November 16th, 2024
1. PayPal charges somewhere around 5-10%, if you read their fees carefully, although the show their lowest fee structure when businesses are signing up, while merchant accounts from banks and merchant services companies are quite substantially lower, especially when you calculate that average small businesses do about $250,000 payment processing per year
2. PayPal may hold funds for 21 days and not allow it to be transferred to your bank account “in order to safeguard transactions” – as you get larger and your business does better in sales, you run the risk of having funds temporarily withheld by PayPal, or even worse, frozen for months
3. Despite the fact that PayPal is a payment remitter, and have no right to hold/freeze funds belonging to a business, it does so, almost systematically backed by a very poor customer service that you can hardly ever get hold of, so don’t be surprised if your funds are frozen by PayPal for 6 months – even worse, PayPal freezes your funds WITHOUT ADVANCE WARNING OR ANY EXPLANATION
4. You may incur fees when transferring money from your PayPal account to your bank account
5. PayPal can never offer a true merchant service for businesses because it is not a merchant account, it is a third-party processor and it has little to no flexibility with underwriting, and it subjects its business users to the same shortcomings that third-party processors are subjected to by the banking industry
6. No direct website integration, so your customers always see that you are using a third-party processor like PayPal, and while your marketing Dollars promote PayPal, you run the risk of customers assuming that you are too small of a business to have your own bank merchant account for credit card processing
7. Many businesses experience countless occasions when they cannot log into their account to transfer their money from PayPal to their business bank account, or being subjected to harsh verification just to access your own money, in the meantime, PayPal gets hit so often with fraudsters who claim to be you in order to access your account, and possibly steal your money
8. PayPal is the lowest speed of getting your cash flow for your business
9. PayPal asks to have you link your bank account to your PayPal account, and storing user ID and password for your online banking. This could allow a dishonest PayPal employee, or someone who successfully hacks PayPal, to access (or wipe out) your bank account
10. PayPal is not a bank, so it is not subject to banking rules, and your funds that PayPal holds are not protected by FDIC insurance.
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