Friday, March 22, 2013

Major issue with the design of PayPal for merchants.

For some time it has concerned me that Australians are moving to the rude behaviour encouraged by companies like PayPal. If you have a problem with a retailer/merchant the first step should be to contact the merchant. If you can’t resolve the problem to your satisfaction then go to a company like PayPal or your bank. But what is happening is PayPal simply enables people to raise a dispute and the money is removed from the merchants account without any reference or contact with the seller.

I get this is easy for buyers but I consider it rude behaviour. I go out of my way to make sure my clients are happy but when people raise a dispute directly with PayPal without even contacting me first, I start to wonder do I really want to deal with these people and the answer is no.

For me it isn’t a big financial concern as I only send low cost items. This is more of a warning to other small businesses. With PayPal after someone has purchased an item they can raise a dispute and PayPal withdraws the money from your account without contacting you first. As a business are you going to spend hours over a $10 sale. The answer of course is no. But a consumer can easily say they didn’t get what they expected, they didn’t receive the item and then you as the business have to put the time and effort into resolving the issue through PayPal.

The following is just one of possibly thousands of merchants who’ve spoken up on the internet. (PAYPAL FRAUD : BUYERS SCAMMING SELLERS ... Read More)

More recently I was about to open a new bank so I could receive funds from PayPal. I stopped immediately I saw it was a direct debit authority. I only want to receive money from PayPal and there is no way I want to give PayPal access to my accounts. By providing a direct debit authority PayPal have the ability to debit amounts from my account and that could be for any reason. My concern is I’ve seen bank agreements where you become liable for legal costs incurred, and since you’re liable, the bank would have no concern as to racking up huge legal bills against you and you have agreed to it. I immediately removed my existing bank account and now I have no bank accounts associated with PayPal. I’m happy to receive money into PayPal and then to spend the money out of the PayPal account. At no time do I keep much money in the PayPal account as I simply don’t trust that the money is safe. As to giving PayPal access to my bank account, forget it.

Make sure you take the time to read the agreements you are signing up for. It isn’t the 90% of decent people in the world that will cause you grief. It is the 10% who somehow feel they can take others for a ride. Make sure you read the agreements, search the internet to see what others say and make sure you understand the risk.


Kelvin Eldridge

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