Review: Pros and Cons of PayPal as a Payment Processor

PayPal is an online payment system owned and operated by the American company PayPal Holdings Inc. It specifically provides online money transfers while also operating as a payment processor or payment gateway for individual online vendors, electronic commerce businesses, auction websites, and other commercial uses.

A Concise Review of PayPal as a Payment Processor for Merchants and eCommerce Businesses

The following are the pros or the advantages and benefits of using PayPal as a payment processor for business owners and freelancers:

• Free and Easy: One of the key advantages of PayPal is that it easy to set up an account. The sign-up process is free, and it only requires users to submit proof of identity and address, and link their credit card or bank account to verify their accounts. Note that the service has a flat rate pricing drawn from cuts from sales.

• Accessible: The service is available in 202 markets and has over 286 million active users around the world. Individual merchants or business owners benefit from the existing user base of the company composed of individuals familiar with how the service works.

• Payment Options: Note that non-registered shoppers or customers can still pay PayPal-enabled freelancers or businesses. The service accepts payment via credit or debit card payments from Visa, MasterCard, and American Express. The service also allows recurring or subscription payments.

• Multiple Currencies: Individual or business merchants can receive payments in more than 100 currencies. They can also hold payments in their accounts in 25 currencies and withdraw funds in 56 currencies.

• eCommerce Support: Online businesses such as online shopping, online-enabled services, and other digital storefronts can easily integrate a PayPal payment checkout link to their websites. The link directs online customers to the summary of charges and payment options.

• Physical Stores: The service also works for physical or brick-and-mortar businesses such as retail stores. It essentially enables small business owners to receive cashless transactions due to its support for credit and debit card payments via card readers without the need to set up merchant accounts with local banks.

• Security: Transactions coursed through the service is secured via online encryption. The company also offers round-the-clock fraud monitoring, fraud protection, dispute resolution, and seller protection on eligible purchases.

• Third-Party Integration: Another benefit of PayPal is that it can be integrated with several third-party solution providers. Examples include shopping cart software, financial management or accounting applications, email marketing applications, shipping software, and CRM software.

Below are the cons or disadvantages and limitations of using PayPal as a payment processor for business owners and freelancers:

• Not Entirely Free: The service comes with charges taken from each sales transaction. The fee for each transaction is USD 0.30 plus 2.9 percent of the amount received from transactions in the U.S. Transactions received outside the U.S. costs 4.4 percent each plus a fixed fee that varies depending on the country the funds are coming from.

• Unsuitable for Large Sales: A key disadvantage of PayPal is that users can experience an increase in costs with an increase in their sales transaction. In other words, their costs grow as their sales grow. Other payment processing solutions offer more cost savings because of minimal charges from transaction fees, among others.

• Extra Charges: Not all features and benefits of the service are available to all account users. For example, PayPal Payment Pro costs USD 30 per month with USD 0.30 and 2.9 percent of sales per transaction. The Pro service centers on a hosted checkout. Recurrent billing costs an additional USD 10.

• Account Freezing: The company has been haunted by horror stories from customers complaining that their accounts and money have been frozen after being flagged down as risky or involved in fraudulent activities. However, there is a customer support that can handle this issue but resolving it can take patience.

• Unreliable Phone Support: Note that the company excels in overall customer support. However, there have been complaints about the unreliability of customer service coursed through the phone. Account holders have noted that some customer reps seem less knowledgeable than the others, thus demonstrating the lack of standards in customer service representation.

• Purported Favoritism: Grievances and criticisms from individual and business merchants are pervasive online. Most of these complaints have one central issue: that PayPal seems to favor the customers of these merchants, particularly when it comes to chargebacks, fraudulent activities, and buyers claiming that they have not received the product they ordered from the merchants.

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