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    6 Replies Latest reply on Jul 10, 2008 3:32 PM by amspcs

    Paypal.  Love 'em or hate 'em?

    amspcs Ranger
      Even though we are in the merchant processing business, for many years we have recognized and endorsed the need for alternatives to traditional merchant accounts such as Paypal. Even though it costs us a sale now and then, we could never bring ourselves to recommend in good faith a traditional merchant account to a merchant who does maybe 2-3 sales per month. We always felt it was better for this kind of start-up to get their feet wet with Paypal on a temporary basis until their business grows up a little, THEN make the switch to a more traditional merchant account setup.

      As a result, we have send a lot of business to Paypal. Lately, however, we have been getting tons of negative feedback about them. Lots of gliches and hassles, people not getting paid right, holdbacks, creating more problems than solutions, etc. Even worse, we are hearing over and over that PP customer service reps are short tempered, surly, disrespectful and generally anything but helpful. In short, they just don't care.

      Has anybody experienced simiilar issues with Paypal. We are seriously considering terminating our
      referral practice to Paypal, dumping our webpage we have dedicated to them, and switching to another provider such as Google or whatever. We are very interested in hearing the experiences of you Paypal users out there, good bad or ugly, so we can make our decision.


        • Re: Paypal.  Love 'em or hate 'em?
          Lighthouse24 Ranger
          I've heard similar stories from second-hand sources, but have not experienced any problems at all -- either myself (personal eBay sales and purchases) or within the one business I have that uses and accepts PayPal (three or four transactions a month, plus a couple of bank transfers). I have a few clients and associates that use PayPal, and am not aware of any issues there, either.

          The only problem any of us have experienced is with would-be buyers (usually in city, state, or federal government offices) who want to purchase something, but can't access PayPal to complete the transaction. That access "problem" is in the buyer's world, not PayPal's -- but it has caused a couple of businesses that regularly sell to those buyers to move more quickly toward a traditional merchant services arrangement.

          Good post -- I, too, would like to read any actual firsthand experiences that were problematic. Thanks.
          • Re: Paypal.  Love 'em or hate 'em?
            mrsbu1 Newbie
            Paypal may work for individuals selling stuff from their garage but as far as real businesses using them it is a nightmare.They decide that after you have an account balance where they owe you 10K that it is time to stop paying you but still collect from your clients until you can jump thru all there hoops to prove you are not a criminal. Now mind you not a single client complains that you have done anything wrong, they randomly decide that you cannot have your money, while not refunding it to the clinet. So the merchant ends up with a situation where he has no money, client shave no refund for weeks and no product and end up going to an alternate merchant.

            In the begining Google Checkout was good but they have also joined the Paypal Way and hold merchants money for no reason. I run my business and have two merchant accounts and processors as I can never be sure as to when Merchant Services for one company will decide I have made too much money and put a security hold on my account. I actually have thought about going offshore for processing , but that is a whole new can of worms. I can't imagine why processors put frustrated, bitter people in the department that offers customer service. I hvae lost a client ot two because of my processors security dept harrasing clients and asking them for way too much proof to verify that actual were paying me.Claiming it is for the clients benefit and it isn't it is for the processors benefit
              • Re: Paypal.  Love 'em or hate 'em?
                amspcs Ranger
                Dear Mrsbu1

                We certainly appreciate your input and sympathise with your Paypal & Google problems. I hear that a lot
                in regards to Paypal, not so much with Google.

                To be honest, I totally understand WHY Paypal does some of the things they do. One needs to appreciate that fraud and deception are rampant in non-face-to-face transaction situations, and since practically anybody can register on Paypal without credit or backup check, they don't always know with whom they are dealing. So I don't blame them for being too careful. After all, if something goes wrong and they can't get reimbursed by the buyer and the seller isn't good for the amount, Paypal gets to 'eat' it. My problem with Paypal is the 100% lack of cooperation, knowledge or helpful attitude that their customer service people exhibit. I've heard a hundred times the same comments: They just don't care. They refuse to give intelligible explanations or offer solutions, just canned useless responses that leave both buyer and seller out to dry. Unacceptable. .

