Paypal -- AAAARRRGH !!!!!!!!!!!!!

[Silky]

When we set up our website almost two years ago, we used Paypal for speed and ease. It's worked relatively well in the interim although proves unworkable for about 5% of customers who it rejects for no reason.We've had a good year and our Paypal fees have reduced accordingly as we reached the next tier. Everything hunky dory until a month ago our account was blocked. Why? Apparently a review...

Paypal refuse to give us any more information except that they regularly review customers and we're "one of many". Whilst we can still take payment, we cannot access any of the funds in our account and this is now the 5th week !!!!!

Daily phone calls to Paypal get differing stories, the only common theme seems to be that we've been placed in some kind of "review queue" and have only just moved onto someone's in-tray on Friday. We've provided copies of passports, Company House documents, bank account statements showing our liquidity and still no answer.

A search on the internet shows we're definitely not alone on this (the one truth Paypal have told us!), some companies have taken legal action against Paypal for similar actions, indeed this could strangle a business. Unfortunately we get no further than the first line customer DIS-service staff when we ring or write to complain or at least get some explanation.

Having integrated our systems with Paypal this is now a major headache for us and I'm incensed at the bully boy tactics used for no good reason. As a matter of urgency we're looking at incorporating a second if not replacement merchant to our site.

Has anyone experienced the same ?
Does anyone know who to appeal to? (Ombudsman etc?) We've found a site that emails everyone from the CEO downwards to get things moving but it's USA based.

This is the fifth week now of not being able to access our turnover and to say I'm incensed is an understatement !

Silky

 

[Online Trader]

Is Paypal the only payment method you offer on your site?

 

[Silky]

It is , though people can pay with their debit / credit cards and don't have to use a paypal account. Up until now it's worked relatively well and tied in with a subscription service we run (also Paypal).

Fortunately we've good liquidity at the moment so are weathering this "storm" but it's taught us not to keep all our eggs in the one basket, I can't believe how they can simply freeze our account when they haven't even got around to reviewing it !



Silky

 

[Online Trader]

It does sound odd this, first thing to do is get another payment processor on board such as Sagepay etc, then at least you can ditch Paypal if you wish to

I can fully understand your frustration and I would be throwing hairdryers around if it was me

I have to say we have never had any major problems with Paypal but they do appear to be poor when things go wrong as they take an age to sort things out and appear to be a faceless organisation

 

[Scott-Copywriter]

If you're doing well and have good liquidity, then why don't you integrate a professional payment gateway into your website with SSL encryption?

Much more professional, easier and has no Paypal related troubles.

 

[Silky]

I've just browsed another thread on the E-Commerce section on here, and in a comparison of payment processors, someone has complained that Paypal can and do "freeze your account for the most trivial of reasons". That post was made in 2004 - they obviously haven't improved much.

Because we wanted to get our site up and running as quickly as possible last year, Paypal seems the easiest option, and one of the least expensive too. We're at the stage where we could / should look for a merchant account, it just has a large impact on our systems.... (I guess no time is ever the right time to re-programme everything though)

I just can't believe Paypal can act like this with impunity. There have been some articles in the Times about their bully boy tactics on this front, we're obviously one of many. Funny how this doesn't make us feel any better about the situation !

Silky

 

[Online Trader]

The only way to hurt them is to ditch them

 

[aaamusements]

Very worrying... my new sales site will be using Paypal (from necessity, I already hate the company from my experience of using them with Ebay).
I just can't see an alternative to them at the moment, although I hope to be able to offer Google Checkout too.

 

[Robert Wheeler]

Isn't there going to be a point where the UK Government steps in and says "Hang on Paypal, aren't you some kind of money service/bank now? Shouldn't you be subject to some kind of regulation?"

I am consistently amazed that this business appears to have no financial regulation whatsoever.

 

[aaamusements]

Isn't there going to be a point where the UK Government steps in and says "Hang on Paypal, aren't you some kind of money service/bank now? Shouldn't you be subject to some kind of regulation?"

I am consistently amazed that this business appears to have no financial regulation whatsoever.

I believe that in the US they are effectively classed as a bank now.

You are quite right though, in this country they should at least be regulated by the FSA but I am pretty sure they aren't.
Ebay should have been investigated by now for the virtual monopoly that Paypal (an Ebay company) have within the auction site - in many cases sellers are now forced to offer Paypal on certain auction items.

