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Advantages and Disadvantages of Using PayPal for Your Online Business

By helen Under Make Money Online

This make money online article is guest posted by Alia Haley

PayPal happens to be the most widely used online payment processor in the world. They are considered to be the most reliable of money transfer method. Those who hardly knew anything about this, it’s time to know about it and understand the pros and cons of this system.

PayPal is generally used for money transfer using the e-commerce tool from one place to other. An estimate says that there are more than 87 million users all across the world who benefit from the services of PayPal. Despite having all the advantages, PayPal also has a number of demerits, let’s discuss some of them:

Advantage number one – Trusted name

Many people who shop avoid giving their credit card or checking account details to any vendor or online store. Since PayPal’s role is somewhere in between the two, the Web store never gets the bank details of any customer. Hence the customers get a trust and confidence of shopping from anywhere using the PayPal account.

Disadvantage number one- Locked Accounts

There are lots of security issues and a threat of terrorists using these services, the US government has strict regulations enacted which demands to limit the number of transactions through PayPal. Hence you will find PayPal blocking your account in case if it notices any kind of suspicious situation. The accounts can remain frozen for long till the PayPal investigates it thoroughly and gives a clean chit. This period could last for months thus preventing the business groups to extract money from their accounts.

Advantage number Two – Ease in execution part

Incorporating the e-commerce system at your website can be expensive business. Hence small time vendors and smaller groups prefer to use the services of PayPal, where they don’t have to invest much and get the money transferred safely to their account. The system of PayPal is easy to use and understand wherein it creates everything right from invoicing to the safe fund transfer.

Disadvantage number Two- Corporate Access to your bank account

Though PayPal acts as a cushion between people shopping and their bank details, it gives them to have the access to the customer’s bank accounts. Due to this you may find your funds getting deducted even without your authorization or knowledge in case a charge back conditions are met by the consumers.

Advantage number Three – Free to execute

Though the PayPal charges some small amount for this money transfer by the customers under transaction fee, it permits your small business to use their services for free. The larger groups can avail their option of Website Payments Pro Plan, which gives them the opportunity to receive money straight to these big shot’s website without any via channel. Thus this saves some money.

Disadvantage number Three- No outside Arbitration

If there is any dispute between the user and the PayPal over the issues of charges of fraud, the account of the user gets frozen. This goes for other administrative issues owing to the limited resources. PayPal’s service terms give the company the power over all funds in their possession, while investigation is put forth without giving any documentation to the user.

Final Word

You will find millions of users across the world and has embarked with as a trusted name in money transfer over the internet. People benefit in many ways using the PayPal for their online shopping and auctions over the internet. However, the service is not suitable for all types of business. You may lose your valuable money than reaping the benefits promised to you.

Alia Haley is a blogger who is a tech freak. She has a weak side for gadgets and fashionable stuff like beach bag she loves collecting them. Recently she added a sony ericsson android to her collection, and she is also planning to buy a home theater.

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4 Comments Add yours
  1. Dan Thorley
    October 11, 2011
    4:08 pm #comment-1

    It is very worrying knowing in the back of your mind that PayPal could close down your account at the hint of any possible problem. I have known of Marketers being shut down by PayPal immediately after the start of a product launch because to many transactions were taking place. There are alternatives to PayPal that may or may not suit some IM better, such as; Google Checkout, Money Bookers, Paymate, Obopay and lots of others. It’s worth shopping around to see what is available.

  2. Randy Bonachita
    October 14, 2011
    5:04 pm #comment-2

    The first disadvantage of paypal hit me hard last year.
    Had many activities on my account one month then, suddenly my
    account got blocked.

  3. Louie
    December 7, 2011
    9:47 am #comment-3

    @Randy,

    I wonder what happened? Did you upgrade into a merchant account? Personal accounts aren’t allowed to hold too much money since they are only used for purchasing.

    There is an official Paypal partner in the Philippines. Have you asked about it?

  4. william gran
    March 26, 2012
    1:45 pm #comment-4

    hi i dont know what these people are talking about ive used paypal for my sites for years and never had a problem,in fact i think it has increased sales from when i had a regular merchant acct since people can just shop with paypal with only a few clicks whereas with a regular merchant acct some people might not want to fill out all the info and you lose the sale,cheers!

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