I Have Never Been So Happy to Give PayPal $30/month


Photo by The Consumerist

The process of opening a credit card merchant account is like getting an enema with a rusty potato peeler. It’s something you don’t really want in the first place, and the longer it drags on the more you regret doing it.

This was the situation I found myself starting almost a year ago today (applying for a merchant account, not getting an enema).

Even though I’ve coded more than a dozen custom credit card integrations, have accepted payments online for 10+ years, and sell invoicing software that supports half a dozen credit card gateways, I had never been through the application process myself.

I’ve used PayPal, Amazon Payments, Google Checkout, and the PayPal merchant account/gateway equivalent (Website Payments Pro) with varying levels of appreciation, but I’ve always had one or two complaints. But no more!

For I have stared into the countenance of evil and lived to speak the tale…

A Long Time Ago (In Internet Years)
About a year ago I acquired a product called WeddingToolbox. It’s a SaaS app that allows an engaged couple to plan and share their wedding online.

The site was developed using Authorize.Net as the credit card gateway. “No problem,” I thought, “I’ll just pay the original developer to convert it to PayPal Website Payments Pro (WPP). A couple hundred bucks and we’re done.”

Except it wasn’t a couple hundred. The quote from the original developer was $900. Urgh.

I would have taken a crack at it myself, but the site is written in ColdFusion, and I haven’t touched CF since 2000. That learning curve wasn’t going to be worth it.

Normally I wouldn’t have thought twice about this decision from a monetary perspective, but the site was not profitable when I bought it. In fact, it was losing nearly $400 a month due to a long-term contract the previous owned had signed with a hosting company.

So it was a cash shark to begin with and I wasn’t looking forward to dumping another grand on top of what I had paid to acquire it, in addition to the monthly football I was carrying.

And when you do the math the payback is out 3 years (fees for PayPal WPP are $30/month, and Authorize.Net is around $55/month). So even though I’d be paying a bit more each month, I figured it was worth it until I could turn the site around and start making a few bucks. Then I’d invest in upgrading to a different gateway.

Application #1
If you’ve never applied for a PayPal WPP account, the process is as follows:

  1. Click a link in your PayPal account.
  2. Double check your business information is correct and submit.
  3. Wait 2-3 days for approval (I’ve never been rejected).

The application form for Authorize.Net is, simply put, painful.

It’s been a year so I don’t recall the exact amount of time it took me to fill out, but it was close to three hours. They asked for things I didn’t know you could legally ask for. They asked for proof of things I didn’t know I had. By the time I was providing them with the name and home address of my paternal ancestors I realized I might be making a mistake.

After a few hours of toil I clicked submit and then…nothing. Well, that’s not entirely true. I received an email that thanked me for submitting it that indicated billing for the gateway would start right away (but not billing for the merchant account since it had not been approved).

And billing started – I soon saw a withdrawal for the $99 setup fee and the $20 or so monthly fee for the gateway. Hooray! I couldn’t use it but I was sure paying for it.

And then…nothing. This time for real. Weeks went by and no word on my merchant account application. After 3 weeks I emailed them and no response. After 2 more weeks (and another $20 taken from my bank account), I called. And they told me my application had been denied.

“Denied?”

“Yes sir, it appears you don’t have the correct company name at the bottom of your website.” (the old owner’s company name was still there)

“Ok, I can change that. Could someone have emailed or called me about this 5 weeks ago when I submitted my application?”

I apologize for any inconvenience we may have caused you.”

So I updated the company name while we were on the phone.

“Ok, sir, this will have to go back in for approval. Expect to hear from us in a few days.”

And then…nothing. No call, no email. Weeks passed and I called again.

“Sir, it appears your request has been denied.”

“Again, could someone have called me about this?”

“I apologize for any inconvenience we may have caused you. Your request has been denied because we don’t support gift certificates, and you allow people to buy gift certificates on your site.”

I was starting to get a little miffed at this point.

But all was not lost! The rep recommended a company that supported gift certificates. And I began the process once again.

As an aside: Authorize.Net was very gracious at this point. Since I had not used my gateway they refunded all of the charges to date – nearly $160 worth.  I was impressed with their willingness to do so.

Application #2
It gets better. The next application involved, I kid you not, a downloadable PDF that I filled out by hand in ink. Ink, people! It brought me back to the glory days of 1996.

