In the Trenches: The Good and the Bad of Paypal

BrettSnyder by Brett Snyder on March 16, 2011

I’m fairly certain that there is nothing more complicated than figuring out which credit card processor to use for your business. It seems that the industry has made this as complicated as possible in order to prevent people from actually learning how much they’re paying in fees, and that’s why people gravitate to the ease of Paypal. But there are problems with Paypal, and that’s why I’ve been looking elsewhere.

When my business started, I did what most small businesses do. I went to Paypal, because Paypal just makes life easy. All you have to do is stick a button on your website and Paypal can handle the processing for you. Then your money shows up and you do what you want with it. The fee is flat and that makes it easy to understand. They also have a virtual terminal that lets you process payments over the phone. Why wouldn’t you use Paypal, right? That’s what I used to think as well.

But there are a couple reasons not to use Paypal. First, Paypal sits on your money. Instead of directing it into your bank account immediately, Paypal keeps it in your Paypal account. If you want to remove your money without paying a fee, you have to wait for three or four days for them to transfer it. They make money by sitting on your money. Second, the simplest way to use Paypal, slapping that button your website, isn’t great for converting customers.

There’s something about the Paypal interface that turns people off. It seems amateurish, so people might question the legitimacy of the business. And the fact that you have to send customers off your site to make a purchase is off-putting. In addition, people often assume that they need to have a Paypal account if they want to pay you. In fact, that isn’t the case, but people don’t know that. It’s problematic.

Paypal does have a way to integrate with its services doing your own development work, but that defeats the purpose of Paypal in the first place, right? I mean, once you start doing that, it’s no longer so easy. So I’ve started looking for alternates. And that’s when I realized how incredibly difficult the credit card processing industry can be to understand. I’ll talk about that next week.


Brett Snyder is President and Chief Airline Dork of Cranky Concierge air travel assistance. Snyder previously worked for several airlines, including America West and United, before leaving to create a travel search site for Snyder did his undergrad at George Washington and earned his MBA from Stanford.