Benefits and Risks of Paypal

[Tom W]

OK, I've been on the internet for 10 years and have yet to obtain a paypal account. I don't do much business on the net, but I will sell the occasional thing. Now I've been approached by a potential buyer who wants to pay with a credit card through paypal.

As a seller, what are the risks of using this service? Are there any fees? How does it work?

I went to their web site, blocked their cookie, and didn't really find any good information. They certainly want people to use their service, and if it is good and safe, I might consider it.

[tpinchback]

Hi Tom,

I too am very reluctant to do business on-line, because of all the scams that do happen on a day to day basis. But, there are pros and cons to just about every thing.

I did a search on dprewiew and found a couple of good sources of information to get you started.

Hoped it helped. gL

EDIT
dprewiew would not let me link to the paypal scams but do a search here.

http://www.dpreview.com/forums/

[CoolToolGuy]

Tom,

I have bought many things using PayPal and accepted a lot of payments via PayPal for things that I have sold. However, I have never gotten a credit card payment via PayPal. I understand that with a credit card payment there is a way that the buyer can cancel the credit card transaction after making the payment, which leaves you hanging. I don't know all of the details, but if the PayPal payment is made from the buyer's checking account they cannot pull such a stunt - once you get the payment, the money is yours. In addition, I think your fees may be higher with a credit card payment, since you are the merchant.

I see a lot of items listed on eBay that state that PayPal is not accepted from a credit card. I would stay away from it if it were me.

On the other hand, I love using PayPal to buy things. It is instantaneous and secure.

You may be able to find more details about the credit card deal in the eBay community forums.

Hope this helps.

[Tom W]

Thanks, both of you. I'll do that search. Frankly, if its someone I know on the net, I'll just send the doggone thing and wait for payment, unless its real expensive.

[SoCal69]

I have used paypal with my account on ebay for a few years now and have never had a problem. I think it is correct that a buyer can dispute a credit card payment and you may get stuck. However, I believe that there is a way to set your preferences to block credit card payments. That being said, I have never had a problem with any payment. I love the convenience of using the account to buy, but I have stopped using it for selling except in limited circumstances due to their fees, which I believe is currently about $0.30 + 3% of the amount received. There are no fees to the buyer.

I'm sure you can find the current fee schedule on their site.

[Tom W]

I have used paypal with my account on ebay for a few years now and have never had a problem. I think it is correct that a buyer can dispute a credit card payment and you may get stuck. However, I believe that there is a way to set your preferences to block credit card payments. That being said, I have never had a problem with any payment. I love the convenience of using the account to buy, but I have stopped using it for selling except in limited circumstances due to their fees, which I believe is currently about $0.30 + 3% of the amount received. There are no fees to the buyer.

I'm sure you can find the current fee schedule on their site.

I'm having a rough time finding any pertinent info on their site - its all marketing.

Anyway, I've decided not to go the paypal route as a seller. I'm not about to pay a fee so that a buyer gains the option of reversing a CC payment on me. That just isn't prudent.

[SoCal69]

Tom:

Here's the link to their fee schedule:

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

it seems that you can get a personal account and not pay any fees for sending or receiving funds. For you, this may be an option, because a personal account does not allow credit card payments. This is an excerpt from their user agreement:

Receiving Payments


Receipt of Credit Card Funded Payments. The ability to receive credit card funded payments is reserved for Premier and Business accounts. Personal Accounts that receive credit card funded payments may accept the payment by upgrading to a Premier or Business account, or they will have to deny the payment. Personal accounts may receive non-credit card funded payments for free. Once upgraded, Premier and Business Accounts may receive unlimited credit card funded payments. Payments funded wholly or partially by a credit card are classified as credit card payments in the PayPal system.


Receipt of Payments; Risk of Reversal of Transactions; Collection of Funds you owe PayPal. When you receive a payment through the Service, unless you follow the steps necessary to qualify for our Seller Protection Policy, you are not protected against a subsequent reversal of the transaction. In the event that the sender's transaction is reversed for any reason and you do not qualify for the Seller Protection Policy for that transaction, you will owe PayPal for the amount of the reversed transaction plus any fees imposed on PayPal as a result of the reversal. Examples of such a reversal include, but are not limited to, a credit card reversal by the sender of the payment, and a reversal of the transaction because the sender of the payment was using a stolen credit card or unauthorized bank account. PayPal will seek to recover the funds from you by debiting your PayPal balance and, if there are not sufficient funds in your PayPal balance, PayPal reserves the right to collect your debt to PayPal by any other legal means.

