Bye bye PayPal

[Kilrah]

When my company was selling goods to consumers (nearly exclusively services and B2B now) we were online only, and one guy who lived 10 mins away from our workshop asked if he could come in person, as an exception we said yes, guy was super nice, had a good chat, we had his $1500 order ready, he paid via Paypal on location as if he would have online, no problem.

A couple of months later we get some money taken out of the account, the bastard had filed a chargeback on his credit card. But the fact he was local (most of our sales were international) was actually a great thing - we filed a complaint for fraud which is pretty easy here, and the guy happened to be a serial offender, having done that to dozens of companies. But even better, he owed about the equivalent of $250K to the taxman, so there was an ongoing procedure that was certain to conclude and our case was just tacked on.
The moron happened to own real estate so one of his apartment blocks was seized, sold and while it took a year or so everyone got their money back.

Crazy how some people are.

Who's that competitor from Europe?

 

[Wayne]

Who's that competitor from Europe?

Payoneer is the company. 1% for ACH and 3% for cards. While the card price is not very good, it is for all currencies, so that actually may be better than many options. Sure is better than paypal. They have some other interesting bits. They have told me they are working on a gateway for e-commerce, and I'm on a mailing list for that. I'm not holding my breath as I think they have said this for a few years now.

 

[Kilrah]

Hmm, actually an American company based in NY... Hever heard of it here in Europe. Seems it's somewhat shady, they had a presence in France several years ago but got into trouble for tax evasion reasons...

 

[Wayne]

Hmm, I used them to pay a manufacturer once per their request. Payment went through just fine. I did a little research and as I recall they had a pretty long history, but I did not dig in very deep. Enough to see if they were safe to use.

As I recall Transferwise had a questionable start also, thrown out of the US market for a while, then came back strong. I have been using them for a few years and am very pleased with the savings.

 

[LazyBee]

@LazyBee
No problem, happy to help out where I can.

You are not required to accept paypal, and some VERY large places do not. For example Amazon. Ebay has stated that they will drop Paypal once their contractual obligation to offer paypal expires. (Paypal used to own Ebay, but sold it a while back.) With this said, if you offer paypal, you will enjoy more sales. Probably in the realm of 20% or so.

Like TahoEd says above, some people just will not buy from a small web site if they do not offer paypal. Even though I do not love paypal, when I am buying from a small web site, I will always use paypal if it is offered. It is safe and fast. A lot less trouble then entering CC info, shipping addresses, etc. I do not know what level of security the web site may have to protect my CC info. I hate it when I have to get a new CC do to fraud. Many hours are lost every time. For example at Aloft we never store a credit card number. We have no access to see the number or other details, thus no one can break into our site and steal that data. But other companies may not take security as a priority. I think a lot of people have this same concern.

Yes, you will loose sales if you do not offer Paypal. Rough guess, but for us it was around 20%.

No, I have had pretty good luck with Paypal. We try and run a tight ship here and take care of customers. This is key. If paypal thinks you are a problem they can and may hold your funds, but you really would have to have a lot of complaints against you, or something odd going on. If you are brand new with Paypal, they will hold your money for a week or so as I recall. But soon enough they learn to trust you and you can have your money the next day for no additional fees. We do what is called a "sweep" automatically each day, all funds are sent to our bank. I do not trust Paypal to hold funds, they are not a bank, do not use them as one.

Regardless of what payment method you use online, someone will have their hand out for a percentage of it. Many e-commerce sites charge a percentage and include credit card payment collection as a package deal. If you sell on Amazon, Ebay or a similar marketplace you can expect LARGE % marketing fee on anything you sell there.

For use we offer Paypal, Credit Cards (not through Paypal), Amazon Pay, and a few customers like to send us a check or money order. The majority of our customers will use paypal, then comes the credit cards, then Amazon Pay (works similar to paypal) and then just a few mail in payment. I thought Amazon Pay would be more popular than it is. We get just a few orders a day with them. (We also sell a few items direct on Amazon and on Ebay and will probably sell more in the future, but will be very selective of the items offered there.) It is cheaper to buy those items direct from us, and we actually sell more via our site than via those market places, but those sites do bring in new customers.)

I wish you good luck. Feel free to check in anytime. I love chatting with other business owners.
p.s. Get a good accounting system up and running from the start!

Hi, Wayne-

Thanks for sharing! It's always nice when someone is willing to share their knowledge.

I sent you a PM with a few more questions.

