PayPal Review (For Businesses)
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- Date Established
- 1998
- Location
- San Jose, CA
Pros
- Trusted by consumers
- Predictable flat-rate pricing
- Multiple pricing plans available
- Ideal for low-volume merchants
- Extensive integrations
- Good developer tools
- All-in-one payments system
Cons
- Account stability issues
- Inconsistent customer support
- Not suitable for high-risk industries
PayPal For Business Overview
Merchants in today’s world have no reason not to accept PayPal. The payment processing giant is nearly ubiquitous at this point — as things stand, PayPal claims 361 million active consumer accounts and 28 million merchants. As all PayPal reviews note, setting up and using PayPal is ridiculously easy, and you can be up and running nearly instantaneously. What’s more, your customers don’t even need a PayPal account, although they probably do have one.
PayPal is completely transparent about its terms and pricing. There are no contracts to sign and no early termination fees to worry about. Countless integrations are offered, so you’ll have plenty of options for syncing PayPal with your shopping cart, your accounting service, or your shipping software. PayPal also provides its own mPOS app, PayPal Here.
Looking for a PayPal alternative? Check out Square Payments.
| Reader | eCommerce | Retail | Food Service |
|---|---|---|---|
 |  |  |  |
| Free App & Reader | Square eCommerce | Square for Retail | Square for Restaurants |
| Get Started | Get Started | Get Started | Get Started |
| Free, general-purpose POS software and reader for iOS and Android | Easy integration with popular platforms plus API for customization | Specialized software for more complex retail stores | Specialized software for full-service restaurants |
| $0/month | $0/month | $0-60/month | $0-60/month |
| Always Free | Always Free | Free Trial | Free Trial |
Another factor in PayPal’s broad appeal is that unlike the vast majority of merchant accounts or payment processors out there, you can implement PayPal as your exclusive means of accepting payments or as a supplemental option.
However, our PayPal business account review aims to tackle the question: Should PayPal be your primary payment processing platform?
PayPal is set up in a way that makes it scalable with your company from your first day until you make it to the big leagues. With no contracts, no monthly fees, and a robust suite of tools for merchants to sell virtually anywhere, anytime, there are plenty of reasons to recommend PayPal for businesses.
Once you’ve reached the point where you’re consistently processing at least $10,000-$20,000 in credit card transactions per month, though, a traditional merchant account may become more cost-effective. A good merchant account will also give you personalized service and attention — something PayPal doesn’t offer.
If you only process sporadically, have a low volume, are just starting, or a traditional merchant account is beyond your reach (for a reason other than “I run a high-risk business“), PayPal should be near the top of your shortlist for processing options. It’s hard to beat the value, especially for new merchants. It’s also important to ask whether PayPal has all the features and functionality you need, though. If the answer is yes, you should go for it!
We’re giving PayPal a score of 4 stars for its ease of use, clear pricing, and transparent advertising. When we start to see actual, consistent improvement in PayPal’s customer service and account stability, we’ll consider revising the score upward — but not until then.
Read our full PayPal review for all the down-and-dirty details on PayPal’s merchant solutions, including features and pricing. If you like what you see, check out our piece on how to set up a PayPal business account. And if it’s not for you, we’ve highlighted some alternatives to PayPal at the end of this review. And as with everything we review, if you have experience using PayPal as a merchant — good, bad, or anything in between — please leave us a comment!
Table of Contents
PayPal Business Products & Services
Before delving into the full range of PayPal products, we should establish upfront that PayPal is a third-party processor (also known as a payment service provider [PSP] or an aggregator).
The primary difference between a third-party processor and a traditional merchant account provider is that instead of providing merchants with their own merchant account, PSPs aggregate all their merchants into one enormous merchant account. One unfortunate side effect of this arrangement is that merchants bear an increased risk of account instability. Holds and terminations are quite common due to the risk management policies required for PSPs to function. Check out our PayPal vs. merchant accounts article to get the entire scope of the differences between these two fundamentally different payment processing methods.
When most people think of PayPal, they tend to think of it mainly as a P2P payment app or as a payment method available on some eCommerce websites. While PayPal is both of those things, it also offers an expansive array of features and capabilities for merchants. PayPal is expanding and diversifying quite a bit now that it’s a publicly-traded company in its own right. I like to see this because it means PayPal is keeping up with the times and, in many ways, positioning itself to be an industry leader.
But on to more immediate matters! First, to process payments with PayPal, you need a business account, which is free to sign up for.
After doing this, you’ll need to decide which of PayPal’s products and services you plan to use. Get ready — this list goes on!
Accepting Online Payments With PayPal
For a vast majority of merchants, getting set up with PayPal means deciding how you want to accept payments online. PayPal offers three options for web payments:
- PayPal Checkout (formerly Express Checkout)
- PayPal Payments Standard
- PayPal Payments Pro
PayPal Checkout is an easy solution if you just want to add PayPal as a payment option on a website where you already accept credit cards or integrate with an eCommerce provider. To implement Checkout on your website, you may need a developer, but it won’t take a lot of work after that point. PayPal does the maintenance and upkeep for you. Here’s what you get when you use Checkout:
- PCI Compliance: Because PayPal redirects customers to its site to complete the transactions, you don’t have to worry about PCI compliance at all.
- Contextual Checkout Buttons: PayPal will use what it knows about your customer to display “smart” checkout buttons tailored to the customer. For example, Venmo users will see a Venmo checkout option. PayPal Credit (formerly “Bill me later”) will also appear as an option on eligible purchases. Check out our guide to selling with buy buttons to learn more!