Hope this helps.

[Tom W]

Thanks, Chuck. I finally dug up the fee schedule myself as well, but I noted right away that the credit card acceptance was reserved for businesses. Given that I'm not a business, that would seem silly for me.

But that is exactly what the potential buyer requested - that I accept credit card through paypal. I politely declined, and I'm glad I did.

[Scottes]

I politely declined, and I'm glad I did.

Sounds like a smart move.

[Tom W]

I politely declined, and I'm glad I did.

Sounds like a smart move.

Color me silly, but I like good old American Greenbacks. Or at least a check to deposit in the bank.

Come to think of it, I'd probably prefer being paid in gold, but that is a little harder to spend around here. :)

[Cadwell]

I have never personally dealt with PayPal... but the guys on the forums at this site seem to have issues with them. I suggest you have a read and form your own opinions....

http://www.paypalsucks.com/

[Tom W]

Hmmmm....

Interesting site - kind-of a summation of the risk side.

Thanks, all - I'll not be joining up with paypal any time soon. :D

[arogop]

I have used paypal to buy things on ebay for a couple of years now with out any problems.

[garethhhhh]

Whoa! :shock:

This from a former employee:
http://www.paypalsucks.com/forums/showthread.php?fid=6&tid=1529&old_block=0

[CoolToolGuy]

Whoa! :shock:

This from a former employee:
http://www.paypalsucks.com/forums/showthread.php?fid=6&tid=1529&old_block=0

That post is almost a year-and-a-half old, and PayPal has since been acquired by eBay. Things may very well be different now. My dealings with them have been fine, including multiple transactions with the same person.

Everyone has to make their own choices...

[garethhhhh]

Everyone has to make their own choices...

Yes. Me? I think I'll pass on a Pay Pal account

If what I read in that thread is true then:
EBay get a lot of bids from scammers & PayPal is a soft target. Sounds like a perfect marriage to me... :|

Just MHO.

[Tom W]

It looks to me like Paypal is not a bad deal for buyers, but it appears to put all the risk on the seller, as well as that extra 2.9% cost.

As a non-merchant at this point in time, I don't see a reason to deal with them.

EDIT - I should say that I don't see a reason to deal with Paypal as a seller.

[CoolToolGuy]

Everyone has to make their own choices...

Yes. Me? I think I'll pass on a Pay Pal account

If what I read in that thread is true then:
EBay get a lot of bids from scammers & PayPal is a soft target. Sounds like a perfect marriage to me... :|

Just MHO.

You made your choice, and that's fine. But there are several ifs there that others should consider:
-There is no verification that the post you reference is from a former employee - just as there is no verification that I am not actually Bill Gates under a pen name :roll:
-To follow on - the accusations are not verified.
-There are always cautions that should be observed in an electronic medium.
-Since PayPal has been acquired by eBay, it is very likely that eBay will endeavor to provide a safe trading environment for their members.

Have Fun

[CoolToolGuy]

It looks to me like Paypal is not a bad deal for buyers, but it appears to put all the risk on the seller, as well as that extra 2.9% cost.

As a non-merchant at this point in time, I don't see a reason to deal with them.

I think if you stick to accepting payments from a PayPal account or via a checking account, PayPal can work out fine. It can shorten the payment time (you don't have to wait for a check to be mailed or wait for it to clear your bank), and that works both ways - as a buyer and as a seller. As a seller, the second you get the payment into your account, you can have PayPal cut a check or do an EFT into your bank's checking account.

It may not be for everyone, but some of the trashing in this thread by folks who have never used it or seemingly don't have a clue got me going. Make your choices - but be informed before you throw around negative information that you can't verify.

[Tom W]

It looks to me like Paypal is not a bad deal for buyers, but it appears to put all the risk on the seller, as well as that extra 2.9% cost.

As a non-merchant at this point in time, I don't see a reason to deal with them.