 

[Robert Wheeler]

I believe that in the US they are effectively classed as a bank now.

You are quite right though, in this country they should at least be regulated by the FSA but I am pretty sure they aren't.
Ebay should have been investigated by now for the virtual monopoly that Paypal (an Ebay company) have within the auction site - in many cases sellers are now forced to offer Paypal on certain auction items.

Well, I have been looking at my books this morning and wondering how exactly I should class my Paypal accounts. Does Paypal own my money until I claim it? Should I even declare it? I am pretty sure that if it was a personal account I would have no protection if they went bust.

If a bank suddenly decided to freeze any account just because they wanted to "review" it, even with the nonsensical regulation system we have where there is no defined point of call, one or more of the regulators would come down on them like a tonne of bricks.

Paypal is not a bank, so they must have the money deposited with banks somewhere. They don't offer interest, but they have access to cash reserves far in excess of most banks. Is this why the banks are not opposing them? Are they effectively using Paypal as a proxy to earn interest off of our cash without paying us interest or being regulated? It just amazes me that no bank has offered a competing service, it really does.

 

[aaamusements]

Are they effectively using Paypal as a proxy to earn interest off of our cash without paying us interest?

Yes, they make a fortune doing just that, even before the (fairly steep) fees!

 

[Silky]

A further google of this doesn't reassure me at all....stories of Paypal blocking an account for up to a year (one of many)
http://www.aboutpaypal.org/pay_pal_blocked_account

Does anyone regulate Paypal at all? They're a law unto themselves. I wouldn't mind so much if we'd done something wrong / been struggling / had complaints/ large refunds but none of the above apply. It's simply been classed as "a review"....

Silky

 

[Online Trader]

As already stated if you don't likle what they do then don't use them, you do have a choice

 

[Online Trader]

Silky

Which site are you taking payments through :|

 

[Robert Wheeler]

Yes, they make a fortune doing just that, even before the (fairly steep) fees!

What I mean is that the banks can welcome Paypal as one single client, but in reality, they are acting as a proxy for many millions of customers. Paypal can treat the customers as they like as technically, they do not appear to be regulated as a financial service. However, the bank gets access to the huge reserves of real cash that Paypal holds and can make interest on it without giving any interest to Paypal's clients.

In that way Paypal and Ebay effectively works as a front for the banks to make money off of trade without passing interest for holding the cash to the actual traders or having any expensive regulations to adhere to for these millions of customers. Paypal is happy, the banks are happy, and the traders are penalised.

 

[aaamusements]

As already stated if you don't likle what they do then don't use them, you do have a choice

I was waiting for that comment... it never gets any more helpful, the more I hear it.
People say the same when complaints are made about Ebay, but the fact remains that these companies have a virtual monopoly - there is no realistic competition and that is never a good situation for those of us at the bottom of the chain...

 

[Robert Wheeler]

I was waiting for that comment... it never gets any more helpful, the more I hear it.
People say the same when complaints are made about Ebay, but the fact remains that these companies have a virtual monopoly - there is no realistic competition and that is never a good situation for those of us at the bottom of the chain...

I think Paypal and Ebay exhibits some of the worst of what can happen when a company establishes a monopoly. They start off as very reasonable, and are enough of a market leader (or have enough finance) to use loss leader tactics, underpricing and expensive marketing campaigns to destroy all credible opposition. Then their service goes down, they start imposing counter intuitive rules and fees, and generally become a nightmare. By then the customer has nowhere else to go. The merger of Paypal and Ebay should never have been allowed by monopolies.

Now is it too much of a stretch for the Government to implement a paypal like service through the National Savings bank? What about Northern Rock? Would that not get some liquidity back into the banking system?

 

[Online Trader]

Paypal have loads of competition

 

[Online Trader]

. The merger of Paypal and Ebay should never have been allowed by monopolies.

Why not, they are 2 completely different business models, one is an auction site and the other a money launderer erm sorry processing thingy :|

 

[Robert Wheeler]

Why not, they are 2 completely different business models, one is an auction site and the other a money launderer erm sorry processing thingy :|

The leader in online auctions, Ebay merged with the leader in online payments for customers (particularly domestic customers), Paypal, who were also the main payment method for their own site. So now they own the complete system from payment methods through to the auction system. Since then they have made it very difficult to use any other payment systems, and as mentioned, certain kinds of sales have to be made via Paypal.

