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Home Business Advice: The Pros & Cons of Using Paypal


Popular home business advice that you'll get when you first launch your venture is to open a PayPal account, like 87.2 million individuals have done worldwide. The reason is that it's the easiest way to send and receive payments online. It's become standard procedure to get paid via PayPal if you're a freelancer or independent contractor, and many independent online stores use PayPal to process payments from and issue refunds to customers. Here's what you need to know about the pros and cons of using PayPal:

Pros of Using PayPal

The main reason that you'll be encouraged to open a PayPal account is that any individual can accept credit card payments online with an account. Before PayPal, your choice was to open a merchant account, which involved credit checks and applying for a line of credit. PayPal eliminates that for the startup entrepreneur. Other advantages of using PayPal are:

  • Multiple options for customers to pay you, including by check
  • Transfer money to your bank account or to others easily
  • Receive payments from international customers
  • You and your customers don't have to share your debit card information online when using PayPal
  • Free for your customers to use
  • No monthly, setup, membership or cancellation fees for you
  • It's a very secured website
  • Your customers need a PayPal account to pay you
  • No worries about check from employers or customers or bouncing

PayPal charges you $0.30 for each transaction, plus 2.9 percent. If your volume reaches certain levels each month, that percent can go as low as 2.2 percent.

Cons of Using PayPal

Not everyone agrees that using PayPal is solid home business advice. Some customers have accused PayPal of scams, and there are class action lawsuits against the company. Some of the disadvantages of using PayPal are:

  • Cannot talk to a live person to resolve issues
  • PayPal can freeze your funds without first contacting you
  • Can take up to six months to get money back following an investigation
  • Once PayPal makes a decision about a customer dispute, you can't appeal that decision
  • Transaction fees may be too high if you have a large sales volume each month
  • PayPal bans some email addresses associated with certain URLs, so customers cannot send payments
  • Customer can keep the product for free even if they receive a refund based on a PayPal investigation

The major concern that some individuals have about using PayPal is that they don't have control or rights to their money when it sits in their PayPal account. If a customer raises a dispute, or if PayPal suspects suspicious activity, the company can take over the money until it decides how to best resolve the issue.

PayPal was acquired by Ebay and it is the recipient of numerous Internet awards, including "Best Financial Services Site." Using it for some of your transactions, and cautiously, is good home business advice.

Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.

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