PayPal Buyers Survey (July 2004):
What Merchants Gain from PayPal as a Payment Option

by Dr. Ralph F. Wilson, E-Commerce Consultant
Web Marketing Today Premium, Issue 81, Summer 2004

This report is also available in PDF ($9.95) and print format ($13.95). You can purchase it online. Paid subscribers to Web Marketing Today Premium can download their copy at no extra charge.

How important is it for merchants to include PayPal as a payment option? Does it make any difference to sales revenue? In July 2004 Web Marketing Today conducted a survey to examine how buyers feel about PayPal and what motivates them to use PayPal when they have a choice.

This 53-page report provides Editor Ralph Wilson's analysis of the data and his conclusions about the effect of offering PayPal as a payment option. In addition to analysis and graphs of the quantified portions of the survey, the report offers hundreds of brief comments from respondents that reveal their motivations in using PayPal, their thoughts about PayPal as an e-commerce platform, dislikes and problems with PayPal, and reasons some people have no PayPal account or have allowed theirs to lapse. In all, the report provides important insights into a buyer's mindset towards PayPal and offers guidance for merchants considering offering PayPal as a payment method.

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Sections of the Report:

• Executive Summary and Conclusions
• Detailed Analysis of the Survey and Data
• Appendix 1. PayPal Buyers Survey Questions
• Appendix 2: Respondents' Comments that Reveal Motivations for Using PayPal
• Appendix 3: Respondents' Comments Related to Seller Use of PayPal
• Appendix 4: Respondents' Comments on Things People Don't Like about PayPal
• Appendix 5. Respondents' Comments from those Who Don't Have a PayPal Account
• Appendix 6. Respondents' Comments of those whose PayPal Accounts are Inactive

Executive Summary and Conclusions

Online merchants may wonder: How do buyers view using PayPal as a payment vehicle? Will offering PayPal as an option increase sales? In July 2004 we surveyed 575 respondents who were readers of Web Marketing Today Free Edition (www.wilsonweb.com/wmt/), 82% of whom had active accounts. Though most (71%) felt "good" or "great" about using PayPal, their motivations are the most helpful keys to understanding PayPal use. (In the survey the order of answer choices was randomized to avoid bias.)

The strongest motivations to use PayPal are listed in order below, with selected comments from respondents. (All the comments are listed in the appendix.)

Convenience (2.6 on a scale of 3.0)

For those who like using PayPal, convenience is number one. It may not seem more convenient to you than a credit card, but PayPal lovers think it is. Here are some comments to explain their reasoning:

• "I don't have to go looking for my credit card in my wallet!"
• "Convenience of paying right away so I don't incur credit card interest fees."
• "It is easy to use and all calculations are done for you."
• "It's just so easy! PayPal stores all my credit card and bank information and commonly-used addresses for my friends, family, office, and home."
• "It is easy. It is easy. It is easy!" 
• "With a credit card I always have to type in all those numbers, which gets old really fast. With PayPal I just log in and approve the purchase. Easy!"

Faster (2.3)  

Probably closely related to Convenience.

Fraud Protection (2.3)

Both buyers and merchants feel a little bit safer buying via PayPal because of PayPal's reputation for fraud prevention and how it allows you to learn a bit about the buyer -- how many transactions the buyer has made, whether the address is verified, etc.

• "I feel I know a little more about from whom I'm buying when I use PayPal."
• "I feel a lot more protected when I use PayPal. I have a credit card on file with them. When I use PayPal I feel I have two lines of defense against a seller if they do not deliver. First, I can contact PayPal and have them help me. If that doesn't get me anywhere, then I know I can still turn to my credit card company and dispute the charge."
• "No need to expose my credit card on unknown sites."
• "My credit card number is in only one place -- not given with every purchase."

Ability to track purchases (2.1)

Privacy (2.0)

Closely associated with Fraud Protection above. PayPal users like the fact that they don't have to give out their credit card numbers to smaller, unknown merchants. "I don't like giving my credit card number to just anyone on the Net because I'm not really sure who is and who isn't legitimate." 