Best,

Chris

 

[Wayne]

Just a quick update as I am rolling this out for the site now, but we will now accept payments via Zelle. Chances are good your bank offers Zelle. Best of all it should be free for you, and we get the payment in a minute or so, so your payment is not delayed. It draws money from your account and sends it directly to ours.

There is a downside to using Zelle, there is no buyer protection and is only open to people that have an account in the USA. Basically, it is the same as cash (or a wire transfer), once you hand it over you have no more control over it.

Things I like - it is fast, it is FREE and it is secure. It is also simple to setup and use.

It will not be for everyone, so we will continue to offer Paypal and credit cards.

 

[Konrad]

To encourage cash and Zelle payments can those that use these get a 1% or so acknowledgement for our efforts to lower the cost of business?

 

[thenated0g]

I only really use paypall if i have think there will be a problem (chinese stores) or if i have a positive balance from like an ebay sale. IE for me doesn't really matter at all.

 

[Konrad]

It bugs the heck out of me thinking I'm subsidizing the banks with the higher cost of goods and services. Give the cash and carry crowd a break!

 

[Wayne]

OK - 1.5% discount for Zelle. I wish I could charge more for Paypal, but not an option for our site.

 

[Konrad]

OK - 1.5% discount for Zelle. I wish I could charge more for Paypal, but not an option for our site.

You and me both. Charge those for the service they use.

In my day the fee structure most financial institution use today would be illegal as they would fall under the usury clause of the laws.

 

[Wayne]

Will be interesting to see how this pans out. Maybe we love it, maybe we hate it. If we still offer it in a week we probably liked it.

 

[Diceman]

Awesome Wayne! I have Zelle and next time I buy from you Ill try it out!

 

[Wayne]

Sweet - I had not heard of it before, even though it has been around for a couple of years now and is available to the vast majority of bank users in the USA. Sounds like the number of transactions has been growing at a pretty fast rate.

I love the idea of it, just don't like the companies behind it, basically all of the huge banks are part owners. This always is a concern to me, but maybe it is just them side stepping some other service that was costing them all too much money. I suspect if it really grows in market use it will get fees added.

I do wish a company would come along and beat the tar out of Paypal. Seems to me a new company could come along and under price Paypal and still make plenty of profit.

 

[u2builder]

I am not comfortable with and don't use on-line banking or any of the on line payment services like that are springing up, and I don't like having sites store credit card info and I really hate subscription based products purchases. I have used PayPal since its early Ebay days. PayPal works great for me and if I sell hobby stuff I can then spend it through my PayPal account, usually at Aloft, without having to ask my wife for permission. When Aloft didn't have PayPal I had to limit my purchases.

 

[Konrad]

I am not comfortable with and don't use on-line banking or any of the on line payment services like that are springing up, and I don't like having sites store credit card info and I really hate subscription based products purchases. I have used PayPal since its early Ebay days. PayPal works great for me and if I sell hobby stuff I can then spend it through my PayPal account, usually at Aloft, without having to ask my wife for permission. When Aloft didn't have PayPal I had to limit my purchases.

I see a deeper problem than trust in the on-line banking system.

 

[thenated0g]

I just the Zelle thing on my last purchase from aloft. Took me a minute to figure out how to get Chase to find alofts account but ill definitely use it in the future. Saves me money and aloft so win win.

 

[Diceman]

I have used Zelle as well with Aloft, it is a bit harder because you have to go to your bank site afterwards and pay, but it worked great.

 

[Wayne]

Yeah, they make you earn the savings. A few more steps, but easier then typing in a credit card number if you ask me.

I am not comfortable with and don't use on-line banking or any of the on line payment services like that are springing up, and I don't like having sites store credit card info and I really hate subscription based products purchases. I have used PayPal since its early Ebay days. PayPal works great for me and if I sell hobby stuff I can then spend it through my PayPal account, usually at Aloft, without having to ask my wife for permission. When Aloft didn't have PayPal I had to limit my purchases.

I agree and Aloft does NOT store any banking or credit card info for this reason. We can never see your card number! We do allow you to use your Amazon or Paypal as those are huge companies that most of us use, and hopefully they have the resources to keep that information safe. With that said, both of those companies have been hacked in the past!! (Which is funny since Amazon is currently trying to expand into a payment system.)

 

[thenated0g]

So now on my second zelle payment it was super easy with chase. @Wayne just shows up like a contact i have and i just click "pay" and enter the amount in the email i got from aloft.