After another 2-3 hours of filling out the application, I faxed it to them (oh, the humanity) and then…nothing.

Seriously…I heard nothing for about 4 weeks. I forgot about it, actually, or perhaps formed a mental block to guard myself from undo anger. And finally, I called.

“Sir, it appears your request has been denied.”

“Seriously? Could someone have called me about…oh forget it. What’s the problem now?”

“I apologize for any inconvenience we may have caused you. Your application has been denied because you offer a plan that allows people to pay 18 months in advance. We don’t want to take on the liability of someone charging back during that 18 month period. If you remove this plan I can send your application back through our approval process.”

I explained to her that the website had been live and serving customers for close to 2 years and had never had a chargeback. And the 18 month plan is $79…given our sales volume you’re talking about a tiny amount of money over the course of 18 months.

But they wouldn’t budge.

Application #3
At this point I did what I should have done from day 1. I went back to the original owner of the site, and asked who he used for his merchant account. He gave me their name, I applied (another 2-3 hours), talked to them on the phone 2 or 3 times, and was approved within two weeks. Bravo…I was in business.

The tally at this point was nearly 12 hours of wasted time (this was at a time when I was only working 16 hours a week, so this was a huge amount of my productive time), and around $160 in fees spent with nothing to show for it.

But I wasn’t looking back! I wired up my credentials and everything worked like a charm. Money started coming in and I was happy.

Until the charges started coming in…

They Get You Coming and Going
Remember that whole “3-year payback” thing? Yeah, that went out the window in the first month.

The problem I noticed is the fees were not adding up to $55/month, they were closer to $85/month. In addition, about 3 months in I saw monthly fees of $135. But I didn’t notice this right away because several of the fees came through separately, on different days of the month, for different amount each month. It was hard to track how much I was paying, and for what.

This happened to all come at a bad time for me; I had a new baby and didn’t have time to sit on hold with a credit card company. So another month went by and I finally gave them a buzz.

They explained that in addition to my monthly fees there was an annual fee for <insert a good excuse to charge someone money here> and then another one for <contributing to the CEOs yachting fund>. These annual fees would be split over three months, and would amount to…I think it was $150 in total?

“And what about the extra $30/month I’m seeing added to what should be a $55/month fee?”

“That’s for your non-PCI compliance fee.”

“But I am PCI compliant.”

“Oh, well you need to go through our PCI compliance process and tell us about it, then.”

“Could someone have called me about this?”

“I apologize for any inconvenience we may have caused you.”

And it just went on and on. I spent about 2 hours trying to get their PCI compliance form to work, and no dice. I switched back to IE and it still crashed. Their port scanner crashed. I emailed support and they replied with (this is not a joke):

“If you’re using Safari as your internet explorer you will not be able to run the scan.”

I guess this makes sense to some people (internet explorer with no caps = your browser), but I just couldn’t take it any longer.

I was somewhere north of $500 out of pocket, I was chewing through time trying to get things straightened out, and more than six months had passed since I first applied. PayPal WPP…where are you when I need you?

When In Doubt, Get a Second Opinion
At this point I made the decision to bail on the traditional merchant account/gateway and go back to PayPal, no matter the cost. My time spent thus far was more valuable than what I would pay to have this work done.

Just for kicks, instead of paying the old developer their $900 bounty, I jumped on oDesk and posted the project. Bids came in and I found an excellent ColdFusion developer in Eastern Europe.

A week later the changes are done.

  • Total cost: less than $100.
  • Total time spent to apply for PayPal WPP: 5 minutes (with a 2 day approval process).

I want to hit myself in the head right now. For a guy who knows the right way to get something like this done, and trumpets outsourcing from the tops of the hills, it took me way longer than it should have to figure this one out.

But the story ends well…the PayPal WPP code went live yesterday. And today I will call my processor and politely tell them:

“I am cancelling my account. I apologize for any inconvenience this may cause you.”

Afterword
I know PayPal has its issues and that their WPP transaction fees are slightly higher than Authorize.Net (though break even is somewhere north of $5k per month in transactions). PayPal is far from perfect; but they’re not as bad as you think when compared to the alternative.

Please share your credit card processing horror stories in the comments.

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42 comments ↓

#1 Rob Bazinet on 02.11.11 at 10:03 am

Rob, this is so classic. I have gone through the same thing and even though I am running through Authorize.net, the fees are very high per month.