- Localized Payment Methods: PayPal is in the process of adding localized payment methods for customers across Europe. It’s already something we see with Stripe, so it’s hardly surprising to see PayPal implement it as well. In addition to existing support for SEPA Direct Debit (Germany), PayPal is adding support for iDEAL (the Netherlands), EPS (Austria), Giropay (Germany), MyBank (Italy), and Bancontact (Belgium), with more to come in the future.
PayPal Payments Standard (known as Website Payments Standard in some countries) is a bit more involved than PayPal Checkout. That’s because it gives merchants more control and customization with their payment process. Payments Standard includes all the eCommerce integrations that PayPal Checkout offers but does not offer the “smart” checkout buttons. Here’s what you do get, though:
- PCI Compliance: As with Checkout, PayPal routes your customers to its website to complete transactions, eliminating the PCI compliance burden for merchants.
- Customizable Payment Buttons: PayPal says that it only takes about 15 minutes to implement PayPal Payments Standard, and it’s just a matter of copy-and-paste. With payment buttons, you can create an online shop where you can sell one item, or 10, or as many as you want. PayPal’s button builder tools allow you to customize the look of the buttons as well as how some aspects of the checkout process works (whether you want to go immediately to purchase or allow customers to add items to a cart). Nonprofits can also create donation buttons with the option to make one-time or recurring donations.
PayPal Payments Pro is for merchants seeking complete control over the entire checkout process. It’s not everyone’s cup of tea, but if you have access to a skilled developer and are extra finicky about controlling your payments experience — or if you absolutely need access to a virtual terminal — it may be worth a look. PayPal Payments Pro is the most customizable of PayPal’s online payment processing options, though it will cost you an extra $30 per month.
- Hosted Checkout Page: If you’d rather keep your customers on your website throughout the entire checkout process, it’s worth looking at the Pro plan. PayPal makes it easy for you to customize the design of your checkout. However, you do take some of the PCI burdens onto yourself in the process. PayPal makes it simpler with tools such as transparent redirects. At a minimum, you can expect to have to do self-assessments and quarterly scans to maintain your PCI compliance.
- Virtual Terminal: If you want to accept payments over the phone, PayPal’s virtual terminal will let you key in card numbers from a browser window. However, $30/month is a pretty hefty price to pay for this feature considering both Square and Shopify offer it at no additional charge.
- Recurring Billing: Technically, PayPal’s Payment Pro plan does not include any recurring billing tools. It’s an add-on service that costs an additional $10/month. Again, I think that’s pretty expensive given that Stripe offers much better pricing and more flexible tools in this regard. Note that with PayPal Checkout, you get recurring billing for no additional monthly charge (PayPal Payments Standard does not offer recurring billing).
For a visual reference detailing PayPal’s three payment plans, have a look at the following chart.
| Plan Name | Monthly Cost | Payment Buttons | Virtual Terminal | Hosted Checkout | Recurring Billing |
|---|---|---|---|---|---|
| PayPal Checkout | Free | Contextual (“Smart”) checkout buttons | No | No | Yes, for no additional monthly charge |
| PayPal Payments Standard | Free | Customizable payment buttons | No | No | Yes, for no additional monthly charge |
| PayPal Payments Pro | $30/month | Customizable payment buttons | Yes | Yes | Yes, for an additional $10/month |
In addition to the above, PayPal offers a special payments plan for enterprise-level businesses called PayPal Enterprise. PayPal hasn’t released a great deal of detailed information about the plan, but it does tout an optimized processing engine to remove friction at checkout, a brandable web portal, granular data analysis, and more.
PayPal Tools For Businesses
- PayPal Commerce: Formerly known as PayPal for Partners, the PayPal Commerce Platform is a payments solution for marketplaces, crowdfunding platforms, and other platforms for merchants and fundraising teams. Features such as vaulting (the secure storing of customers’ credit card data to streamline the checkout process) and channel billing agreements are available on an approval basis.
- PayPal Here: This is PayPal’s mobile processing app. While it’s not the most feature-laden out there, it’s solid enough. The fact that your funds get deposited into your PayPal account along with the rest of your online sales is pretty nice. You don’t have to pay for any subscription or software fees; you just pay the processing costs. Check out our PayPal Here review to learn more.
- POS System Integrations: If PayPal Here isn’t robust enough for your needs, you can integrate PayPal into one of the company’s partners for POS solutions. You’ll still pay for the software subscription, but PayPal charges nothing except the transaction fees and hardware. Check out the Integrations & Add-Ons section below for a better look at your third-party integration options.
- Online Invoicing: Consultants and contractors can use PayPal’s invoicing features for invoicing their clients for the same rate as regular web transactions. PayPal’s invoicing tools are pretty solid, allowing you to add a tipping option to the invoice and even setting up installments. Recurring invoicing is supported as well. Both the lifecycle status and the payment/refund status of an invoice are tracked. You can also create custom billing apps with PayPal Invoicing APIs.
- Payflow Payment Gateway: The gateway comes automatically bundled with PayPal’s online processing tools, so it’s not something many people will think about. However, PayPal’s gateway is available as a standalone product to businesses that have a credit card processor but no gateway. See the PayPal Merchant Fees & Rates section below for more pricing information.
