The truth about PayPal

rkelleher

Hello,

I recently read a thread on boards.ie about some ranting lunatic who had had a bad experience with paypal. The thread was subsequently closed and no further information was provided on the matter hence, I endeavour to supply some extra information for all you budding entrepreneurs out there who want to start your online business.

I have over 5 years experience dealing as a seller with paypal and lets just say its never been a placid journey. I think the best way I can summarise this is with pros and cons. So... here goes

Pros of selling with paypal:

1. It is the most widely accepted payment method accepted online for ecommerce (therefore without the option to accept paypal on your website you limited yourself in terms of sales.)

2. Buyers trust the paypal symbol worldwide - confidence when buying online is one of the primary phycological reasons why people make purchases.

3. yeah... 5 minutes is enough time trying to fabricate more.

Cons of selling with paypal (the truth of paypal for sellers):

1. It is the most widely accepted payment method online however, essentially what paypal does it takes your credit card details, visa, matercard etc and processes the transaction as a middle man. Normally credit card companies charge a transaction fee of 1.5%. Paypal charges a fee of 3.4% for processing the exact same transaction. They keep the 1.9% for themselves. Now, you might ask yourself, ok why did I get charged more with paypal for this standard transaction? Hmm it must be the 1. seller support they give... no wait its 2. the seller protection they give... no wait it must be the 3. overall coverage on insurance I have if the transaction goes bad.

If you answered "yes" to number 1,2 or 3 sorry, you don't win the holiday to majorca, the truth is that all credit card companies offer this protection for buyers online anyways. If an item is purchased online with your credit card and you don't receive it, it was ordered in error or it was ordered by an unauthorised user, you are covered!! All you need to do is contact the card company and their insurance covers it.

Paypal is an incorporated company (similar to a Limited company here) which means they have limited liability. In financial terms it means that you could have €1 million euro in your paypal account and tomorrow if they go bust you lose everything and they have limited liability, meaning they have no obligation to pay you your cash. Hence, never keep money in your paypal account. It's more secure to leave it under your mattress (extra protection optional by putting your granny on top).

2. Paypal customer support. You'd think that by paying paypal thousands of euros in fees might get you some customer support, sadly its non existent. They hire off the hook employees for temporary positions who have less initiative than tom curise's unwillingness to sue south park over gay liable cases. As a seller you are never covered with paypal. They offer a thing called "seller protection". This service is not provided by paypal. The card company that processed the transaction provides this.

3. Charge backs are a case when someone uses your credit card without your authorisation. If someones credit card is stolen, and the thief uses the card to purchase something from you, you are liable for a charge back on the item. Meaning, you have to reaquire the item as the sale will be refunded to the victim. Paypal acts again as a middle man in this dispute meaning you are charged more than normal for this process. By dealing directly with the credit card company it costs the seller less and the buyer retains the same protection as they always had.

4. Delays in processing withdraws from your paypal account. Paypal states that you must wait 3-4 business days before withdrawing money from their account. As paypal have themselves said that... at any one time there is approximately $5 billion dollars in paypal bank accounts, stands to reason its better to leave it in for as much time possible. Interest on $5 billion must be pretty high (not sure with the current climate AIB are willing to give a money saving account with better rates). Problem is... paypal only allows Irish withdrawals to Irish bank accounts (which normally has a transfer time of around 1 hours... if not instantly depending on the branch, with paypal 3-4 days). The problem is that paypal only allows withdrawls to bank accounts in one currency to one country. Meaning that if you want to target other markes ie. UK, you must convert using the paypal conversion rate on sterling (around 1% higher than most banks) and also endure 2.5% cross border sales fees. Magnificent! Now paypal have clocked around 7% of your sale price + 0.35 transaction charge( not counting the other 8% that ebay take from the sale if you sell through this parent company).

So lets recap, for a transaction that would normally cost 1.5% transaction fee (to the seller), give full buyer protection to the customer (the same as paypal offers as protection for online buying) and would take place instantaneously has now become up to 7% of the sale price + 0.35 to the seller (15% if bought through ebay), causes the buyer to communicate through a middle man over any dispute(paypal) and takes 3-4 working days before funds can be accessed.

In summary, the world is the way it is and paypal is not going to disappear tomorrow therefore as business people you must make the best of a bad situation. However, I hope that later generations will learn from our wasteful, inept and clear unwillingness to accept that we are a bunch of frivolous self indulging bastards who have lost our sense of "good sense". Our ancestors grew up in country that didn't waste things and saw value where value was sought. However, today's wastefulness has become clouded in cyber space, wrapped in a corporate shroud of automated emails and void character.

