If you’ve been wondering whether to accept PayPal payments in your business, you’ve come to the right place. You’ve probably been hearing about PayPal for a while, or you may even have used it as a consumer to make payments.
But is it the time to adopt PayPal for your small business so you can receive payments as well?
Why you should do it, and what are some of the PayPal benefits are some of the things we will talk about, taking into consideration some fo its downfalls too.
In this article we’ll review, in-depth, the following PayPal benefits:
- Online and on-site payment method for your e-commerce and store.
- It’s easy to set-up and use.
- Integration with your accounting systems.
- You can access other business solutions like credit cards.
- Very competitive price.
PayPal: A Good Option for Small Businesses
Before we analyze each of the PayPal benefits individually, let’s check some numbers that speak for themselves: around the world 17 million merchants and almost 250 million people use PayPal. Today PayPal moves more than $150 billion in payment transactions every year.
It is the world’s largest payment system.
What’s the reason behind PayPal’s success? Why is it the leader not only in online payments but also in mobile payments?
First, simplicity. It makes it easy for small businesses to accept payments and for consumers to pay with just a couple of clicks.
Second, variety. It provides a variety of solutions for accepting credit and debit card payments, Apple Pay, Google Pay, eCheck, and more. Besides payment solutions, it brings smalls business owners other banking and POS tools.
Third, affordability. PayPal is free for consumers, and retailers are charged competitive rates for processing transactions.
What Are the Benefits of Using PayPal for Your Business?
1. It offers solutions for online and on-site sales
Whether you do online sales, in-person sales, or both, PayPal has a solution for your business. Flexibility is, in fact, one of the main PayPal business benefits.
If you sell through a website, PayPal is easy to integrate. WordPress and Wix – the two most popular platforms for creating personal and small business websites – both have easy payments integrations which take only a few minutes to configure.
And if you have a store, PayPal has a variety of Point of Sales (POS) solutions to help you out. Payments can be received through POS virtual terminals from Vend, Lavu, Touchpoint.io, BrightPearl, Touchbistro, and ERPLY. Vend is designed for retail operations and supports multiple locations, online sales, and inventory management. Lavu, Touchpoint.io, and Touchbistro are designed for restaurants and the hospitality industry.
All of them run on either iPad or Android tablets and work with PayPal’s chip card reader. The chip card reader supports contactless payments from Apple Pay and Google Pay, as well as good old-fashioned mag stripe cards.
2. It’s easy to set up
Setting up PayPal is very easy. First, you need to create an account, which takes just a few minutes. All you need are a valid email address, a business address, customer service contact info, and a bank account. You will need to enter the bank routing number and your bank account number.
You can use either a personal or a business bank account when creating a PayPal business account.
Learn here how to set up PayPal Payments and start using it to receive payments.
3. It integrates with Xero
Xero is an online accounting software designed to make a budget for your business. You can use Xero to bill your clients: it sends them the invoices via email. The good part is that PayPal integrates with Xero in a way that saves you a lot of time and hassle. You can use PayPal as your default payment solution since the invoice has a payment option with a button. When your client presses the button they get a screen where they can choose to pay with funds from their PayPal account balance, or, if they prefer, they can use a credit card. It makes no difference: you ’ll just see it as a payment made via PayPal.
If you dont know Xero, here you’ll learn more about it and the best budget softwares for your business.
Here’s the great part: Xero shows the payment in your account right away. It also marks the invoice as paid. PayPal tells Xero how much it charged as a transaction fee, and Xero puts that amount in your Bank Charges category. Then you don’t have to do anything else: Xero and PayPal work together to do your accounting for you.
4. It offers other banking services
PayPal has been building out more banking services than just online payments. It now offers ATM services, debit cards, and credit cards.
The ATM card is called the PayPal Cash Card and can be used without incurring any fees for withdrawing cash at 25,000 MoneyPass ATMs. You can use the Cash Card to withdraw funds from your PayPal account.
The debit card also withdraws funds from your PayPal account.
PayPal’s debit and credit cards are both parts of the MasterCard network.
Unless you plan to pay off the balance every billing period we recommend you avoid the credit card: PayPal charges an APR above 20 percent.
5. It’s mobile
PayPal’s mobile app is called PayPal Here. It runs on iOS and Android tablets and phones. The app is free and works with PayPal’s chip card reader. Your mobile device connects to the chip card reader via Bluetooth. PayPal charges $99 for the chip card reader.
