PayPal Secrets

PayPal SecretsIf you search online for the phrase “PayPal sucks” you’ll find discussion board comments and even entire websites with bad things to say about PayPal.

Many of the complaints seem to suggest that PayPal freezes funds and even shuts down the accounts of honest merchants for completely unfair and arbitrary reasons.

Reading between the lines, I suspect that a lot of these complaints come from individuals whose business practices have problems that PayPal’s aggressive customer service controls have exposed.

To put it another way, I believe that if you deliver an honest product with good customer service you’ll find that PayPal doesn’t suck*. From our perspective, PayPal is one of the most reliable online services that we use.

PayPal Standard Buy Now Button
PayPal Standard
“Buy Now” Button

Why PayPal?

When starting our first online store, I chose PayPal Standard, a combined shopping cart and payment gateway, because of its simplicity. This service allows you to start collecting payments by pasting a few lines of HTML code on your web pages, following instructions on the PayPal website. You’ve probably seen PayPal Standard “Buy Now” buttons like the sample shown here.

Since that time our website has changed a great deal, but PayPal is still collects our payments. Although we’ve moved to a more flexible service called PayPal Payments Pro, many of the core advantages are unchanged, including:

  • Competitive transaction fees, that get smaller as your sales volume grows, and the ability to accept many different customer payment cards
  • A lack of hidden costs such as extra fees on rewards cards, statement fees, and so on
  • Aggressive security controls to prevent hackers and an occasional dishonest customer from taking your money
  • Integrated UPS and USPS shipping that automates your shipping labels and provides proof of fulfillment in case of any disputes
  • A history of good telephone support, by staff that seems to be US-based

But despite these positive points, we had to discover some critical, mostly unwritten rules to keep things running smoothly.

Secrets to Trouble-Free PayPal Service

Many of the most important secrets for working with PayPal didn’t seem very obvious at first. We had to learn some of these through experience.

  • Make the email address for your PayPal account your primary customer service address, since buyers will see the address when PayPal confirms payments and issues refunds. Choose an email address that’s simple and will make sense to customers, like
  • Document all customer requests that impact fulfillment (for example shipping address changes) and use integrated PayPal shipping to help prove you shipped every order.
  • Avoid accessing your account from a new location without notifying PayPal beforehand, as this could trigger a security lockout.
  • Once you add employees, configure additional PayPal logins to prevent others from viewing balances, transferring funds, and so on.
  • As soon as your account balance is big enough that loss of funds would be a disaster, enable the PayPal Security Key that uses a cell phone or smart card to authenticate any login that’s allowed to withdraw money. Use of your mobile phone as a security key is free to US customers.
  • Most importantly, treat customer satisfaction as your top priority. Answer questions and complaints quickly, and do everything in your power to focus on customer service so that no one ever ever needs to contact PayPal or their payment card issuer to dispute your charges.

PayPal Shortcomings

All online services suffer occasional outages, and PayPal is no exception. In our experience PayPal disruptions have occurred less than once per year, and are usually resolved within a few minutes of calling their support line.

Our biggest frustration with PayPal used to be its transaction reporting. We find these reports difficult to use since so many of the entries are temporary, behind-the-scenes transactions like authorizations, holds and reversals. These related, temporary transactions often span consecutive months so they’re difficult to reconcile, and they’re so numerous that they bogged down our accounting software. We found no reliable way to import the transactions into QuickBooks, and the add-on tools we tried only made things worse.

After years of frustration we finally found a great accountant who taught us how to solve the problem. For details about the simple way that we now get the financial results from PayPal into our accounting software, see our story about QuickBooks Hell.

What’s Next?

Once you’ve configured your website and chosen your shopping cart and payment gateway, if you sell physical goods you’ll need to determine the shipping options you’ll provide customers. We’ll discuss that next.

Next: Shipping Your Products


* This is not a paid endorsement.

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