                In summary, I totally agree with your assessment that Paypal is good for folks selling stuff out of their garage, but pretty useless in a formal business environment except perhaps as a temporary startup payment solution until the business grows to the pont in which a 'real' merchant account is justified.
                We have preached this for years. Other than that, any business that relys long-term on ONLY Paypal as a payment solution is missing the boat big time..

                In regards to your issues with your two merchant processors, as I am very familiar with the merchant processing business (I'm 60, have been in the biz for years), I have to tell you that you are being a little harsh and unrealistic in a couple of areas.

                First of all, If you look back, you will find that most if not all of the situations in which funds were held and customers were contacted for verification purposes involved one or both of the following scenarios:
                (a) a foreign sale (b) a non-swipe (i.e. MOTO or internet)) sale in which the sale amount exceeded the average ticket amount YOU indicated on your application when you signed up with that processor?
                Am I right?

                What you need to appreciate is that the system MANDATES that these sorts of transactions be 'flagged' as high risk, and in most cases the actions you are objecting to are MANDATORY by the card associations.
                And, just to clarify and contrary to your comment, this is not only for the good of the processor but for the benefit of you and yourcustomer as well. Think about it. If something goes wrong that results in a chargeback and you have already shipped the merchandise, you are going to lose your money (they'll withdraw it from your account) AND your merchandise.

                One small caveot to the above explanation: Different processors have slightly different policies and procedures in these instances. For example, some will just 'freeze' the batch in which the offending transaction resides--other processors will completely freeze reimbursements to the merchant for as long as it takes, which is pretty harsh. The explanation is: Some processors are 'easier' and more understanding than others. That's because some processors have very high underwriting standards and only accept creme de la creme merchants, which others specialize in merchant types nobody else wants (poor credit, high risk business type or model, or whatever) , and treat them accordingly with harsh policies as you have described. I don't know what your credit is like or what your business type is, but if you fall in the category in which you are qualified to be with one of the top name processors but instead signed up with a 'garbage' processor like Cardservice, Retriever, Newtek or some others, than that is an error in judgement on your part and you are receiving exactly what you bargained for. If, on the other hand, due to credit, business type or whatever you belong with the type of processor you are with, then that's just part of the landscape of your business.Beyond that, I also
                need to say that they are means available and procedures in place to minimize the kinds of problems you are experiencing, and since you obviously are unfamiiar with them, you equally obviously were shortchanged by your processor by being deprived of proper training. If this is an accurate statement, then it's time to shopf or a new processor.

                On more thing: If you have two processors, you are playing with fire. If one finds out about the other and it is interpreted as an effort on your part to 'beat the system'....well, without going into gory detail, you are going to be VERY sorry. Be careful.

              • Re: Paypal.  Love 'em or hate 'em?
                dinomon Newbie
                Here's my story & take on paypal.

                Since 2002 I was a vocal proponent of paypal as great way to handle transactions. I never had any problems or complaints until the end of April this year.

                To preface, I am a small business person that had 100% positive ebay user feedback rating. My commitment to quality customer service since 2002 was always reflected in the feedback comments & I thought I was the best kind of seller and buyer there was on ebay (quality, though not quantity). It was always about customer service and credibility. I thought that I was the least type of ebay/paypal customer that would ever have a problem even remotely related to my recent experience.

                But things change. Paypal is of course an ebay company, and ebay underwent a CEO (& more) change in March. After that change is when, without any warning, a serious problem occurred for me (and many other customers) with paypal & thus ebay.

                A buyer clicked on buy it now for one of my items & paid right away. But immediately & inexplicably paypal froze the funds. I tried to get an explanation from paypal as to what was happening, but all I got from them was a computer generated e-mail advising me that this issue had to do with buyer & seller protection! This was the beginning of their so-called C.S (customer service). This went on for several weeks without any clarification, despite several e-mail inquiries I sent. The buyer & I communicated, but neither us had a clue what was happening. Then I received an e-mail from paypal advising that the payment had been credited back to the buyer, without explanation. I lost the confirmed payment, the sale, and a customer, & the buyer didn't get his item, all because of a muddled paypal agenda that had no logic to it. This is what paypal calls additional buyer & seller protection, and C.S.

