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.
Do you have credit problems? Then here’s “101 Ways to Improve Your Credit Rating“ to help you get back on track. This not only explains all the things that affect your credit rating but is a practical guide that tells you what to do to improve yours.
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.
Oliver Jones has written for Solution Loans since 2016. His passion for personal finance comes through in the 200+ blog posts he's written since that time. His talent for explaining all things money means he's covered topics as diverse as...Read more about Oliver Jones
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
I’m gonna stop using PayPal because they have banned my account as they claim there is a fradulent activity and risky behavior. All I was doing was transferring my money off this account on to my cash app account to fix up my house. Now $37,469.66 is locked. I can’t even use my money but I’m pressing charges on paypal because there saying there’s fradulent activity and my account is high risk which this is my first time having that amount of money in my account then I went through the bbb and the FTC because I Will get to the bottom of the problem.
I cancelled PayPal because they refused to stop a monthly transaction. I also had trouble with the seller who kept pressing for payment when it was not authorised. This was an automatic deduction to a dating site and it was impossible to stop both. When I asked my bank to stop any transaction between them I ended up with a new account number and card – so be warned, there are a lot of fraudulent activities on PayPal too.
PayPal won’t stop unauthorized payments. And claims transactions have been approved by you even if you didn’t order them. If your account has been hacked. I found a transaction had taken place in the last few day from an email. And they won’t believe that I didn’t make the purchase. I now use a 2-factor Authenticator. So any transaction goes to my phone.
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
I played Money Tree and I’m still waiting on my money to hit my card after I cashed out 225. I’ve waited 14 days and still see nothing on my card.
Hi Denise. It sounds like it is more likely to be an issue with the makers of Money Tree than with PayPal.
I’m gonna stop using PayPal because they have banned my account as they claim there is a fradulent activity and risky behavior. All I was doing was transferring my money off this account on to my cash app account to fix up my house. Now $37,469.66 is locked. I can’t even use my money but I’m pressing charges on paypal because there saying there’s fradulent activity and my account is high risk which this is my first time having that amount of money in my account then I went through the bbb and the FTC because I Will get to the bottom of the problem.
I am having the same issue!!! How long did it take you to get your money?
I cancelled PayPal because they refused to stop a monthly transaction. I also had trouble with the seller who kept pressing for payment when it was not authorised. This was an automatic deduction to a dating site and it was impossible to stop both. When I asked my bank to stop any transaction between them I ended up with a new account number and card – so be warned, there are a lot of fraudulent activities on PayPal too.
PayPal won’t stop unauthorized payments. And claims transactions have been approved by you even if you didn’t order them. If your account has been hacked. I found a transaction had taken place in the last few day from an email. And they won’t believe that I didn’t make the purchase. I now use a 2-factor Authenticator. So any transaction goes to my phone.