Why EVERYONE Is Ditching PayPal - Here's The Ugly Truth!

for these past several weeks I've been doing a complete audit of every single expense for my e-commerce store and during this audit I discovered something unexpected about PayPal that I was not aware of and I'm willing to bet money that you didn't know about this either so in this video I'm going to uncover the truth about PayPal all the fees the hidden charges and how you can save money with your credit card processing for your online store and in the event that your PayPal account is currently limited or banned I'll also teach you how to get your money back and how to prevent your account from getting limited as well what's up everyone my name is Steve Chu and I run two sfigure businesses over at bumblebe linen.com which sells handkerchiefs online and my e-commerce blog over at mywi quitter job.com I'm also the author of The Wall Street Journal bestselling book The Family First entrepreneur which teaches you how to achieve Financial Freedom without destroying your lifestyle so I'm a little embarrassed to say this but I've been getting ripped off with Payment Processing for at least the past 5 years maybe even longer than that and and analyzing my PayPal Bill carefully is what sparked this video all this took me by surprise and for over a decade I had negotiated a rate with PayPal where I was getting charged 2.2% plus 30 cents per transaction which is actually a pretty decent rate but I got careless over the years and I stopped looking at my PayPal statements because I had assumed that they had stayed the same in fact I don't even remember PayPal ever sending me any correspondence that they had increased my rates and I had assumed that my lower rates were grandfathered in but I couldn't have been more wrong here are some important facts about PayPal's fees that you should know right off the bat if you sell anything online and if you accept Paypal in any sort of volume and I'm pretty sure that these numbers are going to shock you so first off for credit cards the rate is 2.9% plus 30 cents per transaction and you guys probably all knew that already but here is probably what you did not know you are charged 3.49% for all PayPal checkout transactions that do not involve credit cards so basically you're paying 05% more if someone pays by PayPal on your site and in theory paying by PayPal costs PayPal no money at all and it should be the cheapest way to accept payments online but not anymore accepting PayPal payments directly is easily the most expensive way to accept payments online now now to illustrate the magnitude of this rate let's throw some actual numbers into the mix let's say you process $1 million per year and 50% of your transactions are coming from PayPal you'd be paying about $32,000 per year in payment processing fees and at that sales volume you can easily get a 2.2% rate or lower with practically any other payment processor and with a 2.2% rate you would only be paying 22,000 so basically you would save $10,000 a year by going with a different payment processor now what makes things even even worse is that PayPal stopped refunding fees for returns in 2019 so let's say you sell expensive products and you make a sale for $11,000 well the PayPal fees on that sale are 2.9% plus 30 or $29.30 now if the customer returns that product at any time you have to eat that $29.30 no matter what now if you've done any searches on Google for PayPal you've probably noticed that PayPal has a history of limiting accounts or free freeing your funds and PayPal is what I would call a lowrisk payment processor and they have a strict set of guidelines on who they serve for example if you sell any products with chemicals CBD Controlled Substances you're going to get banned by PayPal period now most of the complaints I've come across online indicate that PayPal will sometimes hold your funds for up to 6 months and six months can be a long time if you need access to your money and once they freeze your funds doesn't make sense to continue to accept money through PayPal because you can't access it in other words once your account is frozen you are pretty much screwed now I've never personally had my PayPal account Frozen before so I'm not speaking from experience here but I do have a few fellow blogging friends selling digital products who have had their accounts locked for no reason so I asked them for their side of the story now in both cases with my blogging friends they had their accounts Frozen after a big product launch and for one of them PayPal limited their account by only allowing them to process $10 ,000 per day now this other blogger had over $40,000 in funds Frozen for 180 days now it seems as though PayPal doesn't like seeing huge spikes in money being received into your account in any case if you are worried about getting your funds limited by your PayPal account I actually called my account manager over there and here's what I was told now first off he reassured me that it's extremely rare that they ever Place holds on user accounts and that the reasons for limiting an account vary greatly from user to user and largely depends on the situation but under certain circumstances PayPal has certain triggers in place as a safeguard against fraud and here are some of the reasons why some of these safeguards might be triggered you received an abnormally large amount of money in your account that is way above your average someone has filed a complaint to PayPal about your business a series of chargebacks have been placed against your account your website has questionable content or you are in violation of PayPal's use policy for example if you sell drugs or anything illegal you're going to get banned you can also get banned if your account information is not up to date or if your account is not fully verified or if someone is logged into your PayPal account from a strange location if your credit score is low or something with your background history makes you a higher risk customer or if they detected fraudulent activity on your account now if you're worried about PayPal ever limiting or Banning your account here are some precautions that you can