Can pay from bank account (2.0)

Some people don't like to rack up credit card bills from paying online so paying from a bank account or debit card is important to them. PayPal allows most users the choice of paying from their checking accounts or their bank accounts -- so long as money isn't sitting in a PayPal account.

Ease in making international purchases (1.8)

Ease of international payments was especially important to respondents outside the US. One reader from Mexico expressed it well: "No other payment provider allows for the international flexibility that PayPal offers us." For international respondents this was the most important motivation, twice that expressed by US respondents. Here may be some "new money" merchants might not get otherwise.

Money Sitting in PayPal Account (1.5)

This was a medium motivator, especially for those who are daily eBay sellers. However, this may represent "new money" to merchants, since, for some, using money in a PayPal account doesn't seem to them as "spending" the same way using a credit card does.

• "I have more PayPal income than expense. It's an easy way to utilize the cash that's sitting in my PayPal account, and I don't miss it when I spend it."
• "Being an accountant, I tend to view my PayPal account as the petty cash account and use it for making small day-to-day purchases in preference to credit cards."
• "I use PayPal mainly for auction site purchases and those spur-of-the-moment, this-offer-looks-interesting type of purchases."
• "It really depends on how much is in the account. The only reason I would consider not using the PayPal account is if I had to draw it from my regular bank account. In that case, I'd rather just use my debit card or another credit card. But if there's money in the PayPal account, I have no hesitation about using it."

No credit card (0.5)

This motivation ranked lowest overall. For most, this is not the reason they use PayPal, though for a small number this is important -- and represents "new money" to merchants that otherwise probably wouldn't get the sale. Respondents who considered PayPal "great" scored this as a 70% higher motivation than others, though it was still the lowest motivation.

The Bottom Line for Merchants

Is it important for merchants to include PayPal as a payment option? I believe it is. Though he had no hard data to prove it, Dave McClure, Director of Marketing for PayPal, believers that offering PayPal as an option will give perhaps a 5% bump to sales on average. This sounds about right to me. For some online retailers an additional 5% of sales may make the difference between struggling and "making it."

Several motivations make PayPal payments a source of "new money" to merchants that they probably wouldn't get otherwise:

• Fraud protection assurances offered by PayPal may make the difference between someone buying from an unknown merchant or not. Many people are still skittish about giving out their credit card numbers online.
• International purchasers may purchase via PayPal from US merchants since it makes international payments easier.
• Money sitting in a PayPal account is sometimes viewed as "mad money" earned from eBay rather than money on which purchasers are trying to live. It may be easier to get impulse buys from PayPal buyers with "money to burn."
• Those with no credit cards browsing your site may be relatively few, but for some, PayPal is their only online payment possibility, so you stand a better chance of getting the sale.

Note that my recommendations concern offering PayPal as a payment option along with other options, such as credit cards through a merchant account. For merchants trying to get started on a shoestring, PayPal is an easy way to take credit cards, but PayPal as the only option may discourage some buyers, in my opinion. (See respondent comments in the Appendix.) For merchants with $1,500 per month revenue or more, I recommend getting a merchant account and offering PayPal as a payment option.

I offer PayPal as an option for all sales on my site and find that about 5% of purchasers choose that option. PayPal has now become a mainstream payment option that merchants ignore at the risk of profits.

(For your convenience, if you don't already have a PayPal business account, you can sign up for one here at no charge. You only incur about 2.9% + 30¢ transaction charge when people actually send you money via PayPal.)

You may read the detailed analysis of the survey and date, view the data analysis graphs, as well as read respondent comments below. Respondents' comments give you anecdotal insight into how people feel about PayPal and their motivations for using it or not using it.

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Detailed Analysis of the Survey and Data

How do buyers view PayPal as a payment option? What motivates them to use PayPal rather than other payment options they may have? Does offering a PayPal payment option help increase sales? 

