e-Commerce 101–PayPal Primer

paypal logo

Paypal. This company has been around since 1998 and has been the leading online payment processor for most of those years. It promotes a safe way to do business online, and makes it easier for everyone to transfer money for goods and services.

However, even in 2016, there is still some confusion about it. There are so many questions that people have, that I can’t answer all of them here. I have some answers for the most common questions that I encounter, though.

Do I have to have a Paypal account to send money?

The short answer is no, you do not. The seller can specify options (or at least used to be able to) to require that their customers be registered or even verified Paypal users, but by default this is not a requirement and you can process payment as a guest user using only your credit/debit card.

I am a business, what options do I have for accepting payments?

Paypal has many options for business, a short list is as follows:

  • Standard Paypal payments
  • Virtual Terminal (credit card processor merchant account)
  • IPN (API Integration)
  • Paypal Here (mobile credit card reader)

I am a non-profit, what options do I have for accepting payments?

Technically speaking, you could use all the same things as a business. I would also like to point out that Paypal does have its own web buttons for integrating into websites if you would prefer to use that. This will free you from needing to have your own ecommerce platform. Among the buttons you can get code for, there is a Donate button.

Are there any fees involved?

As per their site, purchasing using Paypal is free. However if you are selling, each transaction is 2.9% + $0.30 per sale. You can see the latest and most up-to-date rates on their site.

Be aware too that there exist merchant modules for various platforms for “Paypal fee reversal”. This means that on those sites that you will be charged for the paypal fee so the merchant does not have to absorb that cost themselves. From what I understand this is very much frowned upon, but I do not know if it’s a Terms of Use violation.

What options do I have for sending money?

Paypal has quite a few options for sourcing money. A short list is here:

  • Direct Debit from Bank Account
  • Credit/Debit Cards
  • Paypal Credit

There are also prepaid debit cards that can be linked to your Paypal account, available wherever you normally purchase them.

What if something goes wrong with a transaction?

Paypal gives every buyer 45 days from date of transactio to file a dispute. You can dispute anything that goes wrong with a transaction, such as unauthorized transaction, undelivered goods, etc. Be aware you do need to provide proof of your claim and that Paypal does not default to the buyer’s favor. Also, if you make frequent claims then Paypal may even no longer allow you to use their site.

Always work with the merchant first, and consider the Paypal dispute system a last resort. Paypal does give you 45 days, but don’t wait until the last minute if it can be helped. Personally, I give companies 15-20 days to reply to my request and if I don’t hear from them, I document this and provide the information in a Paypal dispute. Fortunately, in the 15+ years I’ve been using Paypal, I have had to do this less than 5 times. Just be careful on Paypal and be smart, and you should have some decent experiences.

Where can I use Paypal?

Many places accept it. It got its start from being used for online transactions, but the number of places that accept it is growing. A few popular sites that use Paypal:

You can even use Paypal to pay for things at Dollar General stores if you are in the United States. I have personally not used this yet but it does involve using a PIN you set up from the mobile application or the web dashboard. You will never use your password to authenticate at Dollar General, however you will use your email address because that is the identifier of your account.

How do I get started using Paypal?

The first thing to do is go to their website and click the Sign Up button. Then select if you need a Personal or Business account. Both are free, however, the important thing to consider is if you will need the added billing features the Business account carries. If you are just making payments online and even want to put a Donate button on a web page, then you will be just fine with a Personal account. You can always upgrade later.

After making your selection you will need to enter your email address and a password you wish to use.  Once this is completed it will ask you for your contact information, including Social Security Number. Make sure you have all of your information handy before getting to this point.

Once you are done, you can start using your Paypal account! You can link it to a credit/debit card, bank account, or you can even prefund your account with money. It is highly recommended you attach a payment method though, so you will appear as a verified buyer and that adds a level of trust with the companies you do business with. Some sellers will refuse to do business with non-verified members as it does not afford them the same level of protection Paypal offers on transactions with verified members.

Any Advice?

There are a lot of online safety issues to consider. Internet safety is a topic all on its own, but I will highlight a few big ones here specific to Paypal.

  • Never share your passwords with anyone. If you are a business user, you can add your employee with their own login to your company Paypal, which does include the ability to pick and  choose what they are allowed to do.
  • Be aware of phishing sites. These sites will appear to look like Paypal but are actually just harvesting your login information. If you have any questions as to an email message’s validity, you can always give Paypal a phone call, or reach out to them from within the Paypal dashboard to inquire. Chances are it is a scam and they will want you to forward that email to their fraud department so they can investigate and work on shutting down the scam.
  • As I said before, don’t be dumb when it comes to filing disputes. In addition to Paypal keeping a record of disputes, some industries have a lot of cohesion, such as web hosting. I can personally attest that there are several groups and sites for web hosts to protect themselves from fraudsters, so even if Paypal hasn’t banned you, your false dispute (one that violates the host’s Terms of Service) may have earned you a note on a file with your name somewhere that can be used by other companies to determine if they will do business with you. So when disputing via paypal, make sure you have made sure the merchant is not cooperating with you at all and that you have given them ample time to respond to your request.

Leave a Reply

Your email address will not be published. Required fields are marked *