PayPal's rolling reserve is killing our business!

[barley09]

Dear all;

Firstly thanks to everyone who contributes to this forum to make it the valuable resource it is.

We have worked to build our business over 3 years, and in April got hit with a 30% over 90 days reserve. The reasons behind this are still unclear but relate to account performance. Issues which have now been resolved.

The reserve reached around 25k - we then stopped using PayPal but saw business decline. We took out a cash financing package in order to cope, which is now an ongoing cost.

We're now looking to re-finance again, while PayPal holds over £30k again.

We work on very low margins in online retail , and 30% cripples us.

I have contacted PayP again and again with no result. They will not release anything.

Has anyone any experience of getting around this? I have contacted financial authorities but I don't think they will be able to do anything.

 

[Chris Ashdown]

Sorry cannot help

But never good to get in bad with the devil be it ebay, amazon or paypal

 

[barley09]

Yep, wishing we hadn't. But people seem to expect you to take PP these days.

 

[LMDServicesUK]

Hi Barley09

Any reason why you have not considered migrating to a conventional merchant account and Payment gateway ? PayPal can and do treat businesses like this, as they have the business by the scruff of its neck..

What are you selling out of interest ?

If you are not in a High Risk business and you are trading in reasonable financial health, you should be able to get away from these kind of conditions by using an alternative provider.

You will still be able to accept PayPal but at least your cash flow will be less strangled, as more customers use their Debit and credit cards directly with you..

Hope this helps..

 

[barley09]

Thanks for your responses.

What is the opinion on whether it is essential to offer PayPal on e-commerce sites these days?

We do take a lot of orders via PayPal- maybe 30-40%- but no idea whether these orders wouldn't happen, if PayPal we're not offered?

 

[DPOM]

You could always run both at the same time and then measure which one people use more.

Make your non paypal option more obvious and you may find you get far less people use Paypal in favour of your normal processor so it might lessen the issues for you? If you find very few use Paypal then you can kill it without worrying if it will kill your sales.

 

[barley09]

Thanks. I have taken it off before but it's so hard to measure whether we've actually lost sales, or not.

Has anyone else run an A/B test or similar to see the effects of removing PayPal?

 

[wayzgoose]

I've always looked at it that if someone wants something they will find a card to pay with and that by adding Paypal as an option was to gain a few customers that have money in their Paypal accounts but don't really consider it "real".

 

[beasty]

I use Paypal to pay always for everything, i am in the habit and banging my password in is a clicking pay is a lot less hassle than finding a card and paying then checking the transaction on internet banking etc

plus if something goes wrong with paypal i can see the status all the time

I like paypal, if you did not have it i would not buy from you if i could get it elsewhere

seems you need to offer paypal and something else to fix this problem

 

[LMDServicesUK]

I must presume that you have never had to use PayPal as a seller..

If you had your view would be very different..

 

[beasty]

you presume wrong

 

[LMDServicesUK]

That is excellent if you have never had a difficult buyer through PayPal.

I hope that you never have an issue then with one of your buyers through PayPal then..

However if you have transacted over £ 100K with PayPal it is probably worth your while to investigate switching to a conventional Merchant account and gateway, alongside, it will be a whole lot cheaper than PayPal..

IMHO of course..

 

[greengecko]

Thanks for your responses.

What is the opinion on whether it is essential to offer PayPal on e-commerce sites these days?

We do take a lot of orders via PayPal- maybe 30-40%- but no idea whether these orders wouldn't happen, if PayPal we're not offered?

I have PMed you the contact details of someone at PayPal who may be able to assist you directly.

Regards

 

[kihughes]

How much are you a actually taking through PP? I've just sold An eBay business that used to take £50-60k a year through them and haven't heard of this before.... Mine was unlimited.

 

[LMDServicesUK]

PP operate in some very strange ways as to what they perceive as High Risk Business and will set their settlement terms accordingly.

30 day plus settlement for PayPal Sellers is quote common, couple that with their normally lousy Merchant support to the seller, and their extortionate charges, anyone who is making a success of whatever they are selling ( and is not beholden to eBay for their business) is moving on to better and cheaper service providers.