- Marketing Solutions: Honestly, PayPal’s “Marketing Solutions” makes me think of a pared-down Google Analytics with some PayPal tools thrown in. But if most of your customers use PayPal, or you want to increase conversions on your site, it’s certainly worth looking at. The Marketing Solutions package is available with all of PayPal’s online processing options, including Checkout, and now it’s available outside the US as well. “Shopper Insights” lie at the heart of this package, and these insights include sales conversion rates, average purchase size, and shopper device type.
- Mass Payouts: Want to pay employees or contractors via PayPal? The Mass Payout feature allows you to send multiple payments at once rather than one at a time, using either a spreadsheet or the PayPal API. Plus, you’ll save money compared to PayPal’s standard rates. Check out the PayPal Merchant Fees & Rates section for more information.
- PayPal.me: PayPal sports a Venmo-style payment solution in the form of PayPal.me. With this app, you can send and request payments to/from friends, family, customers, and clients. The other party doesn’t even need to have a PayPal account. While personal payments do not incur any fees, commercial payments are charged the same 2.9% + $0.30 rate as payments made via PayPal proper. Be aware that PayPal is watching to make sure you don’t try to pass off commercial payments as personal payments. If you have a PayPal Business account, PayPal will assume that any PayPal.me link associated with your account is commercial by nature and will charge you accordingly.
- PayPal LoanBuilder: PayPal now offers a simple short-term loan service available to merchants regardless of their payment processor. The service requires a credit score of at least 620, but the application process is pretty simple.
- PayPal Developer Tools: PayPal has recently invested some notable efforts into improving its developer tools. These tools include PayPal Checkout for online sellers who opt not to implement an eCommerce integration. PayPal Here SDK is for those of you seeking to add PayPal payments to your own POS system. There’s also a White Label Wallet if you need a branded mobile wallet app that works at the point of purchase at in-person locations. Connect With PayPal is for merchants who want to allow customers to log into your website/app using their PayPal credentials. And, finally, there’s the aforementioned PayPal Commerce Platform.
What’s New With PayPal?
PayPal continues to innovate and regularly rolls out new features. The following features have been added since our last update in February 2020.
- Social Media Selling: If you don’t have a website and would prefer to sell items through your existing social media channels, you can create an embedded payment link and post it to your account on Facebook/Twitter/etc. A separate feature, “Checkout on Facebook and Instagram,” allows you to sell products from your Instagram page while letting you use the full ecosystem of Instagram Shopping tools.
- Pay In 4: To compete with the likes of Klarna, PayPal has introduced its new pay later installment option, Pay in 4. This lets your customers pay for purchases in four interest-free payments, with one of those payments being a down payment due at the time of purchase and the remaining three payments being due every 15 days thereafter. The great thing about this feature is that you’ll still get paid the entire amount upfront. Purchases qualifying for Pay in 4 must be between $30 and $600.
- Shipping Discounts: When you create and use an online shipping label in PayPal, you’ll get access to USPS Commercial Base pricing along with UPS discounts — up to 45% off UPS Ground shipments and up to 55% off 2nd Day Air on eligible packages.
- Cryptocurrency Support: PayPal recently announced its intent to get into the booming field of cryptocurrency. US users can now use PayPal to buy, hold, and sell Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. That’s all well and good, but the part of PayPal’s announcement that will affect merchants is that starting sometime early this year (2021), customers will be able to use crypto to pay for purchases from PayPal merchants. Once this policy is enacted and a customer makes a purchase from your site using cryptocurrency, the crypto will be instantly converted to fiat currency, and the transaction will be settled like any other.
- QR Code Payments: PayPal merchants can now use QR codes to accept payments from customers in-store. Just generate a QR code online or in the PayPal Business app, display it by your register, and let customers scan the code to make their payment. It’s a nice contactless payment option, well-suited to the COVID era.
PayPal Merchant Fees & Rates
All PayPal services come with no annual fee, no setup fee, no PCI compliance fees, and no cancellation fee. Except for a few optional software-related fees, you won’t have to worry about anything other than payment processing costs.
PayPal’s pricing is very straightforward, even if those costs are a bit higher than most traditional merchant accounts. However, its pricing structure is competitive with other payment aggregating services. New merchants may find the lack of additional fees more cost-effective than an interchange-plus plan. I’ve laid out the fees below, but you can also check out our other article, How Much Does PayPal Charge? The Complete Guide To PayPal Credit Card Processing Fees.
Regardless of your plan (Checkout, Standard, or Pro), your transactions fees will be as follows:
| Fee Name | Fee Amount |
|---|---|
| Online sales | 2.9% + $0.30 per transaction |
| Swiped/dipped/tapped mobile and in-store transactions | 2.7% per transaction |
| Keyed-in mobile and in-store transactions | 3.5% + $0.15 per transaction |
| Virtual terminal transactions | 3.1% + $0.30 per transaction |
| Mass payouts | 2% (max $1) using the online form, $0.25 per payout using the API |
| Chargebacks | $20 per chargeback |
| International transactions | 1.5% cross-border fee |
| Refund fee | 2.9% + $0.30 per refund |
| Instant transfer fee | 1% of the transfer amount (max $10) |
Other PayPal Fees
PayPal sports a couple of alternative rate offerings: a microtransactions plan and nonprofit discounts. PayPal’s micropayments plan is open to all merchants, but it only benefits you if most of your transactions are under $10.