Lets just take some solice in the fact that paypal, employs people, generates tax under an Irish system that dates from the 1980s(13% corporatation tax, one of the lowest in europe) and provides a service which already existed, to a marketplace that already existed, with a service that was never needed, and that to an economy and government that has become so bamboozled with itself that it doesn't know left from right. Yep, we're in this mess because we let it happen.

Think straight, as Jason Mraz says "there no need to complicate, our time is short"

I hope you enjoyed my rant! Looking forward to hearing all the feedback, especially legal cases from paypal and ebay with their army of underpaid, undervalued, rigorous Dutch and Swiz lawyers.

Ronan K

rkelleher

Sorry I forgot to mention.

I hate paypal, I think they are a bunch of robbing bas*ards, if I had the resources they had I could train 5 mentally challenged monkeys to run their company more efficiently. I might also need some type of cassette tape answering machine.

I'd call it "ThePalYouNeverWantedYouJustGot"

Yep

jambofc

but as you say it's "trusted" all over the world,if you want to sell your item outside of Ireland it's the best we can do,do you have an alternative?

i hate using it myself,why should i lose more of my small profit margin to these hungry f#####s.

unklerosco

Got to agree with those points... But as a new business I'd be lost without paypal. It's quick and easy to setup and start taking credit card payments.. Much faster than going for a merchant account. Their fee's do get lower depending on your turnover. My fee's have dropped twice in 6 months...

Everything else is right tho, customer service is pointless, insurance etc. also.. In fairness to them they did create the image that paypal is super safe, safer than credit cards where as it's no different...

Eitherway, Paypal was great for me.. I'll be keeping it as an option on my site but will be aiming to get a merchant account later this year. Oh, and paypal doesn't take laser.. Although, I wish laser would just hurry up and die and everyone can move to visa debt etc..

Fergal C

I've had reason to telephone PayPal customer service on two occasions. Contrary to what I've read here and on other forums, my experience of their customer service was excellent. They were very helpful in both instances and they resolved the issues in a speedy, friendly and professional manner. Maybe I was just lucky!

They didn't get to be the massive and successful company they are today, by being incompetent.

TanG411

I also think their customer service is fantastic.

When I switched my broadband provider and then made a payment through Paypal, the money did not go through to the seller. I assume this was because my I.P. Address had changed.

A simple email to Paypal telling them about my situation, and in two working days the money was sent to the buyer.

J_Wholesale

The picture you paint is not accurate by any means. Yes, PayPal charges more than credit card companies, and there are potential and actual drawbacks to using them, but in many cases the pros outweigh the cons. Also, your portrayal of credit card companies and merchant accounts is heavily tainted - for eCommerce, they're not as rosy as you seem to think.

For example, unlike PayPal, if you want to accept multiple currencies by credit card, you would need a separate online merchant account for every currency. If you're an Irish business taking sterling, this means opening a sterling account up North - I'm not kidding here, this is what BoI made us do in order to accept credit card payments in Sterling.

And as for the time it takes to extract your money from PayPal, it takes longer, in many cases, to extract your money from an online merchant account. Take Elavon as an example (the BoI offshoot company): they hold your money for anything from 5-20 days before you can access it - dictated in many cases by the length of your returns process. For us, it takes 11 days from when we initiate a transfer from Elavon to our bank before we can access the money. With PayPal, it takes about 5 days.

We've taken a huge amount of money through PayPal in the past 4 years and only had a couple of problems, all of which we've fixed. PayPal support actually improves as you generate more business - my guess is your account manager changes depending on how big a customer you are. Nothing unusual in that, we treat our big customers far better than the minnows too.

Which leads me to the biggest difference between PayPal and merchant accounts - the ease with which you can start up. Without a long online trading history, there is simply no way that you would get an online merchant account in Ireland these days. I know more start ups who have been refused a merchant account in this year alone than I do businesses who have managed to get one. This doesn't happen with PayPal. And for that, you pay extra, just as you pay extra when you get a loan from a shady company after every bank has turned you down.

You're parroting all the usual PayPal woes and ignoring all the problems with the alternatives. Your 'advice' should be taken as little more than a whinge and a moan.

unklerosco

J_Wholesale wrote: »

Which leads me to the biggest difference between PayPal and merchant accounts - the ease with which you can start up. Without a long online trading history, there is simply no way that you would get an online merchant account in Ireland these days. I know more start ups who have been refused a merchant account in this year alone than I do businesses who have managed to get one. This doesn't happen with PayPal. And for that, you pay extra, just as you pay extra when you get a loan from a shady company after every bank has turned you down.

