How does PayPal work?

[Jdub]

Can someone give me the bottom line on setting up an account with PayPal and how the money is taken in and disbursed? Also, any caveats you may have about dealing with them (as a buyer only, not as a seller).

Much appreciated,
John

[turbo6bar]

Signup is easy. One of the sticking points is that Paypal has direct access to your bank account. If you are selling an item, and the buyer commits fraud, Paypal will not think twice about taking funds from your bank account.

To obtain the funds from a Paypal sale, you have a few options:
1) mailed check
2) funds wired to your bank account
3) use the Paypal debit/credit card to use Paypal balance

As a buyer, I feel you have fair protection (moreso than the seller). Don't let the ease of Paypal trick you, though. Do NOT deal with shady characters.

I have been a Paypal member since inception (back when it merged with another online payment service - don't remember the name). I have handled approximately 300+ transactions via Paypal with zero problems, and at least 80% of the transactions involved me as the seller. However, it is not a matter of if, but when I will be stung by Paypal. I just have to be prepared to take a potential loss and adjust my profits accordingly.

I would love to sign up with a better, competing service, but Paypal is nearly universal. Not accepting Paypal would be a bad business move.

Search the archives here. There are other threads about Paypal. Some guys/gals really hate Paypal, but I would say I'm more or less satisfied with the service.

Regards,
Jurgen

[emcon5]

Make sure you ar an informed consumer.

http://www.paypalsucks.com/

I do buy stuff with Paypal, and overall have been satisfied with the service.

This does not prevent me from taking some basic precautions, like only sending money from a credit card, for the added protection from the CC company. I also have not gone through the "verification" process, so Paypal has NO access to my bank account. If I ever get to that point, or if I need to accept payment, I will set up a second bank account for paypal only.

Lots of banks offer free checking.

Tom

[steve911]

Jdub-
as a buyer, I like Paypal alot. I almost ALWAYS pay with the funds coming from my credit card (I use one that is almost exclusively for internet stuff - to protect myself in the even the card number is scammed, etc.). Also, by using a credit card to pay, I'm protected as Tom outlined.

As a selller, I'll take paypal payments, but only instant transfers (payments from checking/savings accounts), since its free to receive those types. Accepting credit card payments adds fees, which makes it uneconomical. A bit of a double standard, but...
(When I'm dealing with Pelicanites, I pay using instant transfers, so they don't incur additional CC fees as well)

All in all, it works pretty well. email me offline or PM me with other questions.

[widebody911]

I've been using PayPal for a while, and am being very cautious. I've read about numerous cases where a customer complains to PayPal that they didn't receive and item, even when they have UPS/FedEx/USPS proof to the contrary, and PayPal simply slurps the money out of the bank account. They will also pull a neat trick where they freeze your funds; you can't get your cash out, but you can continue to accept payments.

One other bit about PayPal that sticks in my craw, is that of 'upgrading' to a "Premier" account. If you want to take credit cards, you have to upgrade. But then they skim 3% of all of your transactions, cash or credit. I can see taking the fee on credit cards, but not on cash transactions.

I set up a separare PayPal acct just to take credit cards. Then I learned about the 'limits' - I could accept payments until the cows came home, but could only transfer out (ie pay people) up to $2000. That's it. To get the rest, you have to provide bank account info. So I opened a new bank account, and 'verified' myself, but I'm not going to keep much cash in the account. I'm sure others setting up similar accounts to protect themselves.

Another aspect of PayPal that I'm not super-comfortable with is the sheer volume of financial data they want to maintain on you. It's a matter of when - not if - this data gets sold or stolen. Since they are not a bank, they're not beholden to any regulatory agency, so they could decide to pack it in tomorrow, close the doors, and there's nothing you could do about it. They've been fighting tooth and nail to prevent being classified as a bank.

[BlueSkyJaunte]

1) Paypal takes your money.
2) You cry.
3) Paypal laughs.