Google Search

Friday, April 17, 2009


One of the disadvantages of PayPal that I usually hear from people creating PayPal account is the verification process that PayPal system implements to new registrants. The verification process involves linking of a valid credit card to ensure that you are registering your real name and for other validation purposes. The credit card must bear your name or else your account will not be verified. Since PayPal requires credit card for the verification process, it is impossible for new registrants without credit cards to verify their accounts. No verified PayPal account equals a terrible online business. Take note also that you will be charged 1.95 USD in the verification process which they promise to return back some time in the near future (but they do return based on my experience). Once you’re credit card is charged, you will wait few days for the EXPUSE number. What is the EXPUSE number anyway? It stands for EXPANDED USER NUMBER which you will use to totally verify your PayPal account. You cannot verify your account without this 4 digit EXPUSE number. It depends on your credit card provider to when will the EXPUSE number appear in your statement. IF you can’t wait for a month for the credit card statement to reach your mailbox, contact the customer service rep. of the credit card company and ask the EXPUSE number. If your credit card statement has an online (updated) version, you can also check there after few days. New registrants are complaining that they waited long for that precious EXPUSE number to appear in their statements but they still saw nothing. PayPal registration is as tedious as I write this article. This dissuades some people to register a PayPal account. Patience and self-control are highly needed to fight the disadvantages of PayPal. However, today’s people demand efficient, reliable, and faster online transactions – hope PayPal adapts to this customer demand.

Another disadvantage of PayPal is that you cannot sell your products in eBay to people who don’t have PayPal accounts. It is hard to persuade buyers to open PayPal accounts knowing yourself that PayPal registration is tortuous. It is disappointing to know that you lost potential buyers just because they don’t have PayPal accounts. It is an internet business theorem that the easier for your customers to pay, the easier for you to make a sale.

Some PayPal users have frozen accounts which mean that they cannot transfer or withdraw their PayPal money. Some of these users say that they did not do anything illegal or violation to the PayPal TOS. They appealed to the PayPal administrators, but they ended up having large amount of money frozen. I am not saying that these allegations are true but I heard people complaining about their PayPal accounts being frozen for unknown reasons. Luckily, as of the time I’m writing this article, I have no bad experiences on using my personal account.

Another disadvantage of PayPal that I personally noticed is that the service fee for withdrawing money from my PayPal account to my credit card is 5 USD which is already expensive for a 3rd world man like me. Fortunately, I found a cheaper way to withdraw my PayPal money; it is by withdrawing the money to a local bank account. The charge fee is approximately 1 USD, 4 dollars cheaper than withdrawing the money directly to my credit card. (Note that the service fees vary depending on the country you reside).

Another thing that I would like to add in the list of disadvantages of PayPal is that you will be charged 5 USD for every unsuccessful withdrawal you make. For example if your withdrawal to a local bank account has been denied you will be automatically charged 5 USD which is pretty big. If you’ve experienced this, I am very sad for you. To avoid this problem, check whether your local bank account is capable in accepting PayPal remittances. Also check whether you entered the correct PayPal bank code before you perform a withdrawal transaction.

PayPal is not yet available in certain countries, mostly African countries. The shoppers in these no PayPal countries are in great disadvantage. People in these countries cannot also apply to internet work at home jobs that require PayPal account before they could start to work.

James Maurer advised internet users to use Google check out instead of PayPal because of his bad experience with PayPal’s service. I quoted the following statement from his blog post:

“The Disadvantages of Paypal is that anyone buying a product using a strange looking email address may receive a full refund and keep the item they purchased as well.
If you create an email as in the example above, go to a site and buy something using paypal, chances are paypal will put the money back into your account automatically. In this case, the person didn’t file a complaint; Paypal’s automated security system simply kicked in and did the rest! By the time the investigation is completed, the buyer has received your product and you (the seller) just got scammed!
If you’re going to sell something on the net, do it with Google Checkout and skip paypal!”

You are free to add something to this list of disadvantages of PayPal based from your experience. You can leave a comment below.

Sign up for PayPal and start accepting credit card payments instantly.

Just On Top