take if you are expecting to receive a large sum of money then you should call PayPal ahead of time so they expect to see the extra funds in other words if you are planning a large product launch make sure you let them know ahead of time sometimes when you sign up there's a survey that you have to take make sure that you check off higher numbers in terms of how much money you anticipate making every single month contact PayPal to make sure that your account is not limited in any way in terms of how much money you can accept per day sometimes limits are placed depending on various factors relating to your credit history or a background check make sure your name or the name of your business is on your PayPal account and that it exactly matches your bank account and your credit cards use the exact same addresses and phone numbers that match your bank account and credit cards and always use trackable methods of shipping if you ship physical Goods in case a dispute is filed against you you also want to make sure that your fine or social security number exactly matches the name of your business on the account now if you don't want to take the risk of your account getting Frozen and you want the lowest credit card processing rates possible what can you do well in general you should never ever accept credit card payments with PayPal ever because it will by far be the most expensive way to accept payments online if you process any sort of volume with your e-commerce business you should get a traditional payment Gateway and ask for interchange Plus pricing interchange Plus pricing is when you pay a fixed percentage Over The Interchange rate which is the wholesale rate that all credit card companies have to pay in order to process payments each time a business process a credit card it pays a fee to the bank that issued the customer's card and this is called The Interchange fee and is calculated by adding a percentage of the transaction volume to a flat transaction fee for example 1.51% plus a 10% transaction fee is the current interchange rate for a swiped Visa consumer credit card now if a business accepts this type of card as payment for a $100 transaction it will owe the the bank that issued the card in interchange fee of $161 now interchange rates are determined on a per transaction basis using the details of the transaction so things like the credit card type credit or debit the card category whether it's a reward or a commercial card and the processing method dictate The Interchange rate associated with the transaction and ultimately how much the business will have to pay the issuing bank now issuing Banks don't set interchange rates independently in instead they collectively agree upon the rates through visa and MasterCard and this is why all the issuing Banks charge the same interchange rates and processors have no influence on them interchange rates are a non-negotiable component of credit card processing costs that remain exactly the same regardless of which processor a business uses now as I mentioned earlier the current interchange rates for Visa at the time of filming this video is 1.51% for a regular Visa card and 2.3% for a Visa reward signature card in fact here's a table of rates for all the different types of cards now why is this important it's because when you negotiate interchange Plus pricing you'll get quoted a fixed percentage above interchange and you know that you're not going to get ripped off because the interchange rate is fixed for example if you get quoted interchange Plus .1% that means you are paying a rate of .1% above the wholesale rate now the exact rate that you pay depends on the type of credit card used so you should probably look over your current bill and make a rough calculation of how much you can save by moving over to interchange Plus also your ability to negotiate your rate depends on how much money you process every year but if you do more than $10,000 a month you should always negotiate and move away from PayPal no matter what after all there are many credit card providers that offer extremely low rates that are way better than PayPal now what makes this decision difficult is if you accept a lot of PayPal payments on your online store now over the years I've actually recommended that all sellers accept PayPal on their site for two main reasons one PayPal allows you to import the customers information when they log in and this reduces the amount of typing for customers which is especially important for mobile transactions people having to enter in their addresses on their smartphones is the number one conversion rate killer in e-commerce and two PayPal is popular and certain Shoppers always pay by PayPal and won't buy from you if they have to to dig up their credit cards from their wallet now in the event that you do process a lot of PayPal payments on your site you might want to consider using brain tree which is a company owned by PayPal they'll provide you with a competitive rate and reduce your PayPal processing rate as well now if most of your customers don't pay by PayPal then I would explore and negotiate with other processors like authorized.net and in fact I recommend going to a site called cardfellow docomo now the Mortal story here is that if you haven't checked how much you are paying for payment processing in a while then do it right now because otherwise you're just flushing money down the drain now that you know what happened to me watch this video here to learn how you can save at least $10,000 instantly with your e-commerce store

Channel: MyWifeQuitHerJob Ecommerce Channel

Views: 10,630

Keywords: paypal fees, credit card processing, online store, paypal statements, payment processing, paypal checkout transactions, refunding fees, limiting accounts, freezing funds, accepting paypal payments, prevent account limitation, paypal rates, payment processor, banned by paypal, credit card processing business, credit card processing fees, paypal fees for sending money, paypal fees explained, credit card processing sales, paypal transaction fees, payment processing explained

Id: 84BtSOWuE18

Length: 11min 18sec (678 seconds)

Published: Sat Oct 07 2023