From July 14 to July 31, 2004 I asked readers of my Web Marketing Today Free Edition newsletter (with about 87,000 subscribers at that point) to respond to questions about why they used PayPal. I invited them to participate:

"I'm trying to learn what motivates shoppers to choose to use or not use PayPal for online purchases. I appreciate your help in finding out. As a way of saying thank you, I have a couple of goodies for you when you complete the survey. Nothing big, just a way of saying 'I appreciate your help.'"

The survey is contained in Appendix 1 below. In all I received 545 responses. The majority (68%) from the United States.

This is by no means a random sample of PayPal users, since it tended to be weighted by those who were involved with e-commerce. Of the total respondents, 62% were either deeply or somewhat involved with e-commerce. 23% were not involved with e-commerce at this point.

The average survey participant made online purchases monthly and paid with PayPal a few times a year. 

Only a few were active eBay buyers or sellers. 

Most of the respondents (82%) had an active PayPal account. 6% didn't have a currently active account, while 12% never had an account.

Respondents had various reasons for an inactive account -- mainly that they just didn't use it.

Some of the "other" reasons given for an inactive account were:

• "I've heard a lot of good things about PayPal, but I found it too cumbersome and complicated to use." -- John C.
• "Haven't had reason to use it again." -- Michele I.
• "I just don't like it. Too busy. Too complicated. Too much trouble." -- Darryle R.
• "I've tried to sign up on more than a couple of occasions; they use a security box not accessible to screen readers." -- Bill G.
• "No reason to use it yet." -- Peter M.
• "No real need." -- Gary L.
• "It was used for a specific event registration and the event occurred."
• "Just used it to receive money from a US citizen I sold goods to on eBay." -- Martin T.
• "I stopped shopping online. Too dangerous…."
• "I only have a debit/load-as-you-get-the-cash card and they don't cater to us scum." -- Cliff D.
• "Will not accept debit card top-ups in the UK." -- Ray R.

The 12% of respondents who didn't have an account offered various explanations, but 47%  just didn't seem to need one.

Some of the "other" reasons for having no account were:

• "I don't want to have so many payment methods and try to stick with credit cards." -- Ed C.
• "I don't trust PayPal. I like e-currencies: e-gold, evocash, intgold, etc."
• "I worked at a bank for six years and my daughter works retail. I just don't trust giving out my banking information. I have read that online fraud is very high." -- Rosiland B.
• "Not totally sure how it works. Haven't needed one." -- Barbara H.
• "Not sure how to use it." -- Boris L.
• "I need human guidance to sign up." -- H. S.
• "Just used Visa."
• "Not good for downloadable products. Also a delay between setting up and accepting credit card purchases." -- Trevor M.
• "Never knew what was a PayPal." -- Diogo F.
• "It doesn't allow payment in Australian Dollars." -- Chris C.
• "Mission unclear." -- S. N.
• "I usually buy software from certain companies and use a credit card." -- Dan D.
• "Tried signing up 3 years ago to receive their online Visa card -- too complicated." -- Tony H.

However, among those with active PayPal accounts, there was a rather positive attitude toward using PayPal.

42% preferred to use PayPal whenever possible, while another 29% 'like using PayPal" and another 17% "don't mind" using PayPal. In all, these amount to 88%. Only 9% had a poor opinion -- of course, most PayPal haters didn't take the survey or didn't have an active account anyway.

I was most interested in buyers' motivations of using PayPal as their preferred payment method. The various motivations were presented randomly on the survey so as not to influence the results with the order of presentation. A comparison of responses between US and non-US respondents found few differences. 

The major exception, however, is this: The strongest motivator of all for non-US PayPal respondents was the ease of making international payments. For US respondents, making international payments was a medium motivator, but for non-US respondents it was a strong motivator. Here are some of the comments from international respondents that may give you an idea why PayPal is popular with them:

• "Credibility, trust."
• "Convenience of paying right away so I don't incur credit card interest fees." -- Wendy M.
• "Wide acceptance even here in Europe." -- Manuel F.
• "No other payment provider allows for the international flexibility that PayPal offers us. We have a bank account in Canada and a bank account in the US, and we use PayPal to transfer funds back and forth as needed -- all online from our home here in Mexico!" -- Todd R.
• "As a Canadian, I like their fair currency conversions and willingness to draw from a Canadian bank." -- Brian I.
• "I basically use PayPal because I have their MasterCard Debit card, and I can load my account from my bank or from relatives transferring dollars from their accounts." -- Rob

I was expecting to find that not having a credit card or having one's credit card maxed out was a significant contributor to PayPal use, but apparently not. PayPal Buyer Credit and the ability to hide payments didn't seem to be important.

