Why we're dumping PayPal

[Tej]

Don't take any lessons from big companies - they know very little, except how to do what they've always done.

How did the big Companies get to be big.. if they did not know what they were doing?.... Just luck?

 

[bdw]

Please, can't we just agree to disagree because now your argument is becoming flawed.

You are suggesting that these companies are avoiding Paypal and perhaps some of them are. But what I conclude when I see major high street retailers increasingly using Paypal is that they see the figures and they are recognising its increasing potential for their businesses. Let's wait a year or so then see what happens to the list of users. Whatever you think of Paypal my bet is that there will be many more on board.

There are many, many more people offering Paypal than any other service and it is by far the most popular Worldwide online payment method. If it's not for you then that's your decision and I honestly hope it's the right one for you.

Paypal is certainly miles ahead of the others as far as customer user base is concerned. This link is from a while ago and Paypal has increased its share since then.
http://paymentguy.blogspot.com/2008/02/clickandbuy-loses-uk-market-share.html

Let me repeat that I am not a big Paypal fan. I only do a tiny amount of transactions and I have had some problems (all caused by buyers incidentally). But there are times when we have to think with our business hats on and Paypal is what floats my boat.

 

[The Panda]

Go here for more info on Paypal
http://www.paypalsucks.com/

 

[cjd]

How did the big Companies get to be big.. if they did not know what they were doing?.... Just luck?

They innovated when they were small and growing, then just carried on doing what they were doing until, like Woolworths, they just grind to a halt or like the banks get too big to fail or like BA get stuffed by their employees, unions and pension funds.

And yes, a lot of it is luck.

Obviously not everything big companies do is sclerotic, but tiny companies shouldn't look at them a role models because they work in completely different ways - far better to look carefully at the business models of successful newer, smaller businesses.

 

[cjd]

How did the big Companies get to be big.. if they did not know what they were doing?.... Just luck?

They innovated when they were small and growing, then just carried on doing what they were doing until, like Woolworths, they just ground to a halt or like the banks get too big to fail or like BA get stuffed by their employees, unions and pension funds.

And yes, a lot of it is luck.

Obviously not everything big companies do is sclerotic, but tiny companies shouldn't look at them a role models because they work in completely different ways - far better to look carefully at the business models of successful newer, smaller businesses.

 

[sysops]

There's Nochex

Hahaha! Now there's an outfit who make PayPal look slick and professional...

 

[bdw]

Re Paypal Sucks...

http://www.googlesux.com/
http://googlesearchsucks.com/
http://vistasucks.wordpress.com/
http://www.dellsupportsucks.com/
http://www.microsoftsucks.org/
http://disney-sucks.com/
http://www.alitaliasucks.com/index.html
http://www.audi-sucks.com/
http://www.peugeotsucks.co.uk/
http://dhlsucks.co.uk/

Let me know if you need any more.

 

[Tom McClelland]

And google checkout, as viable alternatives go a checkout service offered by the internets biggest and most likeable company is a pretty good one. Also cheaper.

Cheaper? How so? Unless they've reduced their prices recently they are eerily identical to Paypal's since their price rise a few months ago, and from a programming point of view dealing with their API is a coder's nightmare compared with dealing with Paypal's API.

There was a thread here about this very subject when Google raised their prices to be equal to Paypal's and the consensus was that by throwing away the only advantage they previously had over Paypal (price) while being harder to code against and harder to deal with the changes amounted to Google Checkout throwing in the towel. But maybe they reduced their prices again? I missed that if so.

 

[bdw]

Yes, the concensus on another specialist forum that I frequent is that Google Checkout have more or less thrown in the towel.

 

[The Panda]

Point made.
Have a brownie point.

 

[bdw]

Cheers! :redface:

 

[bdw]

Seems Paypal is not he only system that is too dear. See http://www.ukbusinessforums.co.uk/forums/showthread.php?t=137288

 

[logicfusion]

A cautionary tale for any businesses soley dependant on PayPal:-

http://www.sitepoint.com/blogs/2009/12/22/web-service-horror-stories/

 

[bdw]

That's a shocking tale and one that is not that uncommon with Paypal. They currently have a chargeback on me for £60 for a claim from a customer who forgot he had made the transaction. The customer has admitted this but they still have my £60. This is not a major problem but if it was £6K it would be.

I agree that Paypal's customer service and support is bad and I have already made this point on a couple of occasions in this thread. However my decision on whether or not I use them is based on the vast number of people who use them Worldwide and the ease with which their system can be set up.

If they had a real rival, with lower charges, better support, an easy set up and a similar customer base then I would quickly move to them. AFAIK no such viable rival exists.

 

[logicfusion]

The story I posted above, really highlights what can go wrong and people need to remember the Paypal contract is not under UK law.

Just what would you do if Paypal did that to you and told you 'tough!'?

