January 19, 2005

PayPal and Stuff

Here’s something I don’t like about PayPal. How they put you in an awkward spot to leverage you into becoming a paying “Premier” business member. For your informaiton “premium” means “expensive.” Read on for details.

PayPal allows you to accept a payment from another PayPal member (for something like Girl Scout Cookies). All you have to do is sign up and you can use PayPal both to send money and receive money.

However, if you want to get credit card payments, you have to have a business account with PayPal. I compeltely understand why this is — this is how PayPal makes its money. Credit card transactions cost money, so they would have to charge for being the middleman in that transaction anyhow. I have no problem with the idea that they need compensation for that.

What I do have a problem with is that if I tell you I can accept PayPal payments, but I’m not a Premium Premier or Business member (so I can’t accept credit card payments) they will still let someone try to send me a credit card payment. Then they notify me of what has happened. I can either accept the payment by upgrading to a business account or I can reject the payment.

Clearly, this is just a way to leverage their users into upgrading. Instead of making it clear to the person making the payment, preventing the transaction in the first place, they hold the payment hostage and force me to send an awkward message to the nice person trying to send me a donation for cookies.

I’m not a business. You can count the dollars going back and forth on your fingers and toes. I will never be a premium Premier member. It’s throwing money away. So why would they allow this transaction to begin and force me to contact the other person?

It’s annoying as heck, and PayPal shouldn’t do it.

[Update: It’s called “Premier” instead of “premium.” And all I’d be agreeing to if I allowed the credit card transaction would be to allow them to take a cut of the transaction. But as I am accepting donations, so there is no profit involved. Maybe I should just eat the cost of the credit card transaction. I’m certainly not going to take that out of the money that’s going to the troop. But I don’t like the way PayPal handles it, nonetheless. I would have liked to have given the option to turn off credit card transactions until I decided to accept them.]

Posted by James at January 19, 2005 12:50 PM
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I have some old hardware that I've been meaning to auction on e-bay. It seems the most reasonable way to get paid would be through PayPal. But I don't have a "verified" account, or whatever they call it, because I haven't linked it to my bank account. I don't have a throwaway bank account, and am much to paranoid to link my PayPal account to my real bank account. (I know anecdotal stories should be taken with a large grain of salt, but there are enough of them that caution is probably advised here.)

Posted by: Jim at January 19, 2005 2:55 PM

There are other ways to get people money (sending a check for example). But for many people, PayPal is convenient. As I mention in my update above, maybe I jsut should eat the credit card costs.

Posted by: James at January 19, 2005 3:08 PM

Yeah, that is sort of shady, though it could just be poor design. Given how much money PayPal has to do it the right way, though, I'd assume its intentional.

We want to start taking credit cards at the studio but it sucks that it seems like we have to give 5% of our income to various banks and such in order to do so.

Posted by: David Grenier at January 19, 2005 3:10 PM

I used to be "verified" and nothing bad happened to my old bank account. However, it was a hassle to set up and I wasn't ever comfortable with it. After I moved, I didn't bother setting up my new bank account, and I'm not going to.

I didn't know PayPal was creating a confusing situation for people wanting to pay by credit card. Thanks for the warning. I will keep it in mind next time I feel like selling something on eBay.

Posted by: Julie at January 19, 2005 3:26 PM

I think sometime long, long ago, I might have had a PayPal account (I can't remember why). For the past two moths or so, I've been getting email from, supposedly, PayPal. I've been marking it as spam.

Posted by: Patti M. at January 19, 2005 3:32 PM

I'm looking into it, and it's not as bad as I first thought, but I still don't appreciate them putting me in an awkward situation. If I wasn't set up for credit cards, they just should have not offered it as a payment option.

I think I might just ask people to avoid credit cards if they have an alternate method set up, but I'll probably allow the charges to go through and I'll cover the overhead. There doesn't look to be a subscription charge for Premier accounts, just Business accounts.

I remember Chuck telling me about the pressure they put you under to go Business if you have a certain amount of volume in the Premier account.

Posted by: James at January 19, 2005 3:58 PM

Patti - those things may also be phishing mails. They send you to a site that looks like Paypal, but isn't and then steal your account info. Trash them. But also go to Paypal manually and try to see if you have an account. If you do, it's probably worth suspending.

Posted by: briwei at January 19, 2005 5:57 PM

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