PP will keep on going as everyone uses them to start off, until they realise there are better providers out there..

Not very surprising really..

Mark

 

[barley09]

It's odd that businesses who haven't previously used PayPal start to use it later - they see it as 'new' and must find that customers expect it?

This is part of what drives our concern to remove PayPal from the store entirely.

 

[LMDServicesUK]

I would agree keeping PayPal on as part of your offering makes sense, just do not make it your only payment choice for your customers..

 

[andygambles]

Used PayPal as a Buyer and a seller. I prefer it in both cases.

We have a rolling 90 day reserve of 20% for a long time. This was painful. However after a year they agreed to remove it. Just had to keep asking.

The key was constant communication with them and maintaining a good account. We get chargebacks but we handle these quickly and efficiently which apparently shows we are reputable. Each chargeback has always been fraud not a service problem.

 

[LMDServicesUK]

Hi Andy

Have you ever considered implementing a conventional Merchant account and g/way alongside your PayPal facility, thus enabling to reduce your acquiring costs considerably in comparison with what I suspect you were / are paying PayPal ?

If you have, I would be really interested to find out why you did not switch away in the end.

It is great that you have a good working relationship with them, but I suspect you are the exception to the rule.

Rgds

Mark

 

[JPMiddleton]

It is great that you have a good working relationship with them, but I suspect you are the exception to the rule.

Rgds

Mark

I've been very happy with PayPal too, so i'm not sure how you can say this so matter-of-fact. I'm in the middle of a 10% rolling reserve probably for another couple of months, but i've got no problem with it. So far we've had little (if any) issues and my relationship with the two people I speak to on a regular basis at PayPal is brilliant.

 

[andygambles]

Hi Andy

Have you ever considered implementing a conventional Merchant account and g/way alongside your PayPal facility, thus enabling to reduce your acquiring costs considerably in comparison with what I suspect you were / are paying PayPal ?

If you have, I would be really interested to find out why you did not switch away in the end.

It is great that you have a good working relationship with them, but I suspect you are the exception to the rule.

Rgds

Mark

Because they all wanted far too much money to accept GBP/EUR/USD and settle to relevant currency accounts. Wanted separate accounts for each currency with variable processing rates.

With PayPal our entire processing total is taken in to account across all currencies. Plus 80%+ of our customers actually pay with a PayPal account. Most likely due to the industry sector. So only 20% of sales would be CC and therefore the rates offered were higher than PayPal are giving.

 

[LMDServicesUK]

Accept your comments , but I can only base my observations on feedback from Merchants I have dealt with, and the sheer number of ex PayPal only merchants that are now using us and other merchant Service Providers in preference to PayPal.

 

[emailblaster]

Use a different payment supplier - we moved away from PayPal about two years ago because of an unrealistic rolling reserve and dreadful support. There are lots of decent alternatives, we went from 30%% RR to 8% by moving supplier

 

[barley09]

Moving this on slightly- does anyone know if it's even legal to hold your money this long? I presume it must be!

 

[LMDServicesUK]

If it is in the T's & C's that the merchant agrees to when taking the service from PayPal yes..

 

[TSUK]

Sorry cannot help

But never good to get in bad with the devil be it ebay, amazon or paypal

We had nothing but trouble with eBaY, Amazon and Paypal. For a short while we did start to use Google Checkout but that is now closing so we moved to 2Checkout.com. Users can use paypal to pay you still and you don't have to have a paypal account.

 

[greengecko]

Moving this on slightly- does anyone know if it's even legal to hold your money this long? I presume it must be!

People have taken PayPal to court over holding the money for 180 days. They have won, but then are unable to ever use PayPal services again, guess you need to weigh that up when considering legal action.

 

[Merchant UK]

I think paypal should just be used as a first time thing for when you're starting up, the minute you get busier and start making more money you need to ditch paypal and go for one of the other more professional payment service providers.

If your busy and value your money and want to keep more of it, then stop using paypal

 

[CardswitcherUK]

Barley09,
Some thoughts on how you offer paypal as an online business. The cheapest way to do it is to have a traditional merchant account as others posters have noted AND to have a paypal payment button on your site. Most gateway providers can do this.