I was originally using Paypal Website Payments Pro and moved from them for various reasons, I think it was ultimately a mistake and am considering moving back.

One question, did you actually get the merchant account up and running? If so, how did you get current monthly recurring billing over to Paypal?

Rob Reply:

I did get the merchant account up and running, but since WeddingToolbox does not have recurring billing I did not need to migrate it.

#2 Cem Hurturk on 02.11.11 at 10:07 am

Hi Rob,

Have you considered BrainTree (http://www.braintreepaymentsolutions.com/)?

As far as I know they are pretty good at this and they are also payment gateway of 37signals.

I hope this helps.

Cheers.

Rob Reply:

I haven’t ever used them.

Judging by their website they actually seem to realize it’s 2011 (as opposed to all of the large processors, which seem to still think it’s the 1980s).

I don’t see anything they offer me beyond PayPal WPP, but I would consider them if WPP didn’t work out for me for some reason. They’re the best option I’ve seen, I have to admit.

#3 Jeroen Ritmeijer on 02.11.11 at 10:11 am

I, and many others, share your pain. I have been through a similar process in the UK with Bank Of Scotland / First Data Corp, which is evil in its purest form. In the end they didn’t approve my request after months of no communication and chasing from my side.

I then switched to Streamline, which was quick and efficient. They even came to my house to sort out the paperwork. The rate I negotiated is very good as well.

My merchant account is used via SagePay (formerly Protx), which is pretty good and very affordable.

The only card I am not accepting is Amex as they have ridiculous processing fees.

#4 Warren Eaton on 02.11.11 at 11:31 am

I’ve yet to use any payment gateway, but have considered Google Checkout. Have you or your readers had any experience with it?

Cem Hurturk Reply:

Warren, if you are going to start SaaS business, Google Checkout is not a good solution. Consider PayPal, PayPal WPP, ShareIt.com or FastSpring.com.

On Sendloop.com, we use FastSpring.com at the moment. Quite satisfied with their customer service and cool features they provide. Integration is quite easy and they handle all fraud management processes. We just focus on our business.

I hope this helps. Cheers.

Rob Reply:

I’ve used Google Checkout. They are decent, but PayPal offers more options and functionality. Google Checkout also has little/no customer service so not something you want to trust with your money (IMO).

#5 Kyle Fox on 02.11.11 at 11:55 am

Ugh, what a headache that must’ve been!

We use beanstream.com and it was actually quite simple to setup. The form was a bit long, but their customer service was instantaneous and they helped us through every step. It’s reasonably priced, too. I think we paid $40 for setup, $20 per month and around 2% for transaction fees.

When the time came, I was dreading setting up our payment gateway & merchant account because I’ve heard so many horror stories. I was expecting an experience like yours with Authorize.net. But it turned out to be pretty straightforward.

Rob Reply:

Thanks; this is a good recommendation. I will consider them in the future if WPP doesn’t suit my needs.

Derek Anderson Reply:

I’ll second beanstream, having done a few sites with them. Relatively painless, although there were still too many arbitrary hoops. I think that a lot of these places really still are stuck in paper and pen land, but beanstream at least answered the phone and had clear testing procedures.

#6 Lance Kidwell on 02.11.11 at 12:42 pm

Oy – merchant accounts are are such time and money sucks. I’ve found it easiest to work through a merchant account broker. They aren’t much more than affiliates, but they become a free assistant to stay on top of the application process and usually have plenty of info about what to say and what will happen next. They have a financial incentive to get the deal done so you can offload the bother to them.
I’ve never used paypal – well not in a business context at least – just because of the horror stories I’ve read about their arbitrary and capricious service. They are known for cutting you off and holding on to your money for no discernable reason. bleh.
Google checkout and amazon checkout are a breeze compared to paypal or a traditional merchant account, but, in my experience, customers never use them.

Rob Reply:

>>They are known for cutting you off and holding on to your money for no discernable reason. bleh.

I’ve heard the same thing about Authorize.Net and other traditional processors. Seriously…I used to work for a credit card company and the risk management department of any financial company is brutal.

Lance Kidwell Reply:

The difference being, however, that the traditional merchant accounts are products of banks, so they’re subject to specific laws and regulations that I don’t believe are applicable to paypal. I’m not sure what sort of entity paypal is, but it definitely has a different set of incentives than a traditional bank.

