- Oliver Jones
- 23rd December, 2016
- Money & Finance
PayPal is now the biggest third party payment provider in the world meaning that it now dominates online processing on sites that go far beyond its origins on eBay. A huge number of retailers now try to get you to use PayPal when you make an online purchase. But there are both advantages and disadvantages to doing this. Here, we look at the pros and cons of PayPal.
Advantages of PayPal
- PayPal is safe. PayPal encrypts all of its customers’ data to the highest possible standard. Its servers check your browser to make sure that you are using the latest encryption technology. It then stores that data on servers which are not directly connected to the rest of the web. That means that even if PayPal’s public-facing servers are hacked, your data has a higher level of protection than with many other payment providers.
- Sending money to friends and family is free. If you ever have to send money to somebody in your family who is at university or abroad, then you’ll know that many providers like Western Union will charge you for the transfer. But PayPal does not charge to send money as a gift, particularly to a friend or a member of your family.
- An easy-to-use app. The PayPal iPhone and Android apps make it simply to buy online and transfer money at the touch of a screen no matter where you are in the world. When you’ve downloaded the app and gone through its security procedures, you’ll be able to transfer, send money, pay bills, look at your transaction history and make purchases on both eBay and a multitude of retailers’ sites. The PayPal app relies upon a PIN and/or your fingerprint making it a safer way of sending and receiving money than your credit card.
- Discounts. PayPal offers special discounts for loyal customers who use the service to buy from particular retailers. You can find a list of those discounts at www.paypal.co.uk/shopping. Using PayPal to shop from companies like H. Samuel, Ernest Jones and Converse can save you as much as 40 per cent on a host of products like clothes, jewellery and even car insurance.
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Disadvantages of PayPal
- You lose your Section 75 rights. If you use PayPal with your credit card to pay for an item that costs more than £100, then you are missing out on extra protection when making your purchase. Section 75 of the Consumer Credit Act protects you when you pay for something costing between £100 and £30,000, specifically on a credit card. This is because the card company is jointly liable with the retailer should anything go wrong. But Section 75 applies only when there is a direct relationship between the debt (using the card) and the product. It doesn’t apply when you get a loan or use a payment provider like PayPal.
- PayPal charges you to receive money. If you use PayPal to receive payments – particularly on eBay – then it will charge you anything between 5 and 10 per cent of the total price. That means that eBay sellers not only face the fees imposed by the auction service, but will also be charged when they finally sell their item and receive the money through PayPal.
- PayPal often freezes a user’s account. Sometimes, PayPal users report that their accounts have been frozen without warning. The company’s algorithms are constantly checking every transaction to look for unusual behaviour which might be something as innocuous as a larger-than-usual sum being moved through its systems. When it freezes an account, it is impossible to transfer funds to a bank account or send money to another person. PayPal can also put a freeze on money that was sent when an item was bought online and it may refuse to lift the ban until the item is delivered – making life difficult for retailers who rely on its service.
- PayPal may hold on to your money. You might not get immediate access to funds from PayPal if you sell something on eBay. The payment provider sometimes holds payments for up to 21 days to guard against the possibility of a problem with a transaction. This can happen to sellers who have not had much activity, have a history of chargebacks or who sell certain kinds of materials such as electronics, gift cards and event tickets which are subject to higher levels of fraud.
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PayPal just gave back all of the money some lady had paid me for babysitting her daughter. She later got mad at me for something petty and unrelated, and threatened she would just get her money back. Well, she knew she could because she typically does hat and it worked easy as pie for her. It seems when someone wants their money back from a seller of friend they just send in a dispute for any old fake reason with no proof and PayPal gives it to them as they favor a payoror customer not the account owner. Seems dumb and against all business principles to favor your non account holder. She was a loud aggressive type. Still she had no reason and t had been a month since she paid me for services rendered! $75 just vanished and customer service doesn’t exist.
My PayPal account is frozen and it’s been 7-8 months now. I still don’t have access to my money in my account. They will also close your account without warning. That’s how I was receiving my child support and unemployment. They said suspicious activity. I will never use this company or recommend this company to anyone whatsoever. I’m still waiting on my money.
If you love your money and peace of mind, run! RUN! RUN! away from PayPal! This company can ruin your business! They can freeze your account, hold your money, request personal documents and still won’t allow you have access to your money. While they hold your money they won’t let you issue refunds, or withdraw to your bank. So if anyone sends you money and your account is limited, that money too will be locked up. If you think getting a lawyer would make it easier, good luck.
Alternatives? Try Cashapp if you live in the USA or Apple pay. But stay away from PayPal.
Thank God my account creation process was not completed. See what I’d have faced. I just don’t know how the app is the best and most used money apps with all these problems. I know the solution to these!
HI! I wanted to ask some questions about PayPal. I want to create an account there and want to be sure that there will be no problem if I add my card. I don’t think that i will receive huge amount of money as I am just a student so would you please tell me if I should do this. And one more question: if paypal is not safe and secure, what is the other way if I want to receive money internationally. I do not live in US and still have to have an account for transactions. Thanks in advance
I’ve been a Paypal user since 2008. I’ve not any problems with them. I’ve received money from sales, as well as sent money to friends. I’ve received money a few times from friends, for items I’ve picked up for them. I’ve received, as well as sent money to individuals for holding items. I’ve never had a problem. They’ve even reimbursed me for a BAD transaction once. I’d only suggest opening a separate bank account just for the sole purpose of connecting it to Paypal. Opening up a separate account, you’ll be able to move money around from one account to another.
Do not use this service, it’s horrible. They will continually freeze your account and then request the information in their system from you, only to still leave locked. While you can not control your funds, they will continue to allow you to receive money and charge you fees while holding YOUR money! When you call they will place you on 45min holds to tell you Oh well, wait it out. Their card reader has low battery life and I’d you allow someone to manually enter their card it will lock your account. They not only have my UBI, EIN, social media links, website link, pictures of items, detailed invoices but also comments from happy clients with notes of what they bought. I have given them every detail of my business and explained why it’s critical to my success that my account not be locked for ridiculous reasons and yet I just got 2 of my largest shipments canceled due to the current hold on my account. This is the 3rd time in less than 90days. Your business will suffer for sure if you use them. Get a bank account. I just found out banks offer card readers as well. They do not want you to make it big, these types of inconveniences will keep a small business small!
Horrible experience. Same issue recently as with Bev’s comments below… ” notice they take total control over refunds too & move money around but don’t leave any trace or record of the transaction, how is this legal?? They took funds for a refund now its gone without trace…”. In order to get MY money, I had to file disputes with my bank for 2 of the transactions, and with my credit card for a 3rd transaction. If you are having trouble, consider going to your payment source who may do a better job of protecting you. Paypal has held onto big money of mine in the past years as well. What a shame.
and to add more about this issue? there is no pros… only cons…
to tell you honestly.. it s been 21 weeks now or more.. still no luck… the money is stuck…. they dont want to link my own bank.. and one time it was lnked… and that is when 21 weeks counted,,, until now its counting.. so use the money for online shopping.. could not withdraw it.
I recently started selling a few bits after a five year break. After I sold an item but they held the funds until I added tracking info but they changed it to must confirm delivery 1st. After items confirmed by buyer PayPal says I can’t have funds as there’s s issue with the postcode I wrote down but the buyer confirmed six hours previously.
I notice they take total control over refunds too & move money around but don’t leave any trace or record of the transaction, how is this legal?? They took funds for a refund now its gone without trace&their trying to access my business account for money they have already taken. Please help