PayPal has a unique niche in the payment processing industry. They are mostly sought after for eCommerce purposes. They started out as the processor for eBay, then broke off to become their own company. Servicing over 17 million merchants across 218 million consumer accounts should mean PayPal is one of the best processors out there, right? Not necessarily. It depends on your business size and the features you need from a payment processor. Our PayPal review should give you a good idea of if they’re a right fit for your business.
PayPal Review: Costs
This company has transparent pricing that never increases without your consent. Like us, they also offer no contract exit fees and their setup is completely free of fees. This comes at a cost, however, because they have a higher than average processing rate.
- Swiped Cards via Mobile App: 2.7%
- Key Entered Cards: (keyed in by cardholder on ecommerce site or invoice): 2.9% + $0.30
- Key Entered Cards: (keyed in by merchant on mobile phone or virtual terminal): 3.5% + $0.15
If you upgrade to their PayPal Payments Pro option, you pay a $30 monthly fee. This basically gives merchants access to a virtual terminal online.
Not all costs to your business are in dollars. The cost of precious time should be taken into account as well. PayPal uses a daily discount instead of a monthly discount. A daily discount means that your processor takes the cost of their services out of your profit daily. For example, let’s say you sold $500 worth of product in one day over 5 transactions. They take out 2.9% of $500 plus 30 cents for each transaction. So, at the end of the day the batch that you accept is $484 dollars. Now you or your bookkeeper must go back to QuickBooks and apply as a sale to each client with a separate entry of $16 for payment processing fees. This takes extra time every day, and the more transactions you have, the more complicated the bookkeeping work becomes. This is a lot of time wasted.
Speaking of wasted time, PayPal does not deposit funds directly into your business checking account, which you use to run your business. They only deposit funds into a PayPal account. So you must manually transfer the funds from your PayPal account to your business checking account each day. Nobody can operate their business solely out of a PayPal account. Plus, who would want to …being that it is not FDIC Insured?
PayPal Review: Customer Service
PayPal has a tiered customer service system in which you pay higher amounts for the kind of service you want. The bottom tier is free, but there are many online complaints filed for long hold times, poor service, and call transfers to India. If you decide to pay $139 per month for enhanced support you can have access for more hours a day. It is called the 13X7 plan. The 24X7 plan is a just a cool $495 a month and gives you the best support. If paying $500 for a service that should come free doesn’t appeal to you, read up on quality merchant service support here.
The Bottom Line
The company can be competitive for some because they do not put you through an underwriting process. Anyone with an email address can use PayPal. This is attractive for merchants who have trouble getting approved for one because of their high risk grade. However, this too comes at a cost. The number one complaint about them on the BBB website is that they frequently hold funds for far too long. By skipping traditional underwriting upfront, merchant can get started in minutes. But some time merchants get blindsided by by held back funds, reserve accounts, or even account termination.
So, if you can’t get approved anywhere else and you are a business that processes sparingly and never more than $3,000 a month, PayPal could work for you! Some of those 17 million merchants we mentioned before are probably pleased with PayPal, but what about the 7 thousand registered complaints online? What if you could find a reliable merchant service provider with free phone support, lower rates, and 100% gross funding to your business checking account? You should probably book an appointment with us for a free consultation to see how PayFrog can help you!
What has your experience been with PayPal? Give us your PayPal review in the comments sections below!