Make Money Online - Should You Use PayPal to Process?

So you are setting out to make money online, and you need a way to accept payments. Let us begin by first stating that PayPal is NOT an acquiring bank or processor and does NOT provide its merchants with a real Merchant Account. PayPal provides its merchants with a PayPal account only.

 

There is a Very Significant Difference between the Two.

 

When your business sets up an actual Merchant Account with an acquiring bank and payment processor, your funds will be directly deposited into your personal or business bank account. Those funds are fully protected by Federal Banking Regulatory Laws.

 

The opposite is true when using PayPal as your funds are deposited into a PayPal account that only PayPal controls and regulates.

 

Since PayPal is NOT a bank, they do not need to follow federal banking regulations. These regulations are in place to help the "Average Joe" avoid issues like having their bank account frozen for 6 months with no explanation... (Just imagine if your bank was permitted to do that!)

 

Since PayPal accounts do not fall under the same federal regulations as real Merchant Accounts, PayPal can freeze any of their accounts at any time without any notice given to that account holder. While the frozen account can still receive money, NO money is allowed to be withdrawn from it. A frozen account is many times held up by PayPal for months on end with No Recourse for the account holder.

 

 

Merchants finding themselves on the wrong end of a frozen PayPal account will still have to find some way to pay their obligations and fill orders for the weeks and months ahead while their account is restricted. A domino effect occurs when a merchant's account is frozen, leaving them with No Means To Fill Orders or Pay Bills. Those orders are then disputed by customers, creating more chargebacks and the illusion of fraudulent activity on the part of you the merchant. "Welcome to the PayPal Nightmare."

 

 

How Does PayPal Make Money With My Money?

 

Currently there are roughly over 100,000 outstanding complaints at PayPal according to the San Francisco Chronicle. These disputes many times last for months leaving merchants angry, frustrated and sometimes out of business. You may be wondering what happens to the millions of dollars being tied up in these frozen accounts. Here is a short clip from an article recently in the San Francisco Chronicle that gives us some good insight:

 

U.S. District Judge Jeremy Fogel of San Jose refused to dismiss a lawsuit that seeks class-action status on behalf of thousands of PayPal customers nationwide. A common allegation is that the company brushes off or stalls customer grievances for months and meanwhile freezes the customer's account and pockets the interest (So that's how they make their money!). No wonder they freeze so many accounts!

 

I highly suggest that you take the time to research the many benefits and protections that an actual Merchant Account offers to you and your business. There are enough worries and stresses in the day to day operations to make money online. You do not need to have the additional stress of having your hard earned money frozen time and time again.

 

 

Zero Cost. Zero Obligation.

SOSComplete!