No other payment system gets a chance to compete on the Ebay platform. However, because of Ebay's domination, other payment systems need to be able to handle transactions on Ebay to be considered truly competitive to handle transactions in any part of the online transactions market. By dominating Ebay, Paypal has become the defacto system for non-credit/debit card payments across the internet.

That is uncompetitive and monopolistic.

 

[Kernelpower_Ltd]

Paypal Are Scum , Had A Complete Pile Of Crap Turn Up Off Ebay , Made A Claim And 3 Seconds Later I Got An Email Saying Paypal Only Gives Money Back For Non Receipt, Ie If Its A Bag Of Lard Instead Of A Nice Laptop Then Tuff S**t

 

[Online Trader]

And I bet you wish you had thought of it first

The amount of people that knock eBay/Paypal amazes me, if you don't like it don't use it end of

 

[Robert Wheeler]

And I bet you wish you had thought of it first

The amount of people that knock eBay/Paypal amazes me, if you don't like it don't use it end of

There must be some fundamental problem here...

Who exactly is the competitor for Paypal? I can not think of any other service that offers non-debit/credit card transactions with any customer base. I can't think of any other service like that full stop. Paypal has completely cornered the market! It has a monopolistic and it acts in a monopolistic fashion and it has no perceivable regulation.

If a bank suddenly decided they were going to stop you from making withdrawals for over a month for no reason, would you just say "oh well, I'll go somewhere else?". No, first of all you would have to get your money out, then you would think "hang on, might it not happen at the next place I go?".

 

[Kernelpower_Ltd]

And I bet you wish you had thought of it first

The amount of people that knock eBay/Paypal amazes me, if you don't like it don't use it end of

that is a stupid statement seeing how many people use ebay , you dont really have any choice but to use it , I used to spend all my paypal back on ebay but now i withdraw it to my bank account instead , meaning they dont get fees on both ends of the transaction.

 

[Online Trader]

that is a stupid statement seeing how many people use ebay , you dont really have any choice but to use it , I used to spend all my paypal back on ebay but now i withdraw it to my bank account instead , meaning they dont get fees on both ends of the transaction.

Well we don't use eBay to sell anymore so why does everybody have to use it :|

 

[Online Trader]

Anyway back to the OP, hope you ger it sorted soon and as advised look for an alterantive ASAP

As for Robert, I will leave you to argue alone

 

[Robert Wheeler]

Well we don't use eBay to sell anymore so why does everybody have to use it :|

Because for some traders the system offers access to their markets which is critical to the prosperity of their business, and for some customers it offers them the ability to find the traders with the products and prices they want.

 

[Silky]

Another call to Paypal ( a daily routine ) and of course it was again pointed out that they can hold our money for up to 180 days if they pretty much feel like it.... Yeah, thanks for that. Surely it would be courteous to at least give us a reason????!!! Anyway, latest telephone voice seemed a little more cooperative than the last 30 and I'm hoping for once, someone will keep their promise and find out what is going on.

In the meantime we're hastily reviewing other options for online payments.

Silky

 

[Naughty Vend]

The use of PayPal by any major business concern online amazes me, they charge for receiving money and for sending money... they have but one small benefit and that being an AMEX / DISCOVER account with the absolute grief of dealing with those guys.

PayPal / EBAY are a victim of their own success, which is fundamentally geared up to what I affectionately call "muppets" or people operating small opportunities from home, any serious business should only offer acceptance of PayPal as a third line for some customers - whilst it's easy to use at the start up stages, to continue using them is not only lazy but a valuable lesson learned for any person in business. Integration of Worldpay into most online systems is relatively simple, which if you have not learned the skills of or are capable of employing someone to perform probably means you shouldn't be working for yourself... take the time and learn the skills.

Summary, do not use Paypal for anything much more than Ebay and to be honest the UK government really need to look at their whole operation, not being able to use alternate credit/debit card payment options for purchase is outrageous... to get goods quickly you do of course. If you have a business get a proper merchant account, apart from anything else you'll save a fortune on debit card transactions...

 

[Silky]

, they charge for receiving money and for sending money... ...

It costs our customers nothing to pay using our shopping cart and our fees have been minimal. In the last 2 years it's worked well for us with few issues and was easy to get up and running, and also integrate with other packages within our business (membership subscriptions, accounts etc)

Please do let me know which online payment processors operate with absolutely no charges, we're looking at adding a second (or replacement) account so I'd be interested if we can find someone who does it all for nought....