                Then several weeks ago, I was going to list 8 items (no listings since the sale loss) on ebay using their turbo lister program. Abruptly 7 of those items were flagged with a threatening warning attached to them advising that payment may be held! After unsuccessfully seeking help in this matter, last week someone from ebay answered my inquiry, advising that my inquiry had been forwarded to paypal C.S. I knew right away that was the end of it, that I would get no help. Someone in paypalC.S. answered me with a computer scripted generic reply, which did not specifically address my inquiry or situation, or offer any assistance. But it inadvertently led me in a direction whereas I was able to at least partially discover what was going on.

                Ebay/paypal has a new (since) list of requirements a seller must meet so their funds won't be held. It's stated very clearly in the guideline, that if you meet these requirements then funds will not be held. Well guess what, I meet all those requirements, yet paypal still held my payment, and was threatening to do it again if I had chosen to list the 7 items & they were subsequently purchased! Paypal doesn't even follow their own guidelines.

                Besides the obvious inept system paypal has in place that punishes quality (ex)ebayers like me, other effects can occur. They state that they can hold the funds up to 21 days or more, until the buyer receives the purchased item and then leaves positive feedback (actually they can hold funds for any reason they want & don't have to give an explanation not limited to ebay). A seller is then supposed to ship the item without having the funds, and then hope that the buyer leaves positive feedback asap, although the buyer is under no obligation to do so (leave feedback). If no feedback is left, Paypal will not release the funds, and then paypal looks at this situation as a negative reflection on the seller (who must have done something wrong), which is further expressed in the even more restricted way they will deal with that seller.

                Further, "Merchants finding themselves on the wrong end of a frozen Paypal account will still have to find some way to pay their obligations and fill orders for the weeks and months while the account is restricted. A domino effect occurs when a merchant's account is frozen, leaving them with No Means To Fill Orders. Those orders are then disputed by customers, creating more charge backs and the illusion of fraudulent activity on the part of the merchant. "Welcome to the PayPal Nightmare."

                It is definitely a nightmare, chaotic for the victimized seller or merchant, as well as being a lose, lose situation for everyone. What kind of a perverted business model could this be based on? What prompted this bizarre agenda? Perhaps it's because both ebay & paypal no longer want to deal with small businesses & entrepreneurs? That is implied in a recent CNN Money, series of articles dealing with new ebay/paypal policies and customer fallout since April of this year. Cut & paste this link:



                Besides the funds freeze nightmare, I'm puzzled why you would want to give referrals to paypal since they are a direct competitor of yours? In 2005 they purchased the Verisign online merchant business and now have their own gateway.

                The comments you expressed regarding their C.S., from my experience, are all true. I would summarize their C.S. as abysmal to nonexistent, and most certainly they don't care. It's as if their directive is to avoid helping customers as much as possible, although I wouldn't be surprised if the big $ customers are treated completely different & have no complaints or problems. Really if so many people weren't being hurt by the inept paypal policy and the joke they call C.S., it could be considered ridiculous & comical. A recipe for failure. It's perhaps significant to remember that this is an ebay company. My experience with paypal is as a seller on ebay. But from my research it appears that the freezing of funds and C.S. problems can and do occur with any merchant.


                  • Re: Paypal.  Love 'em or hate 'em?
                    amspcs Ranger

                    I have to say I agree 1000% with everything you recounted about Paypal. Your negative experiences with them have been verified almost to the letter by countless other ex-Paypal users I have heard from via various sources. As you correctly note, they used to be a dependable solution, but for whatever reason(s) have transformed into use_less_ detrements to business.

                    As far as why we have referred business to them: As noted in our original post and as mentioned by you yourself, things aren't the same as they used to be with Paypal. We have therefore made to decision to no longer refer them and are in the process of removing their page from our site.

                    May I have your permission to use your commentary on this forum and reproduce it for the benefit of anyone I run across about to make the mistake of using Paypal as their payment processor? If you are agreeable, please express your permission in writing, either via direct email or on this forum.

                    Thank you.

                    Barry G