have a web business that sells accounting and POS software. Initially I used PayPal only for receipt of payments. This was the cheapest and easiest way to start. I also make sales through portal web sites, where they receive the payment and take a cut before paying the balance to Ezi Solution.

I decided that I needed the credibility and flexibility of receiving payment by credit card directly. I chose Barclays ePDQ instead of World Pay. Ezi Solution had to become a credit card merchant to receive payment from ePDQ. Becoming a merchant is complex and costly (£300 ?). This is not a requirement for some credit card processors, but I believe that this does give more credibility.

A major difference between PayPal and Credit Card payment is that the buyer pays nothing for a Credit Card purchase, and the merchant pays around 5%. In the case of PayPal, there is a charge of around 2% for both the buyer and the retailer. Payments by PayPal are received immediately. Payments by Credit Card take 45 days to be received!

I decided to run the two payment systems in parallel. This was twice as much work, but I thought it would be worthwhile. I expected a high percentage of sales through Credit Card, and a low percentage through PayPal. This has not happened. Some customers prefer one, and some the other. The split is roughtly 50 / 50, but does change a lot.

Ezi Solution sells internationally. Most credit card systems in the UK are pound sterling only, with other currencies at significant cost (same price again?). PayPal can receive payments in most major currencies for no extra cost.

On balance, I suggest that you will increase sales by receiving payments by credit card, but if possible, I suggest that you do both. The payment terms for many Credit Card processors are very high and slow. PayPal is cheaper and a lot more efficient. There are alternatives where you receive payments through third party companies. These will be attractive to most small businesses.

A side benefit of PayPal is many suppliers will take payments by PayPal. Payments to suppliers by PayPal costs little and is immediate. This is quicker and easier than bank transfers / cheques.


Graham Morris
www.ezisolution.co.uk

[weddingcrafter]

I started out with PayPal only as it was easy to set up, then set up a merchant facility with my bank using PROTX (btw I get card payments from protx in 2-3 working days, paypal takes about 7 days for withdrawn funds to hit the bank account).

My plan was to phase out PayPal once the credit card facility was up and running, but have found that plenty of customers like using PayPal. I get about 20% of payments this way.

I also offer nochex but have only ever had one customer use it.......

I have noticed a couple of established ecommerce sites ADDING PayPal and believe that it will become more popular.

My recommendation would be to offer both!

[DuaneJackson]

IMHO, Dread summed the situation up perfectly in his response.

The answer to the question in the topic title is 'Yes'.

[Fusionhost Group]

I believe it is, I dont want to use paypal but it might be the only option because getting Cardnet though Lloyds is so expensive.

[babybiz]

I get a lot of customers using paypal but I also have my highest number of abandoned carts this way too. Not sure why because I've only had one customer through worldpay not complete but several via paypal. I'd considered removing it as an option but not sure yet so it's still there.

[thegateways]

I guess their service and support has been affected from recent past perhaps due to their alliance with verisign etc. Most of the people are facing different problem with them, I've seen posts on different forums as well with heading "recommendation for Paypal alternative". Considering the coming christmas people are probably shifting to other payment processor like 2CO, worldpay, chronopay etc. On my personal experience a small professional company is better handle the service and support and offer you affordable charges as they have to grow rather than the big player those who sucks their customers eventually.

[paulcreedy]

I offer both Paypal and Worldpay on my site for clients to pay invoices.

Most use Paypal for some reason.

[Toon]

I offer both Paypal and Worldpay on my site for clients to pay invoices.

Most use Paypal for some reason.

I echo this.

[paulcreedy]

So much so that I've thought about packing in with Worldpay and just keeping Paypal. However Worldpay does give extra features such as being able to take payments over the phone, and they are far easier to deal with should they be queries.