I think if you stick to accepting payments from a PayPal account or via a checking account, PayPal can work out fine. It can shorten the payment time (you don't have to wait for a check to be mailed or wait for it to clear your bank), and that works both ways - as a buyer and as a seller. As a seller, the second you get the payment into your account, you can have PayPal cut a check or do an EFT into your bank's checking account.

It may not be for everyone, but some of the trashing in this thread by folks who have never used it or seemingly don't have a clue got me going. Make your choices - but be informed before you throw around negative information that you can't verify.

Well, that's the main reason I asked. I've heard things on other sites, though like the "focus problem", things get blown out of proportion.

On the other hand, I'm leery of anything that can attach itself to my checking or savings account. Some of the stories I've heard involve the EFT of funds OUT of the seller's account in a reversal of a previous payment. Maybe I'm overly cautious, but I'd rather err on the side of safety, especially when it comes to my hard-earned money.

[CoolToolGuy]

It looks to me like Paypal is not a bad deal for buyers, but it appears to put all the risk on the seller, as well as that extra 2.9% cost.

As a non-merchant at this point in time, I don't see a reason to deal with them.

I think if you stick to accepting payments from a PayPal account or via a checking account, PayPal can work out fine. It can shorten the payment time (you don't have to wait for a check to be mailed or wait for it to clear your bank), and that works both ways - as a buyer and as a seller. As a seller, the second you get the payment into your account, you can have PayPal cut a check or do an EFT into your bank's checking account.

It may not be for everyone, but some of the trashing in this thread by folks who have never used it or seemingly don't have a clue got me going. Make your choices - but be informed before you throw around negative information that you can't verify.

Well, that's the main reason I asked. I've heard things on other sites, though like the "focus problem", things get blown out of proportion.

On the other hand, I'm leery of anything that can attach itself to my checking or savings account. Some of the stories I've heard involve the EFT of funds OUT of the seller's account in a reversal of a previous payment. Maybe I'm overly cautious, but I'd rather err on the side of safety, especially when it comes to my hard-earned money.

Believe me, I understand, and it is a risk like many other things. How bad you want the benefit balanced against the risk.

Please note: what you are about to read may be considered by some to be an 'old fart telling war stories'. So if that offends you or you don't think it may be valuable, now is your chance to pull out. On the other hand, some of us old farts tell the war stories in the hope that others learn from our experiences. Consider yourself advised

Direct deposit for paychecks is almost the norm today (at least in the USA). But many people don't realize that giving your employer the ability to deposit into your account may also give them the ability to withdraw from your account. At a prior employer, the payroll department screwed up the payroll one week and had to back out the payroll deposits. Well, they screwed up even more, and backed out some of them twice. Now, I don't know about you, but on the day before payday I don't typically have a balance equal to a whole paycheck in my checking account, and there were many others in the same boat, and many of the employees' accounts became overdrawn. Some folks had checks hit their account the same night and they bounced. Not a pretty picture, and the employer had to provide explanations and apologies. So things can happen anywhere there are electronic fund transfers.

[IndyJeff]

eBay buying PayPal will not make PayPal any safer if it is anything like eBay's security.
One of my friends bought a Nikon D1 off eBay. The seller was in Madrid and asked if my firend could send money via Western Union Money Order. He agreed and sent the money. It wasn't long after that he found out the camera wasn't coming, nor was his money being refunded. He said eBay was of absolutley no help what-so-ever. Western Union did an investigation but never could come up with anything. So my buddy was out quite a bit of money, plus he had no camera and none of the legitimate principals involved wanted anything to do with helping him recover his funds.
When I buy off eBay, I send an email before I bid explaining that before I bid I need a phone number contact. Only once or twice has the seller refused to give a phone number. I do explain that if anything goes wrong I want to be able to contact somebody, especially if I am spending a large sum of money.

IMHO What ought to happen is eBay scammers should be caught, hung up, beaten with a whip, dipped in saltwater, beat some more and then branded with the word thief across the forehead. Anything they have of value should be confiscated and sold to refund their victims money they are due. Publicise that a time or two and you wouldn't be able to get Osama Bin Laden to run a scam on eBay.