But let's examine "Money in PayPal account," since this may be a contributor to "new money," that is, purchases that might not otherwise be made. Non-PayPal users, with few exceptions, didn't use eBay either as a buyer or seller. Respondents rated various motivations as Strong Motivator (to which I assigned 3 points), Medium Motivator (2 points), Low Motivator (1 point) or Not Applicable (0 points).

When I broke down average motivation by how often a person bought or sold on eBay, I found little correlation to frequency. However, those who sold on eBay at least monthly were more likely to list "Money in PayPal Account" as a stronger motivator than those who only bought on eBay.

Another approach to get at motivations is to get away from averages and just look at the motivations of PayPal's greatest supporters, the 42% of PayPal account holder respondents who indicated "I prefer to use PayPal and do so whenever it's an available option." By separating out this group from other responses you can begin to see some differences:

To make these differences more pronounced, I graphed the percentage increase of the "greatest supporter" responses vs. the other responses.

The most important motivators for PayPal's greatest fans seem to be the following. The percentages represent the percent increase over the responses of "other" respondents.

• No credit card, 69%. This represents only a small number of people, but it's the only clear "new money" that you might not otherwise capture in sales through regular credit card purchases. Some people clearly like PayPal because they just don't have another option for online sales.
• Ability to track purchases, 36%. The greatest PayPal supporters are confident that they can check their accounts online to see what they have purchased. Perhaps they haven't obtained online access to regular credit card transactions.
• Faster, 33%. PayPal owners know that the sale will go fast because there's little additional information to fill out.
• Ability to pay from a bank account, 26%.
• Privacy, 26%. Many people don't like giving out personal information online more than necessary.
• Convenience, 22%. This category probably includes "faster" and "ability to pay from a bank account".

For my conclusions, see the executive summary above.

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Appendix 1. PayPal Buyers Survey Questions

Page 1. Introduction

Dear Friend,

I'm trying to learn what motivates shoppers to choose to use or not use PayPal for online purchases. I appreciate your help in finding out. As a way of saying thank you, I have a couple of goodies for you when you complete the survey. Nothing big, just a way of saying "I appreciate your help."

Thanks so much!

Dr. Ralph F. Wilson
Editor, Web Marketing Today

1. If you complete the survey, I'll send you a copy of the some of the basic results of the survey, so long as you give me your e-mail address (entirely optional). We value your privacy and never loan, rent, or sell our lists for any purpose.

• First Name
• Last Name
• E-mail Address 

* 2. In which country do you usually reside?

* 3. Do you have a PayPal account that you use to make online purchases?

• Yes, I have a PayPal account. [goes to page 2: Using PayPal]
• No. I have (or used to have) a PayPal account, but it's not currently active. [goes to page 3: inactive]
• No, I've never signed up for a PayPal account. [goes to page 4: no account]

Page 2. How do you feel about using PayPal?

* 4. Which best describes your feeling about using PayPal for making online purchases?

• Great. I prefer to use PayPal and do so whenever it's an available option. [goes to page 6: selecting PayPal]
• Good. I like using PayPal. It works okay. [goes to page 6: selecting PayPal]
• Satisfactory. I don't mind using PayPal. [goes to page 6: selecting PayPal]
• Poor. I prefer not to use PayPal, but I'll do so if it's absolutely required. [goes to page 5: dislike PayPal]
• Negative. I will not use PayPal under any circumstances. [goes to page 5: dislike PayPal]
• No opinion or only used it a few times. [goes to page 7:online purchases]

Page 3. Inactive PayPal Account

* 5. Why is your account inactive? [goes to page 7]

