PayPal is not your pal (paypal.com)

Member Name: shuttlex

Product:	paypal.com
Date:	25/08/09 (25 review reads)
Rating:

Advantages: Quick and fast

Disadvantages: Expensive, too much commission, chargebacks

There are two kinds of PayPal accounts available, a personal account and a Premier account. I have both accounts and tend to use a PayPal premier account as a means to receive money for ebay auctions over the internet.

Overall PayPal allows a very efficient process to receive payments for auctions over the internet. An auction ends, the total is immediately calculated and I can receive the funds from the buyer within seconds. After the funds are in my account I can simply transfer to my bank account.

However unfortunately some major flaws exist with PayPal. The first is, it is owned by Ebay and the service has monopoly. Using as means to receive payment for auction may be convenient but it is also very costly especially for those selling small items. First there's the cost of receiving funds. Any transaction related to an auction, the seller must pay 20 pence and an additional 3.5% commission per transaction. If one is receiving payment of over £20 this isn't too bad however it makes using PayPal uneconomical for small transactions around £5. Funding can come from different sources, while it's understandable charge for a transaction where the funding has come from a credit card, there shouldn't be a fee when the funds are simply transferred from on account to another. This is simply greed on PayPal's part.

The second major flaw is the possibility of a fraudulent chargeback from an unsatisfied buyer. Unless the seller has a signature with proof of delivery, if the buyer makes a claim the seller automatically loses. Even with a signature PayPal will always favour the buyer. I do not recommend PayPal for transactions over £100 especially selling high value items such as laptops. There's always a chance that you can ship the item with all the tracking info yet a month down the line, the seller can make a chargeback. For high value items I would recommend a bank transfer.

Summary: See review