- Micropayments Rate: 5% + $0.05
Qualified 501(c)(3) organizations that go through the verification process are eligible for a discount for online transactions:
- Nonprofit Discount Rate: 2.2% + $0.30
PayPal doesn’t offer a discounted rate for in-person transactions. This nonprofit rate applies only to online sales or donations. Read our PayPal For Nonprofits Guide: How To Accept Donations Via PayPal & More article to learn more about what PayPal can offer nonprofit organizations.
Remember that there are two options for accepting PayPal on your site that charge no monthly fees: PayPal Checkout and PayPal Payments Standard. However, if you prefer to keep customers on your page, or if you’d like a virtual terminal, you’ll need PayPal Payments Pro:
- Paypal Payments Pro: $30 per month
PayPal Payments Pro doesn’t include an option for Recurring Billing. If you want to offer subscription services, that will run you an extra $10 per month on top of the Pro plan. PayPal offers free recurring billing for PayPal Checkout users but not PayPal Standard users.
Finally, PayPal offers its Payflow gateway to process payments. It works with most payment processors. If you want to sell online but don’t want to use PayPal as your primary payment processor, and your chosen processor doesn’t offer a gateway, Payflow is an option. Payflow supports two plans:
- Payflow Link: This pay-as-you-go option costs $0.10 per transaction with no setup or monthly fees. With Payflow Link, you embed a checkout form on your website that will redirect to the PayPal site to complete the transaction. Payflow Link also adds PayPal and PayPal Credit buttons.
- Payflow Pro: Payflow Pro costs $25/month, and there’s a relatively high $99 setup fee. Plus, you’ll still be paying the $0.10 per-transaction fee. The PayflowPro plan gets you a customizable checkout page that’s hosted on your website, with the ability to add PayPal and PayPal Credit options.
Funding Options For PayPal Business Users
Money from PayPal transactions is available almost immediately in your PayPal account. You can then spend that balance anywhere that accepts PayPal online or transfer the funds to your bank account. Standard transfers typically take one to two business days and are cost-free.
If you need your funds within minutes, PayPal offers an instant transfer option. It will cost you 1% of the transfer volume (capped at $10), which is on par with what Square charges for the same service.
Whether you’re doing a standard transfer or an instant transfer, your debit transfer limits are as follows:
- $5,000 per transaction
- $5,000 per day
- $5,000 per week
- $15,000 per month
If you’re transferring funds to your bank account, there is a $25,000 per-transaction withdrawal limit.
PayPal also has its very own debit card for businesses, the PayPal Business Debit Mastercard. The card gives you fast access to cash from your PayPal account — no waiting for a funds transfer. You can spend your balance at any store that accepts cards or withdraw money from any ATM with a Mastercard, Maestro, or Cirrus acceptance mark. It also makes accounting simpler because you don’t have to use your personal accounts to make business purchases or constantly shuffle funds around.
If you need a quick influx of cash and don’t want to deal with a loan, PayPal merchants are eligible to apply for PayPal Working Capital. It works like a merchant cash advance where you pay back the financed amount by deducting a small portion of each day’s transactions processed via PayPal. Check out our PayPal Working Capital review for more information.
Contract Length & Cancellation Fee
All of PayPal’s payment solutions are contract-free and have no early termination fee. It really is that simple.
That’s great if PayPal is your starter option, and you want to upgrade to a merchant account later. However, if the rates work for you (particularly as just a secondary option), PayPal will also scale with your business. We rarely find a service that will help you start and stay with you as your business grows, and we like that quite a bit.
Sales & Advertising Transparency
The best thing about PayPal is that its sales and advertising are very upfront. All of the rates are listed in plain sight, so there’s no hidden agenda. PayPal has, over the years, gotten better about disclosing pricing and fees (such as its chargeback fee, which used to be hidden in the fine print).
Most of PayPal’s business comes directly through its website or via referrals. It doesn’t have the traditional sales team “pounding the pavement” and luring in potential customers with too-good-to-be-true deals like some merchant account providers.
Please don’t think that just because anyone can open an account, everyone can process with PayPal. That’s not true, and I think it plays a considerable role in complaints against PayPal. There’s a specific list of PayPal prohibited businesses, which I encourage everyone to check out. You’ll also be under scrutiny as soon as you start processing. If PayPal decides you present an unacceptable risk, it will terminate your account. So make sure you operate transparently and use sound business practices. Check out our guide on how to prevent holds, freezes, and terminations.
PayPal Customer Service & Support
PayPal has several different customer service channels. Depending on your question or problem, you can check out any of these options:
- Community Forum: If you want insights and advice from other PayPal merchants, the community forum is a good place to start.
- Knowledgebase: PayPal’s self-help resources are pretty extensive, both for consumer users as well as merchants. You’ll find a vast array of questions and answers in the searchable database, which should cover most of your needs.
- Phone/Email: Any PayPal customer service review must note that PayPal’s phone support is quite inconsistent, judging from online opinion (see Negative PayPal Reviews & Complaints). Sometimes you’ll get a rep who knows what they’re doing; other times you won’t. My advice is to avoid calling, if at all possible. Answers to the most common problems can be found with just a little bit of searching. Between the knowledgebase, community forum, and quick answers sections, you should be able to find a solution.
- Social Media: PayPal is active on Facebook, but if you want help on social media, you’re better off taking to Twitter, where you can send a tweet to PayPal and get some assistance that way.
