Paypal as a Merchant System - Digital Goods versus Physical Goods
August 28th, 2007
In a mastermind group to which I belong someone asked whether it would be a good idea to use Paypal as a merchant service for e-commerce.
The gentleman wanted to sell touchscreen monitors at $1000 to $2000.
One thing I will say for Paypal, using their system for merchant payments is extremely easy. You just set up your buttons and your links and you can be taking donations in minutes.
For physical goods, Paypal is extremely buyer friendly, i.e. it would be difficult to prevent a customer from abusing a return policy. On the other hand for digital goods, Paypal is extremely seller (i.e. con artist) friendly. I recently made the mistake of purchasing some expensive marketing materials from a dubious seller. In the end, the product was never delivered.
With Paypal's system, there was no recourse. You fill in the complaint procedure (you have 45 days maximum) and then when you are done, they close the case.
Digital goods are not subject to Paypal guarantees.
But for physical goods, they are always on the side of the buyer (i.e. someone can order something and claim that it didn't arrive and all the burden of proof is on you). On expensive items like yours, I would be wary.
If Paypal for some reason decides they don't like your account activity, they freeze your account (no more incoming money, no access to the money on file).
That said, I have put $25,000 through Paypal with little incident (mainly international money transfer for services). That seller probably does close to $1m/year through PayPal and is still using PayPal for about half of their business.
Still with physical goods, you might think long and hard about putting all your eggs in this basket. I suggested the original poster take a look at Google checkout.
By Alec
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