[CoolToolGuy]

IMHO What ought to happen is eBay scammers should be caught, hung up, beaten with a whip, dipped in saltwater, beat some more and then branded with the word thief across the forehead. Anything they have of value should be confiscated and sold to refund their victims money they are due. Publicise that a time or two and you wouldn't be able to get Osama Bin Laden to run a scam on eBay.

Can they put their cohones up for bid? Oops, that would violate their own standard of not allowing body parts to be sold on eBay - shucks.

The Spain/Western Union connection seems to be well known by now, and I don't think I would ever wire money by Western Union for an eBay purchase. I also am very cautious about buying internationally. Shame about your friend. But eBay manages to satisfy a lot of buyers and sellers, and there are folks legitimately making a living selling on eBay. And there are lots of 'camera stores' in a certain burrough of New York City that rip people off without using eBay. The sharks are everywhere... :shock:

[Tom W]

Direct deposit for paychecks is almost the norm today (at least in the USA). But many people don't realize that giving your employer the ability to deposit into your account may also give them the ability to withdraw from your account. At a prior employer, the payroll department screwed up the payroll one week and had to back out the payroll deposits. Well, they screwed up even more, and backed out some of them twice. Now, I don't know about you, but on the day before payday I don't typically have a balance equal to a whole paycheck in my checking account, and there were many others in the same boat, and many of the employees' accounts became overdrawn. Some folks had checks hit their account the same night and they bounced. Not a pretty picture, and the employer had to provide explanations and apologies. So things can happen anywhere there are electronic fund transfers.

I used to like direct deposit, until it became mandatory. Anyway, the situation you describe would really tick off some people, myself included. Did the company reimburse for any overdrafts that it caused? Did it correct the employee's credit records after their overdrafts?

I don't know if you've noticed or not, but there are a few places now that will use EFT even when you send your payment by check. They destroy the check and withdraw the funds instead. That, of course, destroys the paper trail as well and gives yet another party access to your account. And of course, anything done electronically can be done remotely. I can visualize hacking into a bank's system getting easier and easier as systems become more connected.

Give me cash any day. Yes, you can get robbed, but at least you have a chance to shoot the SOB that steal your hard-earned money. Try that when the perpetrator is sitting behind a CRT in some obscure corner of another country oceans away.

Sorry - I just needed a security rant, I guess. :)

[CoolToolGuy]

Direct deposit for paychecks is almost the norm today (at least in the USA). But many people don't realize that giving your employer the ability to deposit into your account may also give them the ability to withdraw from your account. At a prior employer, the payroll department screwed up the payroll one week and had to back out the payroll deposits. Well, they screwed up even more, and backed out some of them twice. Now, I don't know about you, but on the day before payday I don't typically have a balance equal to a whole paycheck in my checking account, and there were many others in the same boat, and many of the employees' accounts became overdrawn. Some folks had checks hit their account the same night and they bounced. Not a pretty picture, and the employer had to provide explanations and apologies. So things can happen anywhere there are electronic fund transfers.

I used to like direct deposit, until it became mandatory. Anyway, the situation you describe would really tick off some people, myself included. Did the company reimburse for any overdrafts that it caused? Did it correct the employee's credit records after their overdrafts?

I don't know if you've noticed or not, but there are a few places now that will use EFT even when you send your payment by check. They destroy the check and withdraw the funds instead. That, of course, destroys the paper trail as well and gives yet another party access to your account. And of course, anything done electronically can be done remotely. I can visualize hacking into a bank's system getting easier and easier as systems become more connected.

Give me cash any day. Yes, you can get robbed, but at least you have a chance to shoot the SOB that steal your hard-earned money. Try that when the perpetrator is sitting behind a CRT in some obscure corner of another country oceans away.

Sorry - I just needed a security rant, I guess. :)

The company provided apologies, and I don't think there were any long-term repurcussions. But it came as quite a shock to several people that their employer could withdraw from their checking account!

Let's face it - we are in the electronic age, and the days of large-scale paper transactions are numbered. I believe there is a requirement for all US Federal Reserve Banks to be equipped for check truncation (keep the check) by sometime this year. What that means is that the check won't go beyond the bank to which it is presented for payment. A little more plainly - If I (on the East Coast) send a check to Belmondo (in California) and he deposits the check at his bank, the check will go to the Federal Reserve Bank that his bank deals with, and no further. Digital Imaging (gee, imagine that!) of the front and back of the check will be used to forward to my bank along with the electronic transaction (acct number and amount), and they will have the images available if I want them. I may be slightly amiss in the details but, absolutely, the check will not come back to the East Coast. This will be a huge savings in transportation and processing costs for the banks. It was apparently helped along by the 9/11/01 attacks, as transportation links were disrupted, which resulted in checks not being processed.

Of course, Belmondo may have enough socked away that he never cashes the check, so it might not make a difference. But that's another story for another time... :roll:

[Tom W]

The company provided apologies, and I don't think there were any long-term repurcussions. But it came as quite a shock to several people that their employer could withdraw from their checking account!

Let's face it - we are in the electronic age, and the days of large-scale paper transactions are numbered. I believe there is a requirement for all US Federal Reserve Banks to be equipped for check truncation (keep the check) by sometime this year. What that means is that the check won't go beyond the bank to which it is presented for payment. A little more plainly - If I (on the East Coast) send a check to Belmondo (in California) and he deposits the check at his bank, the check will go to the Federal Reserve Bank that his bank deals with, and no further. Digital Imaging (gee, imagine that!) of the front and back of the check will be used to forward to my bank along with the electronic transaction (acct number and amount), and they will have the images available if I want them. I may be slightly amiss in the details but, absolutely, the check will not come back to the East Coast. This will be a huge savings in transportation and processing costs for the banks. It was apparently helped along by the 9/11/01 attacks, as transportation links were disrupted, which resulted in checks not being processed.

Of course, Belmondo may have enough socked away that he never cashes the check, so it might not make a difference. But that's another story for another time... :roll:

What Chase Mastercard and a couple of others are doing goes beyond sending images of the check - they don't even cash it, but use it instead as some kind of permission slip for directly transfering funds from my account. Who polices that activity?

My bank has, on line, copies of my cancelled checks from all transactions except for Chase - it is treated the same way as my automatic mortgage payment. Its even written on the bank statement that way. And the problem is, they made the rule unilaterally. I agreed to automatic withdrawel with the mortgage company, but I did not do so with Chase. They just decided to change policy one day.

Now how long do you think it will be before they don't even want me to write the check, but instead just pull the funds out of my account automatically? That will probably be the day I close the account.

[CoolToolGuy]

What Chase Mastercard and a couple of others are doing goes beyond sending images of the check - they don't even cash it, but use it instead as some kind of permission slip for directly transfering funds from my account. Who polices that activity?

My bank has, on line, copies of my cancelled checks from all transactions except for Chase - it is treated the same way as my automatic mortgage payment. Its even written on the bank statement that way. And the problem is, they made the rule unilaterally. I agreed to automatic withdrawel with the mortgage company, but I did not do so with Chase. They just decided to change policy one day.

Now how long do you think it will be before they don't even want me to write the check, but instead just pull the funds out of my account automatically? That will probably be the day I close the account.

I have a little banking and check processing experience in my background, so I can make an intelligent guess at this (but a guess nonetheless).

The reason to have images of the check is to see all of the endorsements by the banks that process it from original presentation back to the source bank. If there is a question about the check, it is helpful to follow the trail (dates are included on the endorsements). You send the check to Chase, and since they are a bank (a major one), they can kill the check and create an electronic transaction. Chances are good your bank statement shows a check number, which is part of the EFT. Since there are no endorsements, there is no need to ship or store a piece of paper (thousands of them, actually).

The paper check has been a medium of exchange for so long that any changes to its flow and trail can be traumatic. Truncation on a national scale will likely be one of those traumatic events.

Have Fun.

[Tom W]

The paper check has been a medium of exchange for so long that any changes to its flow and trail can be traumatic. Truncation on a national scale will likely be one of those traumatic events.

Have Fun.

Well, the paper check does put a piece of paper in ones hands that proves where it has been. Its not that I'm resistant to change (well, yes I am), but I've been in the human race for long enough to know that there's a small percentage of the population that cannot be trusted. Its really nice to have original documents to use in the court of law and to have access to them without having to pull teeth.

Sadly, we're well past that point now. Oh well - I guess cash is still around for now....