- Resolution Center: Through PayPal’s resolution center, a merchant can communicate directly with a buyer to resolve a transaction problem. You can also use it to attempt to resolve an account limitation, to report unauthorized account activity, and ask PayPal to investigate a transaction problem.
One compelling benefit of using PayPal is the sheer volume of users. Any time you encounter an error or a problem, you can google it. The odds are good that you’ll find a solution from another merchant who has already dealt with the same issue. However, when it comes to account issues (such as holds), you’ll need to talk to someone over the phone. If need be, you can go through the BBB (read more about that in the PayPal Customer Reviews & Complaints section).
Integrations & Add-Ons
PayPal integrates with a vast number of applications, from shopping carts to accounting software, shipping applications, and email marketing software. There are just way too many to write out, but you can find the full list on PayPal’s site.
If you are interested in PayPal integrations, here’s a quick primer on some of the options available:
eCommerce
- Shopify
- Magento
- X-Cart
- 3dcart
- BigCommerce
- Wix
- BigCartel
- Volusion
- WooCommerce
- CS-Cart
- Ecwid
- Jimdo
- WordPress
- Squarespace
- UltraCart
In-Store
There’s an obvious benefit to having so many integration options: You won’t have to worry about whether your shopping cart is compatible or not because it most likely is. The same goes for major accounting applications, such as QuickBooks Online and Xero. And there’s no shortage of well-known, robust POS solutions for retail stores and restaurants. Plus, PayPal integrates with some more specialized solutions as well.
PayPal Customer Reviews & Complaints
Positive PayPal Reviews & Testimonials
Though you’ll find plenty of negative comments in PayPal customer reviews, there are plenty of positive comments from merchants (and even some developers). Considering over 28 million merchants are using PayPal, this shouldn’t be too much of a surprise. Here’s what the positive chatter in PayPal credit card processing reviews is all about:
- Easy Setup: Most PayPal for business reviews — particularly from business owners — rave about how easy it is to set up a PayPal account. If you’re using PayPal Payments Standard (or even PayPal Checkout), then you can get started almost instantly.
- Widely Accepted: PayPal has an extensive user base, making it a trustworthy payment option for everyone. If you’re just getting your business off the ground, starting with something such as PayPal is a good choice. The name recognition and trust associated with PayPal (especially with its buyer protections) can be a serious asset in the early days of operation.
- Almost-Instant Access To Cash: Your PayPal transactions clear almost immediately, so you can spend the money in your account as soon as you have it — provided the place where you’re spending it accepts PayPal, of course. If you want your money anywhere, don’t overlook the PayPal Business Debit card. It works like a debit card, but it deducts directly from your PayPal account. And now we have the instant transfer option, too.
- Multiple Products/Services Under One Roof: PayPal offers you everything you need to process online or mobile payments (e.g., payment gateway, payment forms, virtual terminal, invoicing, micropayments, recurring billing, developer tools, etc.). It truly is a solution that will grow with you.
- Transparent Pricing: Every PayPal payment review notes that pricing-wise, what you see is what you get with PayPal. There are no setup fees, annual fees, cancellation fees, or downgrades for sellers.
Negative PayPal Reviews & Complaints
PayPal is a massive company, and like all big companies, there are many complaints. The greatest difficulty with quantifying a negative PayPal account review is the fact that PayPal is also a consumer product. That means a good chunk of the complaints come from users on the consumer end of things. Therefore, the number of complaints about PayPal is not representative of the complaints about its merchant services.
While the number of complaints isn’t particularly helpful, the content of those complaints is. I read over a chunk of the complaints, dating back about 12 months, and one thing stuck out for me.
I was honestly impressed with PayPal’s quality of service. The department handling BBB complaints is full of real people writing the responses and explaining where the problem occurred. They’re genuinely trying to help where they can. If you go through the BBB, the odds are good that you can probably get whatever help you need — it just might take a little while, and you should try going through PayPal’s customer support first.
The BBB is a leading source of information about how a company deals with complaints, but I do check out a few other review sites for more details. For the most part, I see the same trends: a mix of consumer and merchant complaints. Of the merchant complaints, there is one single complaint that dominates all others. It’s not that PayPal’s products are the problem. It’s the service. Specifically, here’s the big issue:
- Withheld Funds, Freezing Of Accounts, & Termination Of Accounts: If PayPal notes any suspicious behavior on your account, it may implement a hold on a certain percentage of your funds, freeze your account, or even terminate your account. Usually, a red flag on your account comes with a request for documents, such as bank statements, photocopies of your IDs, purchase orders, invoices, and more. PayPal uses that information to determine what to do with your account. One of the criteria PayPal uses to flag an account is a sudden spike in processing volume. It also doesn’t like seeing merchants sell goods below cost (an unfortunate tactic used by a LOT of newbie eBay sellers) or merchants selling vague, mysterious products. Anything that indicates an unsustainable business model might be grounds for account termination.
That said, this certainly isn’t a problem unique to PayPal. Other aggregators, including Square and Stripe, have a similar reputation. Such is the nature of the “come as you are” business model. It’s easy to get an account with minimal history, but there’s an inherently higher risk because you’ll be under scrutiny once you get started.
