Life – and business – would be a lot simpler if a successful customer interaction ended in a sale. For too many, a lingering drama unfolds with customers who use the legendary payment service, PayPal, to facilitate their transaction.
PayPal, a behemoth originating from the early days of eBay, offers a relatively smooth transfer of funds from buyer to seller, and provides industry-standard security in the process. When a sale goes awry, however, it can be a nightmare to deal with – especially if you have a customer who may just be attempting to defraud you.
As an online seller, the benefits of accepting PayPal payments are impossible to overstate. First, PayPal processes about $100 million worth of payments each year. Second, the percentage of ecommerce shoppers, and others, who have PayPal accounts is very high. Most are comfortable with the technology and will readily turn to its convenient service. Merchants including a PayPal payment button on their checkout sites may realize a greatly increased chance of making the sale.
But there’s a dark side, and it has to do with the third-party position PayPal places itself in as a liaison between you and your clientele. Though they represent a fraction of overall sales, the fraudulent or exploitive chargeback customer can be a pain in the virtual cash register, and other parts of your business’ body. Here’s how they unfold.
A customer purchases an item from a seller and uses PayPal to complete the transaction. PayPal, sensitive to consumer protection both because of state regulations and good business sense, immediately considers your customer to be their customer. Say this customer attempts fraud by claiming she or he never authorized the charge. If it’s disputed through an issuing credit card bank, the bank may issue a chargeback and reverse the funds transfer. Along with that comes a welcoming $20 chargeback fee.
Since PayPal was the entity used to transfer funds, it acts as a mediator in these disputes. That means attempting to resolve the issue, which may include a run-of-the-mill complaint about the quality of the product. Plenty of merchants believe PayPal automatically favors the purchaser, even in fraudulent transactions.
Let’s get to the point: there are ways to minimize the odds of ending up on the bad end of a PayPal dispute. Here are a few:
Once you’ve caught on to the PayPal dance, you can offer its payment service option with confidence. You’ll capture sales from people who may be reticent to directly enter credit card information online, and you’ll earn a layer of merchant protection you may not receive from a bank.