However, to keep things balanced:

I'm sure there must be plenty of customers who are entirely satisfied with the service they receive from Paypal. In the grand scheme of things, Paypal has been a huge success.

I've not looked extensively into any alternatives available to small businesses. I can't help but think that a UK based bank / payment processor would not get away with such alleged antics. If they did, you would have the UK courts available.

 

[sysops]

If they had a real rival, with lower charges, better support, an easy set up and a similar customer base then I would quickly move to them. AFAIK no such viable rival exists.

You seem to bury your head in the sand at this point - taking CC payments the 'old fashioned way', using a PSP and merchant account, is cheaper, more reliable, and more widely used.

Here's a thought for you. Would you use a bank that wasn't regulated by the FSA?

 

[bdw]

In the grand scheme of things, Paypal has been a huge success.

Indubitably.

You seem to bury your head in the sand at this point - taking CC payments the 'old fashioned way', using a PSP and merchant account, is cheaper, more reliable, and more widely used.

I am fully aware of what I am doing and I have no reason to bury my head in the sand. I use Paypal and I am happy to accept their charges - it works for me. Why would I change?

Would you use a bank that wasn't regulated by the FSA?

Yes, I use Paypal. The FSA only looks after the UK. I buy from vendors all over the World. That's where Paypal beats everyone else it is accepted in more countries than any other form of payment.

 

[luckyg]

i dropped paypal a month ago. i never get charge backs but i did it because of their charges. I pay 1.6% c fees so dont see why i should pay them more than double. have been using them for 5 years and it's their loss!

I still love using them when i am purchasing though only because i don't have to fill in my details when purchasing. but it wouldn't put me off a site if it didn't take paypal so i therefore think it is ok for everyone to drop paypal and give them a kick up the ass!

 

[free181]

yea, i'm plan to start a online shop, according to my plane, the payment will be paypal, after seeing you words, i'm thinking it again, meanwhile, i learned several new words, thanks!

 

[movietub]

Cheaper? How so? Unless they've reduced their prices recently they are eerily identical to Paypal's since their price rise a few months ago, and from a programming point of view dealing with their API is a coder's nightmare compared with dealing with Paypal's API.

There was a thread here about this very subject when Google raised their prices to be equal to Paypal's and the consensus was that by throwing away the only advantage they previously had over Paypal (price) while being harder to code against and harder to deal with the changes amounted to Google Checkout throwing in the towel. But maybe they reduced their prices again? I missed that if so.

Yes, the concensus on another specialist forum that I frequent is that Google Checkout have more or less thrown in the towel.

Checkout was initially very much cheaper, naturally they had to incentivise people to use them alongside/instead of paypal. paypal are so well established that a 'hammer blow' entry to the market is all that would work.

Whilst I admit it's frustrating that google raised their prices to match paypal I still see a rosy future for them - they are still growing very fast. One of the biggest benefits of checkout is the review system. Your customer review score is displayed next to all google shopping listings, thats invaluable. Also shoppers tend to trust google and like the association.

We find that around 40% of our traffic comes from google shopping, and these customers have the highest conversion rate too. During a period when we lost google checkout on our site we noticed the conversion rate drop sharply - this was a result of no longer having our positive review score shown on our shopping listings.

Increasing conversion rates is surely invaluable, so long as google deliver this they are offering better value than paypal ever could.

Also don't forget that google's mantra is to make what people want available for free. Google checkout will never be 'free', but I can easily imagine that when they are able they will look to reduce costs. If they got within shooting distance of paypal I've no doubt they would be desperate to reduce costs and settle the argument once and for all.

Probably a long wait though...

 

[bdw]

Whilst I admit it's frustrating that google raised their prices to match paypal I still see a rosy future for them - they are still growing very fast.

Where did you hear this? You must be reading different information from me.

Link 1
Link 2
Link 3
Link 4
Link 5

 

[themiddleman]

Paypal suspended my account recently and swore that they hadn't. I had to make about twelve phone calls to their CS people before I found one who could work out what had happened. In the meantime no business. Very frustrating.

 

[movietub]

Where did you hear this? You must be reading different information from me.

Link 1
Link 2
Link 3
Link 4
Link 5

Not one of those links gives any indication of checkouts growth rate. Checkout went climbed up to 6% market share within its first year, only to go back down to 2% when they upped the charges (and on presumes many online shops simply turned it off). But recently I think its something like 11%.

Thats growth.

 

[PayVector]

I can't believe I missed this thread.

As a gateway we see some pretty interesting statistics with reference to Paypal.

1. Converting from Paypal to Gateway/Merchant account - Every single time without fail the merchant has a substantial increase in sales when they start using a gateway over just paypal. Have seen it in the 50% bracket but generally around the 30% mark.