In addition to the withheld-funds issue, here are some other common complaints found in PayPal merchant services reviews:
- High Transaction Fees: Compared to a traditional merchant account, PayPal’s transaction fees are higher. Visa’s wholesale rates for an eCommerce transaction are between 1.5% and 2.4% + $0.10 per transaction. At 2.9% plus $0.30 per transaction, PayPal’s rate is over that amount, even when you factor in a merchant service provider’s markup. However, merchant accounts aren’t always accessible or even viable for low-volume merchants. For those merchants, when you factor in the various costs that a merchant account often generates, PayPal usually breaks even or comes reasonably close. What’s more, you don’t have a contract (or early termination fee) to worry about.
- Inconsistent Phone-Based Customer Service: Most merchants will rarely have to call PayPal’s customer service line. Reviews of PayPal note that the quality of service on the helpline can be inconsistent. Some reps are more knowledgeable than others. The good thing is that PayPal has a whole slew of other service and support options (e.g., the knowledgebase, forum, email, etc.). Barring any account-related problems, chances are you can find your answer without having to call in.
- Chargebacks: Let’s be honest. Chargebacks are the bane of existence for any merchant who sells online. They’re also bad for your account stability, no matter what company you process with. A lot of chargeback-related complaints found in PayPal merchant reviews seem to come from sellers on eBay or merchants who aren’t happy with how a chargeback was resolved. PayPal does offer some limited seller protections for online transactions, but you should brush up on what is and is not covered (eBay sales, for example, aren’t covered).
I should note that most of the complaints about PayPal posted to the BBB are ultimately resolved to the aggrieved party’s satisfaction. Nonetheless, if these complaints make you worried, check out our top selections for small business credit card processing instead. No business is perfect, but you might find that other companies give you a little less reason for concern.
Final Verdict
PayPal is an ideal payment option for new businesses, and you should definitely keep it around as a backup form of payment if you sell online. Of course, it functions quite well as your primary payment option as well.
Setting up a PayPal business account is quick and painless, the platform is easy to use, and it’s widely accepted. If you own a brand new business and you need to accept payments quickly, PayPal is an ideal solution. The mobile integration, PayPal Here, is seamless, which is useful for retailers and vendors that want to accept payments on the go. There are also plenty of other POS options available if you need more advanced features. A huge number of shopping cart integrations and developer tools for online sellers are available as well.
That said, as your business grows and you exceed $10K in monthly revenue, it may be more worthwhile to pursue a traditional merchant account because the processing costs will be lower. Just make sure that the merchant account provides all the features you need — and that if you have to pay for additional services, they don’t exceed the costs of using PayPal. Have a look at our merchant account comparison chart if you’re considering going this route.
As with any other third-party processor, account stability is always a concern. While your account may be approved almost right away, your transactions will be stringently vetted. As we’ve seen in PayPal merchant account reviews, red flags can lead to held funds, or worse, account freezes or terminations.
Despite this, the credibility PayPal offers beginning and small-time merchants, its near-universal recognition, and the sheer number of features and integrations available are serious advantages. Even well-established merchants can benefit from using PayPal. For those reasons, along with its ease of use, transparent pricing, and overall versatility, we’re keeping PayPal’s score at 4 out of 5 stars. We’d love to see more reliability and improved customer service, which would easily bump PayPal up a half-star or more.
We’re confident in recommending PayPal to you, but we acknowledge that, like most other aggregator services, it’s not the best fit for every business.
If you want the processing freedom that comes with no contract and no monthly fees, but you’re determined not to use PayPal, have a look at either Stripe, which is very developer-friendly. Another good alternative is Square, which doesn’t have quite the wide-ranging eCommerce support that PayPal does but is still a powerful all-in-one option. We also have a piece comparing Square and PayPal if you’re intrigued. And if you want a bit more account stability but still have all the trust and tools that PayPal offers, it’s worth checking out Braintree. Since PayPal owns Braintree, it integrates seamlessly and provides merchants their own unique merchant accounts. All of these processors have similar pricing models.
Read our article on PayPal alternatives to get a concise picture of your other payment processing options.
Thanks for reading! Again, if you’ve used or are using PayPal and have anything to share about your experiences — positive or negative — please let us know. Our comments are always open!
Jason Vissers
Jason Vissers is a writer and cereal chef from San Diego. He graduated with a Political Science degree from San Diego State University in 2001. He's been writing about website builders, crowdfunding sites, online lenders, and credit cards for Merchant Maverick since 2015. Additionally, Jason can't eat raisins.
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We've done in-depth research on each and confidently recommend them.
We've done in-depth research on each and confidently recommend them.