Paypal has a different balance of customers using its card processing services. I would imagine their exposure to risk is an order of magnitude greater than that of a bank whose customer base is predominantly brick and mortar, card present merchants who also use them for banking, loans and other products.

And finally, Paypal holds a near monopoly on the payment processing for low volume, high profit (and high risk) internet based businesses. Most of their customers don’t have anywhere else to go, so they don’t have to compete on customer service and they have no incentive to work with businesses that require any attention or special consideration.

Rob Reply:

I’ve actually had great experience with PayPal’s customer service – far better than the other processors I’ve spoken with on the phone over the years (most of them for consulting clients). But that’s nothing more than anecdotal evidence.

#7 Chris on 02.11.11 at 5:28 pm

Rob,
This post is another example of why I consistently read your blog! I haven’t set up my merchant account yet, since I am still in development. But, I would rather pay more to have a simple process than to pay less (or more in this case!) and have the headaches. Thanks again for taking the time to share your personal experiences for the rest of us. I also appreciate all the feedback you got on this post from your other readers. Hearing this from those who know is very valuable.

Best regards,
Chris

#8 Sean on 02.11.11 at 6:44 pm

Rob, could not agree more. Authnet support is atrocious. My horror story of being put through their support gauntlet just to pay them more here: http://www.scrollinondubs.com/2008/03/26/authorizenet-support-is-decrepit/

We still use them b/c it works out to be cheaper but they certainly leave the door wide open for anyone with an ounce of customer service sense to disrupt them. And the fee nickle & diming is just uber lame.

#9 Tweets that mention I Have Never Been So Happy to Give PayPal $30/month | Software by Rob -- Topsy.com on 02.11.11 at 9:56 pm

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#10 Scott Taylor on 02.12.11 at 3:41 am

Hi Rob,

Have you tried using Paypal’s recurring billing system? It’s an extra $30/month and I hear it’s buggy.

Rob Reply:

I haven’t tried it. I do use their subscription billing, but that’s through website payment standard (where people leave your site to complete the process).

It works (with no monthly fee), but it’s not good that people have to leave your website, and it fails or cancels itself for way too many reasons (like if the person updates their credit card on file with PayPal – all of their subscriptions are instantly cancelled).

Greg Goforth Reply:

Hey Rob, I’m considering ditching Authorize.net in favor of PayPal, but would need support for recurring billing. I’m looking at “Pay Flow Link” with Recurring billing. Is this the system you are saying is buggy? Would it be worth it to save some cash every month (starving start up and all) and deal with the headaches? Thanks!

Rob Reply:

If you already have recurring billing built into your app code, then you’ll be fine moving to PayPal. But if you’ve been relying on Authorize.Net’s recurring billing feature then it’s another story.

The only PayPal recurring billing option I’ve used is their subscription offering where someone is redirected to PayPal’s website from yours in order to create their subscription. This is a decent option – I would like to see some improvements, but it works.

I have never used Pay Flow Link (and I’m not sure if this is what Scott is talking about above). But have you considered something like Chargify, Spreedly or CheddarGetter as a wrapper for PayPal? This way your subscription code is at least being updated and maintained by a company with motivation to do so, and you have better reporting, more control over the flow, etc…

I would consider using one of these services, with PayPal WPP as the gateway, a better option than using PayPal’s built in recurring billing.

Greg Goforth Reply:

Well, currently we do rely on Authorize.net to manage everything. We do an initial call to them that creates the subscription, and at that point, they take care of the billing without any intervention from us. The bad thing about this is now that we are considering switching, we have no access to the customers credit card info, so it might require them to sign up again….eek. I’m going to look into the companies you suggested, they look like what we need. Thanks for the suggestions!

#11 sheel on 02.12.11 at 10:17 am

Have you seen http://feefighters.com? They have a comparison shopping engine where processors bid down for your business, and you can enter in your gateway and only see processors that work with it. The rates are MUCH cheaper than what you’ll get through any of the processors above, and some major companies have used it like Stackoverflow and OKcupid

Rob Reply:

I have heard about them (I think on Mixergy?). From what I’ve heard they are a great resource. Thanks for bringing them into this discussion. Anyone looking to increase the level of transparency in the card processing world is on the right track.