2. Paypal vrs Gateway/Merchant account - We recommend both. As this thread demonstrates you have die hards on both sides with equally valid arguments (in most cases).

3. Cost comparison - This is wholly down to where you as the merchant are based. The cost of processing for a German merchant can be higher for mid tier merchant using a merchant account over Paypal. For UK based merchants there should never be a case where paypal is cheaper. This is down to one simple fact. Paypal's acquiring bank is main EU based. That means UK merchants pay a percentage rather than a flat fee for domestic UK debit cards. So lets do some math.

On a £200 GBP sale you would pay the following (typical rates) for a purchase on a UK debit card.

Paypal - (2.9% and 20p) = £6 GBP

Typical Merchant account - (30p bank fee & 10p processing fee) = 40p

If my math is correct that is 15x less. *

No add in that roughly 67% of all UK online purchases through a gateway are some brand of UK debit card that is a stonking amount of difference even on very low turnover.

*Note : As the merchants ATV** gets lower the 15x multiplier gets smaller. The exact ATV (on these example number) that they match on is £6.90 GBP. But thats only on debit. CC will always be cheaper.

** ATV = Average Transaction Value

 

[mike.davis]

Just stumbled upon this thread - its been a year, very interested to see if dropping paypal effected sales in anyway?

 

[Olly Culverhouse]

Just stumbled upon this thread - its been a year, very interested to see if dropping paypal effected sales in anyway?

Likewise, I would love to know what the difference was.

 

[4little1s]

Err ...what's that about ?

 

[bdw]

It's called spamming.

.

 

[DeanCo]

Background. We run a bunch of online shops. Two years ago we started accepting PayPal in addition to our main card payments (which are SagePay + merchant account). We thought it would be nice to offer an extra option for those who like to use PayPal, and that it would increase conversion rate.

Over the past 12 months, 12% of all of our turnover has been processed though PayPal, with the rest through our merchant account.

I've taken the decision to no longer offer PayPal as a payment option from the 5th Jan, for the following reasons:

1. Fees. Our average fee paid to PayPal over 12 months is 4.4%. This is ridiculously high compared to the sub 2% we pay for our CC processing (and that's SagePay + merchant account fees combined).

2. Chargebacks. It seems that a lot of PayPal users use chargebacks as a routine mechanism for saving some cash. Over the past 12 months, we've had 2 CC chargebacks (88% of our turnover, remember) and 9 PayPal chargebacks (12% of our turnover). The figures are not huge, but they are very annoying.

3. Rolling reserve. We haven't had this imposed yet for some reason, but as far as I can gather it's being rolled out to all accounts, so it's coming soon.

4. Account management. What kind of payment gateway requires you to log in every day to move money out?

Will we see a drop in conversion rate? I don't know. I'll be keeping a close eye on it.

PayPal was ground-breaking, and is a fantastic p2p payment mechanism. But as a business solution is it truly dire.

I have seen many business go through exactly what you are talking about. Paypal these days seems to be a magnet for chargebacks and scam artists like flies attracted to ****.

I have seen many friends and clients drop Paypal in favour of a professional merchant account and have never looked back.

 

[Parrot Hosting]

I see the PayPal bashers are still at it.

PayPal is better than most credit card companies and is certainly more upfront and honest than the land banks. They also work to tougher regulations than most and like for like are cheaper than banks and CC companies.

If you have suffered at the hands of PayPal you would almost certainly have had the same problem or worse from the CC companies.

The fact that your businesses (or clients business) attracts charge-backs and scam artists may be more to do with the way you or they manage your/their business and sales protocols than anything to do with PayPal.

Its typical for a bad business practice to fall foul of a good business practice so, if you are suffering charge-backs and scam artists why not look at your own sales process to see how you can improve your business management instead of blaming others.

 

[Silky]

I've just spotted some of the earlier posts are from 2-3 years ago, so I'm not sure whether the inaccuracies are down to improvements in Paypal's service, or a lack of knowledge by the posters.

Anyway:
1. Paypal is not only for "youngsters" - our customers are mainly 35-55 and middle class.
2. You don't need a paypal account to pay if Paypal's used as the merchant account, the buyer can simply enter their credit card details.
3. It's not only suitable for low cost items, our shopping cart varies between £35 to over £2,000.
4. Paypal do give you the information on a chargeback, they give you a link to the transaction and also the information the buyer has provided in challenging payment. There is also an email address to send any further information.
5. We have very few chargebacks (less than 1%) and have successfully fought 70% of these.
6. Paypal is not only for small, backstreet Ebay traders, we are a credible and respected holiday organisation.
7. Our customers enter all their details into our shopping cart before seeing who our merchant is. Very very few back out, those that do are usually just seeing how much the deposit is (we contact them).
8. Paypal don't just put a rolling reserve on those companies who are "dodgy", they have turnover thresholds, which if exceeded, are likely to land you in this category as their risk is naturally higher.
9. The fees reduce as turnover grows.