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Organization Name: Vivid Collective
PayPal courted me for several months and finally offered a rate that was too good to resist. I filled out the application which required many business documents, bank statements, previous merchant processing statements etc. After being approved from underwriting we signed a contract.I spent hours transitioning my customers over to their platform. I ran some test invoices and it they through as well as my first batch of recurring payments. Day 2, PayPal says they put a freeze on both my business account and my merchant services account and need a bunch more documentation about the business. I send over the all of the entity information and annual sales (all of which they should have had from the underwriting process). Later that day, a customer attempts to pay an invoice and has a message that I am an invalid merchant and cannot receive payments. Day 3, I also try another test invoice and get the same message. My contact says there is nothing he can do but to call customer service. No response to any of my inquiries about why this is happening after their underwriting process.First call to customer service, I get an automated response that I will have to contact them via the messaging center and I get disconnected.Second call to customer service: the rep doesn’t even know what merchant services is and keeps referring to my PayPal business account and that everything is fine. After 30 minutes, I finally get transferred to an “account specialist”. As of this writing, PayPal is preventing over $25k in invoices from being paid. Payroll has just gone out, along with the majority of our monthly expenses. So, we now have a cash flow issue which we have never experienced.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: Wally and Whiz
Can you give zero stars? Or negative?there is one benefit with paypal – and thats that for several European countries its one of the more used solutions. As for the backend of things we have now for several months + over 25 interactions, requests for phone calls, cries for help, etc etc. PAYPAL has consistently and structurally managed NOT to assist in getting our money out of there. I am happy we are now a stronger business that can survive this, but as a company we have now had +20.000 EUR tied up at PAYPAL unable to get this out for over 3 months. And without PAYPAL helping us in getting the money. We are moving to next steps now which is contacting local financial authorities to hear if such behaviour es even legal and how we can move forward to get assistance. The de-facto lack of usefull assistance in getting out money out is resembling a scam-like company, which we as a company in no way feel comfortable working with.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: GCQ ACCOUNTING SOLUTIONS
The worst experience ever!!!!!!! First of all because of the covid situation there’s not an active line over the phone to help you. They only have resolution center which they take days to answer. Secondly they put a limit on my account because they needed to verify legal / non legal information which there’s not a problem because all my papers are up to date and legal. I submitted all the requested documents and no body has helped me with the issues so I have PayPal balance that I cannot withdraw to my personal account because my PayPal account is limited for no apparent reason!!!! If no body assists me I will definitely file a law suit>>>>
This comment refers to an earlier version of this review and may be outdated.
Organization Name: fashion Vibes
Paypal is not a good payment system from the point of view of business owners. I am using paypal for last 5 years and i had bad experience with them on many transactions. They dont investigate the cases properly and encourage fraudulent behavior of some of the customers. They have purposely designed the case and resolution center to fool the businesses. The customers make false claims about the defective merchandise and paypal is not interested in any evidence that you submit to fight the case. I would not recommend to any small or medium size business.
This comment refers to an earlier version of this review and may be outdated.
Horrible experience. 15 year old well respected restaurant creating online ordering system in response to COVID-19. Merchant account setup with credit card processing went smoothly and we’re getting paid every 2 days. Paypal experience has been a nightmare. They arbitrarily hold your money with no explanation or customer service response. As soon as I saw what they were doing I removed the paypal option from our webpage. We’ll just stick with what works, which is our merchant account ,and offer credit card payments only. If you are reading these reviews because you are considering using paypal business – don’t use them. You will be sorry.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: Valerie Smith
PayPal is no longer the reliable company it was when I opened an account approximately 8 years ago.Customer service is no longer provided. Within my account, there used to be a ‘My Money’ tab which enabled personal management of sending recurring payments. Directions they provide to access various features are out-of-date. The instruction to Click Profile, then Profile and Settings is obsolete. ‘Profile and Settings’ does not exist. I attempted to send an email to PayPal Customer Service, without success. It would appear that personal customer service is no longer available. I would as that PayPal is run by robots that need regenerating.
This comment refers to an earlier version of this review and may be outdated.
I can tell you that if you polled the average seller with a PayPal account , there’s absolutely no way PayPal would receive 4 stars. I had a PayPal business account for years when eBay owned them, and at best, it was a dodgy operation. I finally dumped them recently because they’re now outright crooks and liars. It’s a shame how the government allows companies like PayPal to rip off people of their hard-earned money.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: Protea Wines Japan
I notice the eCommerce integration does not mention Zen Cart, which has had excellent Paypal integration for many years: Checkout (previously Express Checkout), Paypal Payments Standard, and Paypal Payments Pro.
I think it would be rather a useful addition, and a service to the readers, to both add Zen Cart to the list, and to do a review — I for one would be very interested in seeing how you think the Zen Cart integration stacks up against the other ones (seeing as it is not feasible for most users to try them all).
Many thanks for the informative review, on a rather divisive topic!
This comment refers to an earlier version of this review and may be outdated.
Hello Gernot,
We actually do have a review of Zen Cart, and mention the Paypal integrations there. Check it out!
This comment refers to an earlier version of this review and may be outdated.
Organization Name: Mark Mentzer
If I could’ve left them a -1 rating I would have done so.I am a freelance web and graphic designer. I have been a freelancer since 2007 and have used Paypal to receive payments. I utilize Paypal’s invoicing system. I sent out an invoice for a 50% deposit and once I received the payment I started the work. I have proof of the work I completed which is a website (http://strataexplorations.com/), logo, letterhead and letter. I have documentation via email and texts stating the work he wanted completed by me. He was always out of the country and the work never got completed because he never got back to me. This was started April 22, 2019, almost 3 months ago. He now goes to Paypal and states that I had no authority to take the money. Literally makes no sense. I have an invoice and he paid it. I have no way of taking someone’s money. Further, I completed a lot of work and he never requested the money back prior to the start of the job nor while I was completing each task. He just stopped communicating and then went to Paypal to get his funds back. I asked the customer service agent at Paypal, “so basically if I need money, I can go to Paypal and tell them I didn’t authorize this payment and get my money back?” The customer service agent said “Basically, yes”. I have no recourse other than to go to small claims court which would cost me the same amount owed to me. Further, I do not know where this person resides. Paypal’s legal structure leaves people like myself, freelancers who get paid through their system without recourse. So, I want to make everyone aware that, at anytime, within 6 months of you getting paid for a service, your past client can decide they need the money and make a claim and get their money back. I shared with Paypal a link showing my work but they gave me no way to share the texts, emails and the invoice, which is a Paypal invoice anyhow, and yet they tried to take the funds from me. I didn’t have the funds in Paypal and I do not plan on paying them. I can’t close the account but I will no longer use Paypal because of this loophole.This is being shared so that it doesn’t happen to other freelancer’s and other people who take payments via Paypal for their services.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: fam properties
They stole me to make their CommissionI made a payment of 5,204$ by mistake during the currency exchange instead of 100$. Their smart algorithm should flag this transaction since the seller sells low-cost stuff and I have never made a payment of a similar amount.I raised a dispute that the case is crystal clear:Anyone can notice that 100$ product is never worth or close to 5,204$, and I provided the email communication with the seller.They refused to have a conference call with the seller.They refused to listen to my call recording with the seller.Nevertheless, they judged this obvious case for the thief seller.When I called them, the customer service said, “Our judges are highly qualified lawyers and …. “, in fact, they are corrupted and care only about their commission.Never trust them, just use other service providers.