#12 Jeffry Houser on 02.12.11 at 12:30 pm

My experience is not nearly as horrible as yours. I’m unclear if you were dealing with Authorize.net directly or going through one of their resellers who also provide you with a merchant account and gateway account as a package. It sounds like the latter.

I went to my bank for a merchant account and signed up there. It was a lot of paperwork, but someone sat down w/ me (they came to my place of business). It was a long form, but I don’t think it took three hours and I don’t think they asked any inappropriate questions.

Then I went directly to authorize.net to set up my gateway account. I don’t remember all the specifics, but I don’t think it was a big deal. The bank gave me some data to give to authorize.net to hook the two up . I have found Authorize.net support to be stellar. My bank’s customer service on the other hand has been horrible.

I have had some “hidden fees.” Near the end of my first year some payment amount showed up on my statements twice in a row. I called to find out what it was for. They told me it was a PCI Compliance fee for the scanning service. They insisted it was a one time fee. I aid “well, I was charged it twice” and then they said it was a one time fee spread out over 4 payments. Despite that, I never saw all four payment show up on my account. I do not believe that charged showed up again this year.

PCI Compliance has been a nightmare, with the scanner triggering on weird things, often things they approved of during the previous scan. I’ve had to rush around to get changes to the site made that [I feel] have nothing to do w/ the security of the site.

Rob Reply:

Thanks for sharing.

To clarify: with application #1 I was dealing directly with Authorize.Net. #2 and #3 were resellers.

My experience was obviously an anomaly; there is no way everyone has this much trouble getting a merchant account. At least, I hope so…

#13 Clay Nichols on 02.13.11 at 10:02 am

Rob,
I enjoy your articles. Keep ‘em coming.

1. Can you explain a bit more about why you bought a product that was losing money?
(I assume you had a plan for how to turn that around)

2. Have you considered something like Spreedly.com to handle your monthly subscription charges and activation?

(I ask this b/c I’m considering using them. @ $20/month + minimal transaction cost ($.02 or something like that) they handle billing, invoicing, validating the subscription, etc.
(I have no relationship w/ them other than considering being a customer. I’ve not done it yet b/c I’ve not had the time to do the integration (but will look at outsourcing!)

Rob Reply:

>>1. Can you explain a bit more about why you bought a product that was losing money?

As you said, I had a plan to turn it around. The hosting contract expired a couple months after I acquired it which means it was break-even at that point. With a small amount of marketing it’s now profitable (by a small amount :-)

But aside from having a plan to turn it around, I bought it because it’s a well-designed, full-featured app that fulfills a need people are searching for online.

>>2. Have you considered something like Spreedly.com to handle your monthly subscription charges and activation?

I have considered using a service like this (CheddarGetter.com, Chargify.com are a couple others). I would not need them for WeddingToolbox because all fees are one-time charges. But I would consider a service like one of these for a subscription billing app if it was less expensive to use than the time it would take me to build this functionality, or hire someone to build it.

#14 Clay Nichols on 02.13.11 at 10:04 am

Oh, BTW, if you use Spreedly.com you still need a payment gateway. (We already use Quickbooks Merchant Services, which they support, so that wasn’t an issue for us).

Ironically, we’ve never had difficulties with payment gateways but I’ve never done any integration. E.g., we do our cc charges thru Quickbooks which uses QBMS, which was easy to get a Merchant Account with.

#15 A-ron on 02.14.11 at 10:32 pm

Wow. You were way more patient than I would’ve been. My mind would’ve started drifting towards pipe bomb around call #3 :).

#16 Dave on 02.15.11 at 7:44 am

Great web site, love the articles.

Just thought I’d add a recent experience with PayPal Website Payments Pro, part for the record and part for catharsis.

We’d been using PayPal for years and I thought they were (on the whole) great. I had a few complaints from customers who REALLY hated PayPal but because we hadn’t had problems I didn’t pay too much attention to it. We’d been using Payments Pro for virtual terminal services for a few years but when we moved to a new reseller account (shareit) decided that we didn’t need it any longer so I cancelled. Or at least tried to.

Although they sent emails confirming the cancellation they continued to invoice us for 3 months. They responded with emails like this:

“I have reviewed your PayPal Pro Account and found at the time of my review that it had remained live even though you cancelled it. I have therefore (just) proceeded to cancel this service but you will have to pay the 20.00 GBP charged for the service because it is a charge for the service while it was still active.”