I got to agree with you 100% there... I was looking to setup a merchant account earlier this year. In order to do so I had to become a Ltd. Company and it would take 4 - 8 weeks for the application. And even at that there was no guarantee we'd get one. With Paypal it took 5 mins to set the account up and a day or so to get verified and I'm still a sole trader..

mfceiling

Have to agree.....paypalare shíte

I sold £100 of vouchers to a guy in england and i got €90 for them.
The money went in to my paypal account and immediately was taken back.
I rang paypal and they told me they would not give me the money as they had reason to believe that the buyer was fraudulent and they weren't happy with where he got his money to pay for the transaction:mad:
I asked them what could i do....cue the usual disputes process, resolution, contact the seller etc
To this day 5 years after i still haven't reached any conclusion with them...the buyer wouldn't return any mails (he got his vouchers so he was happy), paypal never refunded me so they got the €90, and i got nothing - plus i was down the £100 of vouchers.
They might be the most popular but they are incompetent.

It's not the only hassle i've had with them.
Now when i buy or sell on ebay i either send a cheque or receive a cheque...paypal can get fcuked

dollydishmop

rkelleher wrote: »

Hello,

... paypal only allows Irish withdrawals to Irish bank accounts (which normally has a transfer time of around 1 hours... if not instantly depending on the branch, with paypal 3-4 days). K

What Irish banks are you transferring between???

Last time I moved money online from a BOI account to an AIB account it took over a week to arrive in the account!
And pretty much the same length of time transferring money the other way too.
I've given up transferring between Irish accounts online because it takes so damn long for the money to move!....much less hassle & quicker to pull from the ATM and hand cash over the counter
Whereas I can transfer money online from my UK current account to my hubby's UK current account (different UK banks) and it does indeed take less than an hour to arrive in the receiving account, but I've never had that experience doing online transers in Ireland.

However, anytime I've transferred money from my Paypal account to my AIB account its been less than 3 working days... Paypal quotes 2-3 working days to AIB and they've been spot on each time!

Just my experience FWIW

LighterGuy

This might be a stupid question to ask :P
But what is the story with PayPal and regards to the current Irish tax system?

I know that every bit of income a person makes in this country (as is every where else) must pay tax.


But at what point?
Lets say I get 500 euro from doing something online. Could be anything, e-commerce, selling a product or service etc. At what point does something get taxed? .. From the time 500 euro gets into my PalPal account? or at the time I transfer said money into a bank like Permanent TSB (or what ever bank would choose)

The reason why I ask is because PalPay, to my knowledge, appears to be the middle men. Between seller and buyer.

StupidLikeAFox

rkelleher wrote: »

you don't win the holiday to majorca

rkelleher

J_Wholesale wrote: »

The picture you paint is not accurate by any means. Yes, PayPal charges more than credit card companies, and there are potential and actual drawbacks to using them, but in many cases the pros outweigh the cons. Also, your portrayal of credit card companies and merchant accounts is heavily tainted - for eCommerce, they're not as rosy as you seem to think.

For example, unlike PayPal, if you want to accept multiple currencies by credit card, you would need a separate online merchant account for every currency. If you're an Irish business taking sterling, this means opening a sterling account up North - I'm not kidding here, this is what BoI made us do in order to accept credit card payments in Sterling.

And as for the time it takes to extract your money from PayPal, it takes longer, in many cases, to extract your money from an online merchant account. Take Elavon as an example (the BoI offshoot company): they hold your money for anything from 5-20 days before you can access it - dictated in many cases by the length of your returns process. For us, it takes 11 days from when we initiate a transfer from Elavon to our bank before we can access the money. With PayPal, it takes about 5 days.

We've taken a huge amount of money through PayPal in the past 4 years and only had a couple of problems, all of which we've fixed. PayPal support actually improves as you generate more business - my guess is your account manager changes depending on how big a customer you are. Nothing unusual in that, we treat our big customers far better than the minnows too.

Which leads me to the biggest difference between PayPal and merchant accounts - the ease with which you can start up. Without a long online trading history, there is simply no way that you would get an online merchant account in Ireland these days. I know more start ups who have been refused a merchant account in this year alone than I do businesses who have managed to get one. This doesn't happen with PayPal. And for that, you pay extra, just as you pay extra when you get a loan from a shady company after every bank has turned you down.

You're parroting all the usual PayPal woes and ignoring all the problems with the alternatives. Your 'advice' should be taken as little more than a whinge and a moan.

"Your 'advice' should be taken as little more than a whinge and a moan." - Hah who are you Lily Allen!? Exactly it's advise, at the end of the day, the article is meant for educational purposes only. Take from it what you will. However, as a human being I am not void emotion and maybe it was a whinge (highly intoxicated when transcribing, yet lucid I think).

Regarding the fact that a lot of banks will turn you down for a merchant account I fully agree. However with a little effort and persistence it's quite possible without too many hitches. Best thing is to talk to the branch manager and be prepared with a business plan. Current climate is very unhealthy for business start ups.