This comment refers to an earlier version of this review and may be outdated.
DO NOT USE FOR BUSINESS!!!!! I don’t know how it’s a 4 star review?! Probably written by paypal themselves. What paypal does is flat out theft and should be illegal. I think I’ve had a paypal account since 2002-2003. I went in steaks as far as use but didn’t mind it until I started using it for business. I started a business 2 years ago and used it but started noticing a long 30 day deposits times to my bank account. A neighboring business also has the same problem. The customer would have their product a month before I see a penny from it. I called paypal and they said my bank wasn’t accepting it and my bank said they never received it. I originally thought it was my bank since it’s a small bank but I didn’t have that problem with any of my other payment processers. I would see the money in my bank next day sometimes two days with the others. Then when I thought paypal couldn’t get any lower they proved me wrong again. I transferred more money into paypal to purchase more supplies since many of my vendors accept it and when I went to pay it didn’t work. I logged into my paypal account and everything looked accept for a notification that said my account was limited. It Didn’t say why. Of course, I called right away but everyone I talked to didn’t know why and told me the department that does that can only be contacted via email. The email seems to be a dead end because I never got a response. It probably doesn’t even get monitored. I also kept calling with no luck but found one person that said they can create a dispute. I didn’t hear back until about 10-14 days after the dispute was filed but I also sent several more emails and calls so I don’t know what correlated a response. On top of that it was just a generic email that said they reserve the right to be thieves and that they would contact me in 180 days and tell me how to retrieve my money and not to respond to the email because it’s not monitored. I don’t know this is legal? There needs to be laws against this kind of thing. They have almost $10,000 of mine and I still had to fill my orders to stay in good standing with my customers. And when I tried refund close to $3000 worth of my customers orders because I couldn’t get it to them in time because I didn’t receive the funds for materials, they took it out of my bank account instead of my paypal balance. And you can’t delink your bank account from the paypal account. So now they took $13k from me which isn’t a big blow for a business but if you’re like me and just a one-person operator of a new business it can easily put you out of business and almost did. I almost lost everything. I don’t have the resources to fight this at the moment but I won’t forget. Paypal does this all the time so I’m sure they have a good legal team but this shouldn’t be legal. I can’t steal money from someone and tell them I’ll give it back in 180 days without a long prison sentence. Oh, and the lady that filed the dispute laughed when I ask if she’s seen them reverse limitations? I asked if it was 50% or a 1% chance of reversals and she just chuckled and said “I’ve seen it done”. Not very reassuring. The most infuriating thing beside them keeping my money is that they don’t give a pacific reason as to why? I’ve never had a customer complaint and 100% feedback on ebay. Ebay’s getting away from paypal so it should tell you something. When asking it could be for something as small as a larger deposit than normal or even requesting their own debit card? This is probably how they pay their executives bonusses and just draw so many names from a hat. I’m still waiting for my money. I have 4 months to go yet. So now I can’t use paypal and never will. Many friends and family members also closed their paypal accounts in support. Even when I shop online now and see two sites that have something I want I will purchase from the one that doesn’t use paypal. Even if it’s higher price. The sad part is that you probably won’t read this until it happens to you. I’ve always heard paypal horror stories and now know how real they are first hand.
This comment refers to an earlier version of this review and may be outdated.
Im so sorry this has happened to you. Dont they have a office in California? With so many people using paypal, you are just a small fish to them and willing on the chance you will not see it through. I would fly to California with a lawyer just to prove your point.TAKE ALL PAPERS WITH YOU. i would tell the BBB and everyone who would listen, what thy did. Make them sick of you. Go to their office everyday!! Thats a very large sum of money they took from you! Thats larceny right? I wish you well and hope you get your rightful money. I get so sick of companies you trust stealing money.
This comment refers to an earlier version of this review and may be outdated.
Organization Name: HoloVit LLC
From our experience in the last 2 years, PayPal works with just “Say So” meaning they do not require proof from the buyers most of the time. As long as the buyer has their PayPal Protection Plan, they favor the buyer no matter what the issue is. In our case, the customer broke the screen himself in order to receive a Full Refund. We contacted UPS agents and got reassured that the screen was in Excellent Condition at the time of delivery . It is so pathetic that Pay Pal did not require any evidence of the damage the buyer was claiming to have. I heard similar complaints from other companies. Pay Pal does not investigate a Claim the right way and like I said before they work without evidence.
This comment refers to an earlier version of this review and may be outdated.