To Paypal or not to Paypal... that is the question

[ddmcmullan]

I know this is the sort of thing that needs to be tested and all that but I am wondering exactly what everyone's thoughts are on using Paypal.

We have been using paypal and a normal merchant card processor for years on our e-commerce website. We are now at the point where our paypal fees are 3 times more than processing cards.

The question is do we get rid of paypal or not. I have no doubt that we will lose sales however the question is how many. For us it works out that if we lose out on less than 3 sales out of 100 due to not having paypal then it is worth us dumping paypal.

Currently 30% of our customers use paypal but that doesn't mean they wouldn't use is if paypal wasn't there.

Opinions on this?

 

[Mr D]

Try adding different card processors to the site. Then later remove paypal as an option for a couple of days, see if it makes a difference.

 

[Bainzee]

I run a payments consultancy and brokerage and in most cases i would advise merchants to include as many payment options as possible to increase conversion. If you look at it from the buyers perspective, they get PayPal's Buyer Protection, which gives them that extra security on their sale. Yes, PayPal's rates arent great but have you tried contacting them to try and reduce the rates, no harm in trying. Im assuming you have the PayPal express checkout, which the last time I checked had no monthly charges so you pay just the transaction fees, if so, then this is a decent service and used by millions of users worldwide.

 

[ddmcmullan]

Try adding different card processors to the site. Then later remove paypal as an option for a couple of days, see if it makes a difference.

We already have a processor for all cards except American express in place and have done since day one.

I understand your suggestion however to get enough data to test between the two and come to a statistically significant conclusion will take 500+ sales I'd think.

 

[arnydnxluk]

For maximum reach I would keep PayPal in place. The potential loss of some sales has been mentioned but have you factored in the referrals from those customers? I would rather have a new customer on board - at the cost of a slightly bigger payment processing fee - than to turn them away because their preferred (and popular) payment method is unavailable. You never know which customers are going to refer dozens more customers or leave a positive review online to help seal future sales.

 

[Page]

I will often only buy on a website if it offers paypal and even more so the paypal thing where you all your details go with it - their fast check out thingy - I forget what they call it

If they do not offer that I cannot be bothered typing in all my details to a site I may never buy from again - I am to used to Amazon to be bothered

 

[pelparc]

We find PayPal is becoming more and more popular 4 years ago hardly anyone used it now its about 60% compared to the other payment option which is Sagpay. I would think many of the customers would use Sagepay rather than shop with someone else. But why add a barrier, compared with all the other costs to get the order processed and delivered its quite insignificant.

 

[pelparc]

If they do not offer that I cannot be bothered typing in all my details to a site I may never buy from again - I am to used to Amazon to be bothered

That's exactly why i hate shopping with Amazon. Why do they HAVE to keep my payment details? Bought something from them a couple of weeks ago (first time in years). It was a horrible experience compared with most other shops. Finding the best price, not singing up for Prime was hard work and not pleasant.

 

[Mr D]

That's exactly why i hate shopping with Amazon. Why do they HAVE to keep my payment details? Bought something from them a couple of weeks ago (first time in years). It was a horrible experience compared with most other shops. Finding the best price, not singing up for Prime was hard work and not pleasant.

I have a card I use just for amazon, stick some money in it and go shopping.
Pick items, go to checkout and job done.

Same with paypal, I buy stuff and use the paypal payment option from my paypal account, job done.
With one of my suppliers I have to enter card details all over again every time. Slows me down and means I have to hunt out my wallet.
I prefer staying sat down.

 

[Mr D]

We find PayPal is becoming more and more popular 4 years ago hardly anyone used it now its about 60% compared to the other payment option which is Sagpay. I would think many of the customers would use Sagepay rather than shop with someone else. But why add a barrier, compared with all the other costs to get the order processed and delivered its quite insignificant.

We had a couple of sites of our own plus a couple of 3rd party sites.
Our own sites had 2 payment options, one of which was paypal.
In a year the other payment option between the two sites could be just one or two orders, everything else via paypal.

 

[Alexander Sadlier]

This is very interesting. I would have guessed that not many people just Paypal but clearly I was wrong! Looks like I'll be investing some time to set it up.

 

[Toby Willows]

Thing is with PayPal clients can pay by debit/credit card as well. It covers almost all options. Admittedly not the cheapest but it’s daft not to offer it as option.

 

[Nochexman]

Currently 30% of our customers use paypal but that doesn't mean they wouldn't use is if paypal wasn't there.Opinions on this?

How old are your customers? The older they are the more likely they are to have a credit or debit card.

 

[Mr D]

How old are your customers? The older they are the more likely they are to have a credit or debit card.

Yes quite likely having one or the other if ordering online.
Which specialist payment provider to use then becomes a choice.

 

[pelparc]

Yes quite likely having one or the other if ordering online.
Which specialist payment provider to use then becomes a choice.

Its the customers choice and with us its becoming more and more the preferred choice. I would imagine the majority of the customers using PayPal actually pay via a card and not cash in their PayPal account. Is there a way to tell if this is the case?