Also, regarding the currency issue, all banks take a percentage on the mid market rate yet paypal does squeeze a little more our of you than normal 2.5%. Ahah but... did a little browsing on the hidden extras... don't forget that been based in Ireland taking transactions on paypal from the UK also incurs another 2.5% cross border fee. No es bueno che boludo!

Anyways, keep up the cynicism, live life to the full and buy the new Dillion Moran cd when it comes out( you'd love him).

"A cynic is a person who knows the price of everything but the value of nothing! - Oscar Wilde

Chau mostro, disfruta la vida y buena suerte!

Ronan

Moonstar

LighterGuy wrote: »

This might be a stupid question to ask :P
But what is the story with PayPal and regards to the current Irish tax system?

I know that every bit of income a person makes in this country (as is every where else) must pay tax.


But at what point?
Lets say I get 500 euro from doing something online. Could be anything, e-commerce, selling a product or service etc. At what point does something get taxed? .. From the time 500 euro gets into my PalPal account? or at the time I transfer said money into a bank like Permanent TSB (or what ever bank would choose)

The reason why I ask is because PalPay, to my knowledge, appears to be the middle men. Between seller and buyer.

If you are doing business through Paypal, then any profits you make will get taxed.. when you pay tax. Also I think Paypal fees are considered a business expense and therefore should be tax deductible when you're doing tax returns.

rainbowdash

rkelleher wrote: »

Also, regarding the currency issue, all banks take a percentage on the mid market rate yet paypal does squeeze a little more our of you than normal 2.5%. Ahah but... did a little browsing on the hidden extras... don't forget that been based in Ireland taking transactions on paypal from the UK also incurs another 2.5% cross border fee. No es bueno che boludo!

Unless you open a bank account in the UK.....with a UK address.

Where theres a will theres a way. It took me a while to figure it out but I did.:D

141089

Moonstar wrote: »

If you are doing business through Paypal, then any profits you make will get taxed.. when you pay tax. Also I think Paypal fees are considered a business expense and therefore should be tax deductible when you're doing tax returns.

But do paypal contact Revenue Comissioners after a certain amount of money goes into your account?

Like I am a student, thinking of doing small time website design. I am not gonna start registering a business and become self employed. I plan to find a job here or abroad after college, and being self employed will presumably cause hassle when trying to do so. I am just gonna do this for some spending money through college.

I have a site , and will be printing leaflets soon. I don't even know yet if I will make any money! And even if I do, I have expenses I could associate with this money maker(?) as to tend my net profit towards zero.

If this is a major success and I make decent money comparable to a full time job, I will then go about paying tax etc. but right now, I really don't see a clear answer for me.

Like last year I fixed xbox360s, psps and what not, made some money but nothing significant, but then again could have assosiated expenses with that to make net profit 0, anyway I see the website design as the same sort of thing. just like a ?nixxer?

Any guidance?

like what about all those ads I see in my local newsletter. odd ball services with mobile numbers and don't seem like a registered business. if i was to give guitar lessons on a regular basis? sell my tv? finding 20 cent on the groung? am I meant to pay tax on that too?

jeff lebowski

I'm also wondering about the tax thing.....if I did a nixer and got paid through paypal what's the story? I know I am liable for tax for it

whatsamsn

Yeah I'd like to know that too.

aidan.connolly

Hi

You are liable to tax on your earnings, subject to the Irish Tax Authorites laws. It does not matter through which payment method you receive the money

Paypal/Worldpay etc are only payment processers and they don't deduct any tax from your money.

I hope this helps

regards

Aidan

whatsamsn

Thanks Aidan.
So basically its up to the person who is getting the money to report the tax. As Paypal etc wont. If a person doesnt they ruin the risk of getting caught... either by it being in the paypal account or more likely after its been transferred to their personal bankaccount, right?

Doesnt that technically mean there could be alot of people out there earning money from the net on the side? ... even guys on the social welfare? just running the risk?

aidan.connolly

Yes, that is correct.

jeff lebowski

How could they find out if you did withdraw it from paypal into your account?

DubTony

By looking at your bank statements.

This thread needs to be shot.

jeff lebowski

Probably seemed like a stupid question the way I phrased it.

Let me rephrase it. If I have a normal job and pay PAYE, how do I go about transferring money into paypal to my bank account and keeping it all legit and tax compliant? I have never done a tax return or anything like that before.

If I was regularly earning money online would I be bettter off registering myself as a sole trader or something (and how does that work if you are still employed elsewhere and the 'sole trader'/company stuff is part time?)

Maybe I should start a new thread!

Thanks.

aidan.connolly

Hi,

I would suggest you start a new Thread.

Aidan

gavney1

I've only really used Paypal with Ebay. In terms of buying - I'm nearly always happy with Ebay.

In terms of selling however, I find Ebay very annoying in terms of customer service.