The benefit is you still offer a very popular payment method but your traditional cards are processed by a merchant acquirer. The cost differential in paypal processing a card vs. a merchant acquirer processing a card is significant.

Regards

 

[beasty]

People have taken PayPal to court over holding the money for 180 days. They have won, but then are unable to ever use PayPal services again, guess you need to weigh that up when considering legal action.

Which presumably means goodbye Ebay sales

 

[Merchant UK]

Which presumably means goodbye Ebay sales

I wonder if trading standards have something to say about this where ebay forces sellers to use paypay as a method of payment even though people would rather have the freedom to decide for themselves.

Ebay cannot say that paypal is an integral part of ebay as its a different company from a different country altogether, Ebay just happen to own it.

 

[willkeelham]

I have been hit with the 10% over 90 day rolling reserve, which is not ideal but we can deal with it.

You need to keep calling paypal in order to get it lifted, we managed to get it lifted after 90 days.

 

[Merchant UK]

This is definately one of the main reasons i ditched paypal and started taking payment with Worldpay Zinc, a lot more secure and professional https://www.worldpayzinc.com/worldpay-zinc/

 

[Jessie77]

We only use Paypal as our payment gateway they can pay by Paypal Account or pay by debit or credit never had any problems and out of all the payment gateways very rarely goes down.

 

[LMDServicesUK]

What level of revenue are you taking ?, and how much are you paying in fees to PayPal currently..

If you are trading over £ 600 a month, you should look at a conventional merchant account option and just keep PayPal for the diehard customers, you might find the savings you could achieve to be considerable, and in most cases get far better Customer service as a Seller..

The savings you could make would be considerable, and Paypal's gateway is no more reliable than any other gateway today, except perhaps for S*g*Pay..

Just a suggestion..

Mark

 

[Deleted member 162294]

As a customer I never really bothered using Paypal that much. I think in my lifetime I've used it 4+ times out of the other 100+ purchases.

I'd agree with wayzgoose. If I've come across a website that I like, they are offering an item that I find reasonably priced then I will just fish out my card and tap in the numbers.

 

[ZipserSir]

Yep, wishing we hadn't. But people seem to expect you to take PP these days.

When we gave a choice of PP or credit / debit card - 80% chose PP.

When we dropped PP we didn't lose any sales - work that one out!

 

[LMDServicesUK]

Remember that you can still offer PayPal along side your conventional payment options, for the die-hards that think it is safer ( not..) than putting their card details directly into a website.

The crazy thing is that if you use PayPal you are probably not going through the 3D Secure system, so the customers security is lower than if they paid directly on a website that invoked 3D Secure.

I suspect the strongest reason however is that the people who have bought on Ebay know very well that as a Buyer they have all the power when using PayPal to purchase, and PayPal will always back them over the Seller.

Enough said..

IMHO..

Mark

 

[Merchant UK]

The reasons there are a lot of people using paypal is because there are a lot of people using ebay (buying and Selling)

If you had a choice when it comes to security of your account the bulk of people would find it safer to by via visa or mastercard rather than paypal.

With paypal accounts getting hacked, scammers setting up paypal accounts and closing down, even Paypal freezing accounts and addition draconian restrictions, makes accepting credit cards via your own merchant account 100% more safer and cheaper.

People need to remember that Paypal is not the King of online payments and had ebay not bought them i would imagine they would of had issues keeping their customers

 

[andygambles]

The crazy thing is that if you use PayPal you are probably not going through the 3D Secure system, so the customers security is lower than if they paid directly on a website that invoked 3D Secure.

3DSecure is an ill conceived bad practice conversion killer.

We expend all this effort teaching people they should be wary of websites they use and where they put in their card details. Then when someone pays they get redirected to some site with an incredibly dodgy URL asking for a password that the user probably forgot they set. Or worse if they haven't set one their Date Of Birth and other details.

The number of drop offs when 3DSecure was enabled as too much. Rather take the transaction risk.