Leading to:

“We are concerned about your past due account… We will be taking further action to recover the outstanding amount. Please note that additional fees may be payable if you decide to reactivate your account.”

After many hours of my time (over a three month period) writing emails, phoning up, I finally found someone with the authority to sort it out.

PayPal, in my opinion, isn’t able to cope with resolving customer issues. That’s why so many people have a really strong negative opinion about them. PayPal is no longer a payment option on our web site, we pay a good bit more using ShareIt but with the time/cost benefit taken into account I think it will be worth it.

To be fair to PayPal we didn’t really use Website Payments Pro to its full potential. I think it’s wonderful that the barrier to entry for accepting payments online is so low. No merchant accounts, low monthly fee. PayPal deserve full credit for that. I would just warn any potential customers to be ready for a real headache if you need to resolve any issues.

Deep breath and… relax…

#17 laydar Foment on 02.21.11 at 8:51 am

I have had similar experiences. PayPal, a few dollars more, but it works. Merchant accounts, well… not so much. Example. This one merchant account outfit sent me thier API, we coded our forms, and about a month into production, we noticed the online reports did not provide item detail information, dispite the fact that the API provides fields for item summary etc.

The customer support told me, oh that is just displayed to the customer at the time of purchase and is then discarded. Of course that bit of info was NOT in the API docs.

#18 expert on 02.21.11 at 9:06 am

The experience with merchant accounts is a nightmare to any developer.

I just don’t understand how hard it could be to provide some easy to use api and perhaps not to lock your account?

#19 Jon Peltier on 02.21.11 at 9:26 am

My experience was different. Through Authorize.Net and a merchant service, I got set up in hours, plus the two or three days for approval. PayPal is easy, sure, but they actually cost more, and if there’s a dispute, you get no support. In fact, it’s next to impossible to contact a human at PayPal. 85% of my transactions come through Authorize.Net, and 90% of my disputes (and 0% of those resolved in my favor) come through PayPal.

Rob Reply:

I wonder if I have some kind of priority support, because when I call PayPal I get through pretty quickly and the people are always super helpful.

>>and 90% of my disputes (and 0% of those resolved in my favor) come through PayPal.

Wow…so for you the people who use PayPal actually dispute more. This is bizarre, and hasn’t been my experience.

Thanks for chiming in – good to hear the other perspective.

#20 Darwin on 02.21.11 at 1:16 pm

I understand your frustration but you think Paypal is the answer? Because they are one of the most deceptive customer unfriendly payment organizations you can find.

Rob Reply:

>>Because they are one of the most deceptive customer unfriendly payment organizations you can find.

So I’ve heard from a few people. But that hasn’t been my experience, which is why I wanted to write this post.

#21 Mark on 02.21.11 at 4:19 pm

Rob,

Have you had a chance to review Braintree? I’d be curious about your thoughts on its efficacy when juxtaposed against this article.

Rob Reply:

I took a peek at it. But without signing up, coding against the API, processing transactions, and talking to support I don’t feel like I’d be able to provide a true comparison.

Mark Reply:

Very good. We’re looking into using Braintree right now. I’ll be sure to update my response once we’re down the path further. I can tell you that they serve our niché – the software industry – pretty well. Stay tuned…

#22 Len Jaffe on 03.09.11 at 6:03 pm

A merchant’s experience with chargebacks and refunds, both legitimate and fraudulent will, I’m sure depend on thatmerchant’s customer base.

High risk vendors (e.g. gambling, porn) use High Fee gateways, because if your chargebacks trip a threshold in relation to your processed revenue, VISA will revoke your privilege to process cards.

Many processing gateways and third party processors require a reserve fund held back to offset potential refunds and chargebacks. How much depends on revenue volume and refunds as a percentage of that volume.

Paypal has no such reserve demand, so they just take it from your account, and form your linked bank account if the funds aren’t in the paypal account.

Paypal is fine for businesses in low fraud/low risk categories, but not great for higher risk areas, or for example people who sell electronics on ebay, where we hear story after story of fraud and abuse.

You also have to bear in mind, that payment processors, including paypal, have strict OFAC laws that they must follow, and if they are found to have aided in money laundering without reporting the suspected activities, they can be severely punished by the Treasury Department. So it is in their interest to freeze accounts first, and ask questions later, which leads to horror stories.