Paypal… Who Likes To Moan?

As an consumer I do love Ebay and Paypal. They make payments online feel safe. As a business I see that Paypal are verging on scum. How can there be such a contrast?

Brief explanation:

Paypal sees that you are doing well with your transactions and that your Ebay store or website is bringing in a fair bit of cash flow, not profit just cash flow. They then decide to up the rolling reserve to 30% because you’re doing so well which is like putting a gun to your business’s head. Why?

Well if you purchase £2000 of stock and sell each item at a potential gross profit of 6% you make £120. Now you have more orders coming through and you want to buy another £2000 of stock. Paypal wants to retain 30% of the money you have so they take £636 and leave you with £1484. You either have to sell less and wait for 3 months to get your 30% back from Paypal, or you have to find the remaining £636 from elsewhere. That’s just based on a small £2120 of sales, think now if the business is doing okay and doing £100,000 per month – that’s a £25,000 shortfall created by PayPal. Huge Flaw for small businesses with limited funds!

Paypal seem to be friends for the consumer, but by holding back the progress of the small business they are killing the UK market. Look at the chain reaction:

  1. A small business struggles to find the extra cash Paypal retains. The business gets a loan.
  2. Paypal sees your doing well and so increase the rolling reserve which you are given 1 month to figure out… well they say this. Paypal immediately limit your account and then put a reserve on while it’s limited so essentially you cannot withdraw your money and any pending withdrawals are cancelled. You now have to restructure your company, find more money to support your employees and deal with the suppliers who are unhappy with your late payments.
  3. In the mean time you contact Paypal whose customer service teams are unable to help and because you have made contact your Paypal account is closed permanently without any opportunity to appeal. This is the point where most small businesses die.
  4. Businesses that fail are forced to put employees back on the jobs market, and many of these employees join job seekers so the tax payer suffers.

Does Paypal suffer in this time? Well if you close your account or struggle to meet payments, Paypal hold your reserves for an extra 3 months. So any money you could get to help the business, you can no longer access for 6 months. R.I.P to the small businesses….. THANKS PAYPAL.

Check out and get a more in depth understanding of how they truly suck for businesses.

1 comment
  1. Fahrettin Berber said:

    Leena how long you are in UK

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: