Pros & Cons of Paypal, when you are the ‘Merchant’

PayPal’s Claim:

‘It’s safer, it’s faster and it’s everywhere. Use PayPal to shop at thousands of web-sites, knowing that your financial details are never shared’

But what do local freelance and contractor business folks think of it? What do you need to be aware of when using it as an online payment method for your business?

Mark Cuthill, local businessman (@Mark_Cuthill on twitter) states his pros and cons as follows:


  • very easy to set up, just like having a personal PayPal account
  • You don’t require to have additional (potentially) costly security/encryption measures on your website
  • Trusted payment partner
  • People can pay with credit/debit card as a guest even though they may not have a PayPal account


  • Fee’s are high in comparison to traditional online card payments through a merchant bank account
  • It isn’t always obvious that you can pay as a guest – some customers may see PayPal and think “I don’t have a PayPal account, next>”

 What do our twitter followers running businesses think?


PRO: Trustworthy Brand

Alexander Darlington, Social Media Account Manager at Citrus:Mix (a PR, marketing, communication and brand expert) makes an excellent comment about the value of PayPal having a trustworthy brand:

Debtor Controller notice a significant increase in visibility for the brand also:

I know personally when shopping I would always go through PayPal as a payment route as I know it’s easy and secure for me as a buyer. That’s the kind of experience we want our clients to have when buying from us.

What I didn’t previously realise or appreciate is that this is a payment option, even if you don’t have a PayPal account, this didn’t used to be the case, but now buyers can check in to PayPal as a guest without making the commitment of having a regular account.

PRO: Easy for One off Payments

Julie Mitchell Mehta of Debut Marketing (marketing and social media specialist consultancy) also praises it for ease of use for one off payments:

However, not all businesses find the administration as simple at the back end…

CON: Administration on your Accounts

Alasdair McGill, part owner of an online offline Golf Shop, Noah’s Ark Golf Centre with his brother Niall McGill states:

“We use PayPal for our eBay shop and online sales. It’s convenient, and easy for customers to use, but it’s an expensive way of doing business. It’s also a bit of a hassle to administer – we don’t have it setup to automatically feed into our accounting system so we have to remember to download the transactions (as well as transferring the funds!). In a busy retail environment, this isn’t always a priority, so PayPal are sitting on our money and no doubt earning interest on it!”

CON: Misinterpretation of changing trends

Not the only business I know who has had a less than favorable experience with PayPal recently.

A client of FW Accounting recently has a business which massively took off – sales via PayPal grew exponentially one month. All sales are online and purchases made via PayPal. PayPal ,rather than understanding that he had just had a lot of sales, ‘froze’ his money and would not release until the client had gone through various hoops, leaving him 6-9k out of pocket for over 4 months.

 Things to be aware of:

  • There are hefty fees for ‘chargebacks’-  (when PayPal hold on to the money you have earned) – here’s a guide
  •  It’s easy to setup and use.
  • PayPal’s Seller Protection policies do not cover digital goods.
  • It’s a well known brand that many customers will already use.
  • You don’t need a merchant account, but setting one up is easy.
  • No regular user PayPal account is needed to make a fast payment.
  • You can create and send invoices through your PayPal account.
  • PayPal’s fees are less than some merchant credit card/debit card accounts – not everyone agrees:


  • Recurring payments can easily be set up.
  • You can integrate PayPal with a number of shopping cart operations.
  • PayPal can suspend your Account at any time.
  • It can take four business days for withdrawn funds to clear in your bank account.
  • There are a number of people who refuse to use PayPal, which may result in lost business.
  • BUT, there are a number of customers (like me) who would prefer to use PayPal over anything else –
  • It can be difficult to contact PayPal’s customer service department.
  • Digital goods are not covered in PayPal’s Seller Protection policies.

Please tell us what you think, and we’ll look and some alternatives for future blog posts on your recommendations

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