 

[splashweb]

I'm surprised that chargebacks haven't been mentioned in this thread, do any of you have problems with this with PayPal?

I don't use PayPal on my domain sales site as, with the average sale being £250-£500, I'm wary of both the fees and the potential chargeback issue; too much history online of PayPal making controversial decisions against the seller. In addition to this, as far as I can tell, intangible goods are still not covered under their seller protection scheme.

 

[Mr D]

Its the customers choice and with us its becoming more and more the preferred choice. I would imagine the majority of the customers using PayPal actually pay via a card and not cash in their PayPal account. Is there a way to tell if this is the case?

Doesn't make a difference far as I can see.

 

[Mr D]

I'm surprised that chargebacks haven't been mentioned in this thread, do any of you have problems with this with PayPal?

I don't use PayPal on my domain sales site as, with the average sale being £250-£500, I'm wary of both the fees and the potential chargeback issue; too much history online of PayPal making controversial decisions against the seller. In addition to this, as far as I can tell, intangible goods are still not covered under their seller protection scheme.

Not major problems no. Just every chargeback we have had with paypal the money has been refunded to the buyer. Even when their claim is bogus and we have the ebay messages to prove it.

Probably lost £30 that way overall. Out of £40k+ processed through paypal without a problem.

 

[pelparc]

I'm surprised that chargebacks haven't been mentioned in this thread, do any of you have problems with this with PayPal?

We actually find PayPal to be very good when it comes to chargebacks, far better than SagePay, Worldpay and Streamline who don't do anything to fight your case. With PayPal almost all transactions are eligible for their seller protection, so as long as you send the parcel within 7 days and you have proof of delivery (Royal Mail provide free with their 2d barcode system) you are protected. I have claimed twice and had about 4 other chargeback demands which we successfully contested (Customers backed down). We have a 100% failure rate with all others even when the customer has told them the claim is a mistake. They just don't do anything.

 

[Mr D]

We actually find PayPal to be very good when it comes to chargebacks, far better than SagePay, Worldpay and Streamline who don't do anything to fight your case. With PayPal almost all transactions are eligible for their seller protection, so as long as you send the parcel within 7 days and you have proof of delivery (Royal Mail provide free with their 2d barcode system) you are protected. I have claimed twice and had about 4 other chargeback demands which we successfully contested (Customers backed down). We have a 100% failure rate with all others even when the customer has told them the claim is a mistake. They just don't do anything.

You are protected only on the delivery issue. You are not protected on other issues.

 

[JJWinst]

You could always offer PayPal but with a % processing fee? I would normally use PP where available but more than happy to use another method if the site looks secure.

 

[Mr D]

You could always offer PayPal but with a % processing fee? I would normally use PP where available but more than happy to use another method if the site looks secure.

A card processing fee?
This year?

 

[ddmcmullan]

How old are your customers? The older they are the more likely they are to have a credit or debit card.

My customers are in the 40-50 age range.

Some very interesting replies here. I get the feeling the "general" wisdom is to keep paypal as I will likely lose more than 3% of overall sales not having it.

The other point which was mentioned was the chargeback system.

I might just test without paypal and see if I get much change in conversion, if we get rid of paypal we're saving nearly 4k a year in fees!

 

[Mr D]

I might just test without paypal and see if I get much change in conversion, if we get rid of paypal we're saving nearly 4k a year in fees!

You pay £4k extra on paypal transactions over and above what you would pay on other company transactions?
That's quite a difference.

If your sales drop by a chunk then reinstate it. Get buyers to pay the costs, same as you do for your other card processing costs.

 

[pelparc]

You are protected only on the delivery issue. You are not protected on other issues.

PayPal have paid out on a "not authorised use of card" for us. Basically the customer claimed that they never used their card to buy from us. The credit card provider did a chargeback and paypal took the money out of our account. We then provided the required information (proof of posting etc.) and they them reimbursed us say that they have done this regardless of the final outcome of the chargeback as we are protected by the seller protection scheme. So they do cover you for more than just non delivery.

 

[ddmcmullan]

You pay £4k extra on paypal transactions over and above what you would pay on other company transactions?
That's quite a difference.

Yes £4k, meaning if I used my normal card processor rather than paypal I would save £4k a year, you see my dilemma?

 

[Mr D]

So quite a chunk of custom would have to be lost to make the reduced costs not worth it.

The big sellers problems...
Us tiny sellers don't have quite the same problems to the same scale.

 

[pelparc]

Just a idea.... Can your current payment processor handle PayPal payments. I know SagePay does, that way your customers who want to pay via PayPal can but for the most if they pay by credit card they will probably use your preferred payment provider. It might reduce your PayPal transactions by a lot, without upsetting any customers.
Stupid question but i assume you have asked and applied the volume processing discount for PayPal you should be paying 1.9% +20p or less.

 

[Nochexman]

My customers are in the 40-50 age range.

Given the amount of volume you have you could do a split test and see how much difference it makes if you remove PP as a payment option in one half of the split.

Given the age of your customers they are more likely than most other age groups to have an alternative method of payment.

Interesting problem to have!