We've had frustrations with Paypal, but we've had frustrations too with another payment provider taken on for another part of our business - I think few are talked of in glowing terms where customer service is concerned.

We chose Paypal as it was the easiest option when starting out (especially as many other merchants are reluctant to touch travel companies in the current climate), we'd have no hesitation whatsoever to go down the same route again.

Silky

 

[Tom McClelland]

Bingo! to the last 2 comments.

We find Paypal's customer service good. Our chargeback rate is so close to zero as to be negligible. (I don't remember the last chargeback we had). We DO get some reversals (invariably citing unauthorised CC use), which are annoying, but I don't see how any other payment provider would make a difference where reversals are concerned.

Paypal is really easy to get started with, and grows with you. Yes, the fees are high, but that is offset by the ease of dealing with them. We upgraded to the "Pro" system to get virtual terminal and to be able to edit the hosted payment page and our clients find it so easy that the "how do I actually pay you?" calls are non-existent.

 

[shadesofblue]

I see the PayPal bashers are still at it.

PayPal is better than most credit card companies and is certainly more upfront and honest than the land banks. They also work to tougher regulations than most and like for like are cheaper than banks and CC companies.

.

That's simply not true.

 

[Parrot Hosting]

That's simply not true.

Actually, when we did the comparisons, they ended up cheaper than credit card companies and landbanks for CC charges. This is for online transactions not telephone or manual transactions but, even here their price was comparable.

You have to bear in mind that unless you are a big company and can force the banks to reduce their rates, then you will be stung a fairly hefty percentage for transactions.

Recently we even did comparison against Secpay/Paypoint and PayPal were cheaper.

 

[sysops]

Actually, when we did the comparisons, they ended up cheaper than credit card companies and landbanks for CC charges. This is for online transactions not telephone or manual transactions but, even here their price was comparable.

All that means is that your merchant account provider is ripping you off.

We pay 1.2% for CC + 8p to the PSP.

You have to bear in mind that unless you are a big company and can force the banks to reduce their rates, then you will be stung a fairly hefty percentage for transactions.

I've just helped a friend set up a brand new ltd company, with a brand new merchant account. He's paying 1.5% + 8p.

Recently we even did comparison against Secpay/Paypoint and PayPal were cheaper.

What it boils down to is laziness. People want to believe that PayPal is the cheapest option, because it is easy to set up. They want to believe that PayPal provides a good level of customer services. They want to believe that they have made the right choice.

Those of us who have processed large volumes of transactions both ways know that this is not the case.

 

[Parrot Hosting]

Those of us who have processed large volumes of transactions both ways know that this is not the case.

How many transactions a month do you process? and how many transactions a month is the company you just set up processing.

I would hazard that its a lot and for those small businesses (the majority) that would be considerably fewer and therefore of less interest to the banks and creditcard companies giving higher relative costs.

and please confirm to me that these figures you are talking about are online transactions as opposed to PDQ transactions.

 

[sysops]

How many transactions a month do you process?

Low month 1,500, high month 18,000.

and how many transactions a month is the company you just set up processing.

So far around 20 a month.

and please confirm to me that these figures you are talking about are online transactions as opposed to PDQ transactions.

Yes, all online for both cases.

Even from a standing start, you can easily get 1.5% - 1.8% with Streamline, HSBC or HBOS.

 

[Parrot Hosting]

I would be interested to know what people on UKBF are paying for their transactions. I would hazard the average to be higher than the ones you give. Certainly the experience I have is that the figures are more in the region of 2.4 2.75% for small businesses and its no an issue of laziness but the ability to dictate terms.

If I was transacting 1500-2000 transactions a month then I am sure I would be able to get lower rates with anyone especially if they were after my business. I would even expect the lower rates with PayPal... they do have published rates that are much cheaper depending on values of transactions monthly.

It will also depend on the amount of risk and the type of buniess you are in.

 

[sysops]

I would be interested to know what people on UKBF are paying for their transactions. I would hazard the average to be higher than the ones you give. Certainly the experience I have is that the figures are more in the region of 2.4 2.75% for small businesses and its no an issue of laziness but the ability to dictate terms.

I know a lot of people who run businesses, online and offline. The subject of payment processing comes up a lot. I don't know a single person who pays more than 2%.

If I was transacting 1500-2000 transactions a month then I am sure I would be able to get lower rates with anyone especially if they were after my business. I would even expect the lower rates with PayPal... they do have published rates that are much cheaper depending on values of transactions monthly.

You can expect, but you won't get. Here are the fees:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-receiving-fees-outside

BTW. it is laziness.

 

[Tom McClelland]

BTW. it is laziness.

Well, that's me told.