Using PayPal Here with the chip card reader lets you accept payments anywhere you can get either a cell phone or wifi signal.
6. It’s reasonably priced
There are no charges for setting up or having an account with PayPal. Fees are only charged when you make a sale: you get charged 2.7% of each transaction done through your website or swiped and check-in transactions done in your store. If it’s a keyed or scanned transaction done in-store, the fee is 3.5% + $0.15. Other fees may apply if the payments are coming from outside the US.
PayPal can deliver the funds to your bank account: it normally takes one or two business days to transfer funds from your PayPal account to a linked bank account. Then, you can access the funds in your account right away using either the ATM or debit cards.
Find here a breakdown of all the fees that apply to PayPal transactions.
What are the cons of PayPal?
1. It can be difficult to contact PayPal’s customer service department.
Some people like to have a phone number or an office where they can go and get help for their problems. You can get customer service from PayPal but it may not be at the speed you’d wish, specially when you want answers right away.
2. Processing time
It can be a little frustrating not being able to use the money right after your client paid. It can take four business days for withdrawn funds to clear in your bank account, so you have to make sure you’ll have funds in your account four days from the day you make your purchase.
3. You are subject to account suspension at any time.
This happens mostly to new businesses. PayPal will notice there is money flow where there was non before, and will freeze the money you make until it makes sure it’s not fraud. Time will vary, normally PayPal will want to wait and make sure the customer doesn’t start a complain, and fater that will release the money. Or if your account gets suspended it can result in frozen funds for months.
4. There are hefty fees for chargebacks.
So, if a client demands the return of his money through his banck account, PayPal will charge you a fee, unless the transaction was protected by Seller Protection Policy, in that case PayPal covers the fee. Make sure you are clear about your terms and conditions so you won’t be forced to return money to unhappy customers.
FAQs Your Customers May Have About PayPal
Many people have never used PayPal, and it’s important that you know and understand their reservations. Next up you’ll find some questions your customers might have about PayPal and how to answer them.
Is it safer to pay with PayPal?
For the most part, PayPal is very safe to use for making payments, even safer than providing your credit card number or bank account information to the website you’re buying from. However, as in any other online transaction, there’s always some degree of risk involved. Although highly unusual, data breaches can happen and hackers can access your information.
Can you get scammed by using PayPal?
Again, it’s a remote possibility, but it could happen. Once a scammer has hacked into your PayPal account, they can make purchases with your money. However, PayPal may reimburse you if they are able to confirm that your account was hacked.
The other kids on the block: Square and Stripe
Paypal might be the leader in the space, but there are two alternatives that are worth considering – Stripe and Square. There’s a lot of overlap among the three payment services, but they also have differences that make each of them better depending on your purposes and needs.
PayPal, Square, and Stripe all provide payment gateways and mobile POS. PayPal and Square also offer invoicing and virtual terminals. PayPal and Stripe both sell or lease card readers.
Stripe is unlike the other two since they focus on helping 3rd party developers create payment solutions with their payment gateway.
Square offers two sleek registers that look great and are easy to set up.
The transaction fees charged by the three services are very similar. PayPal and Stripe both charge 2.9 percent plus $0.30 for U.S. credit card transactions. Square charges a slightly lower 2.75 percent. For businesses with average sales prices below $10, Square adds on $0.10 per transaction.
However, if your business primarily sells items for under $10 you can qualify for micropayment fees at PayPal. PayPal’s micropayment fees are 5 percent plus $0.05. For example, when selling a $5 item, the transaction fee would be $0.30 instead of $0.45 using Stripe (2.9% + $0.30). The same transaction would cost $0.24 on Square (2.75% + $0.10).
PayPal and Square have tools to help your business, including invoicing, inventory, and payroll, among others. Stripe does not. Also, Stripe does not accept PayPal payments, so if a lot of your customers pay with PayPal, Stripe might not be the best choice for your business. All in all, PayPal, Square, and Stripe are three great solutions, but which one is best for you depends on the individual needs of your business.
Make a decision and start selling now
Whatever platform you decide to use, you better start now. People won’t forgive a bad online shopping experience. If you have doubts about PayPal use, make sure to check here the steps to follow and how it works.
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