Silky

 

[SneakSMS]

they charge for receiving money and for sending money...

What do you get charged for sending money??

 

[Silky]

At last !

After over 30 calls and many emails we finally chanced upon someone who did investigate this for us and the review team got back to us.

Because we've crossed a turnover threshold, Paypal were nervous about the exposure we could represent to their business should things go belly up. This has been amplified by the fact we're in the travel trade - an industry where "products" are often supplied many many months after payment. Although they've admitted we've an exemplary record, they're setting a reserve on our account for their own protection, fortunately we've managed to negotiate this down to something more workable than their first suggestion. (Although we're ambitious, their projected turnover for our company outstripped even our wildest forecasts!)

Why it's taken over a month for them to discuss this and why our account should be blocked in the interim - God only knows and it's left a bad taste. Whatever the case we'll be looking at alternatives - perhaps running two - so we're not left vulnerable like this again.

The Paypal Business Review chappy pointed out they've got the jurisdiction to block our account for up to 180 days if they see fit - a death knoll to many small businesses. He did reassure me it rarely happens, unfortunately after this experience his words rang hollow.

Caveat emptor.....

Silky

 

[jasonnoguchi]

I get this review thing once in a while too but its no longer that frustrating as they usually release my account within a couple of hours of furnishing them with the required info. Very simple and effective, keeps my account safe. I actually appreciate it.

 

[Online Trader]

Glad you got it sorted but still think you need to move away from them ASAP

 

[Silky]

I do understand their take on this, but just wish we'd been kept in the loop - the communication has been non existant, all we had on our site was a note that it was limited due to possible irregular or fraudulent activity, but everyone we spoke to told us there had been neither... We supplied every bit of documentation over 4 weeks ago and still nought.

Anyway, at least I can cross the daily Paypal "chat" off my list now, I was becoming quite a regular !

Silky

 

[quikshop]

Well we don't use eBay to sell anymore so why does everybody have to use it :|

Its not such a daft comment as it might first appear.

Despite some concerns about the impact to our business we dropped PayPal as a payment choice months ago from our martial arts shop and business has continued to grow at a healthy rate. We have no more problems with customers buying and then disputing their own payment after 30 minutes for whatever contrived reason.

Ebay is not compulsory. Its just easy and lazy to keep using it rather than look at other ways to sell on-line, especially for those that constantly moan about how expensive it has become and how bizarre the frequent rule-changes are.

With the vast number of cheap and cheerful Internet shop services around and dozens of very good free to use open source shop software options AND easier ways to market your shop to your friends and strangers through twitter, facebook etc there are no excuses for failing to find an alternative.

But, if you want to keep selling stuff at 5% margins to be competitive with traders importing counterfeit products then stick with eBay

 

[no118.co.uk]

Hi OP

I was going to use PayPal, but I looked for complaints about the company. Within thie T&C's it does state that they can suspend an account and they can hold your money for upto 180 days.

How they call themselves PayPal is beyond me. They dont act like pals, infact they just cheese people off. I would never use them for payment processing.

I hope you get it sorted out

The Dragons

 

[Online Trader]

I do understand their take on this, but just wish we'd been kept in the loop - the communication has been non existant, all we had on our site was a note that it was limited due to possible irregular or fraudulent activity, but everyone we spoke to told us there had been neither... We supplied every bit of documentation over 4 weeks ago and still nought.

Anyway, at least I can cross the daily Paypal "chat" off my list now, I was becoming quite a regular !

Silky

If you move to a normal processor all of this hassle will go away and you will have the added benefit of the payment options looking far more professional than Paypal..

 

[Call Assistant UK]

We opted to go for paypal for the same reason as most. It is cheap to set up and they do offer a fairly reasonable service.

We mainly use them for their virtual terminal to process payments over the phone, but we do suffer horrendous rates and they place a 60 day reserve on 50% of our turnover.

This was fine when the business was small and our overheads weren't great, but now the business is growing, we simply can't allow for them to retain 50% of our funds.

They are not willing to discuss or negotiate so we are moving.

It was easy to set it up, didn't need a business plan, 3 years predicated sales and a balance sheet, which most merchant accounts seem to require these days, but thats the route we are going to have to take.