• I just don't use it anymore. 
• I don't remember my password or e-mail address. 
• My account is currently limited or on restricted access. 
• I've reached the sending limit on my account. 
• I've had a negative experience with PayPal. 
• I've heard about someone's negative experiences with PayPal. 
• Other (please specify)

Page 4. No PayPal Account Yet

* 6. Why haven't you ever had a PayPal account? [goes to page 7]

• I just haven't needed to sign up for one yet.
• I don't want to give my private information to PayPal.
• I've heard about someone's negative experiences with PayPal.
• I can't get a PayPal account in my country. 
• Other (please specify)

Page 5. Dislike PayPal

* 7. From a buyer's point of view, which of the following are your greatest concern(s) about PayPal. (Please rank in order of concern to you with #1 being your greatest concern.) Mark the N/A column if this isn't a big concern for you. [goes to page 7]

• Customer service complaints
• Security of my money.
• Terms of service not fully disclosed.
• Account limited or restricted.

8. Anything else you dislike about PayPal? What would you like to see improved? (optional)

Page 6. Selecting PayPal

* 9. How much do the following factors motivate you to use PayPal? [Choices: Weak Motivator (1), Medium Motivator (2), Strong Motivator (3), Not Applicable (0). Answer order was randomized to prevent question bias.]

• Money sitting in my PayPal account.
• Easy for me to keep purchases hidden
• Protects me from fraudulent sellers.
• Allows me to pay from my bank account
• Faster
• Easy for me to track purchases
• Convenience
• PayPal Buyer Credit
• Easy for me to make international payments
• Credit card is "maxed out."
• Privacy
• Don't have a credit card

10. Any other reasons? In your own words, what factors motivate you to use PayPal for online payments? (optional)

11. What are the reasons you might NOT use PayPal for online payments? What is the downside for you? (optional)

* 12. How often do you make online purchases using PayPal?

Never | A few times a year | Monthly | Weekly | Daily

Page 7. Online Purchases

* 13. How often do you make online purchases, whether with PayPal or not?

Never | A few times a year | Monthly | Weekly | Daily

* 14. How often do you use eBay?

• As a buyer: Never | A few times a year | Monthly | Weekly | Daily
• As a seller: Never | A few times a year | Monthly | Weekly | Daily

* 15. To what degree are you personally involved in selling online (e-commerce)?

• No involvement.
• No involvement, but hope to sell online in the future.
• My company sells online but I'm not involved.
• I am only slightly involved with online sales.
• I am somewhat involved with online sales.
• I am deeply involved with online sales.

16. Comments (optional):

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Appendix 2: Respondents' Comments that Reveal Motivations for Using PayPal

Here are comments from PayPal Users in answer to the following: "Any other reasons? In your own words, what factors motivate you to use PayPal for online payments? (optional)"

Customer Service

"Easy dispute resolution!" -- Stella

"Excellent help desk and customer service." -- Ann

"I like their customer support, which in my experience is extremely fast for such a big company, highly personal and effective." -- Sharon

"Their service in responding to requests is fast and thorough." -- William

Convenience and Speed

"Convenient."

"It is fast, easy, and free for me. I can use my credit card with it or bank account, depending on the size of purchase. I get my items faster than mailing check or money orders and having to wait on snail mail." -- Jay

"It's so easy to use." -- Doug

"PayPal makes online purchases quick easy and very secure. Besides purchases, PayPal is a terrific tool I use to send money to my children immediately. No checks in the mail, etc." -- Jacie

"The ability to pay a seller in a 'credit card' like manner. It allows me to make purchases that I otherwise might not make on the Internet if I had to purchase via paper check." -- Paul

"I don't have to go looking for my credit card in my wallet!"

"Convenience of paying right away so I don't incur credit card interest fees." -- Wendy

"It is convenient. You can accept payment as well as making payments." -- Marion

"Good history tools." -- Tcat

"We have a web site where we use PayPal for members' subscription access matching hunters with hunting properties. It is dynamic and completely automated with PayPal." -- Bryan

"Simply convenient, fast, and secure!" -- Marshall

"It's fast. A buyer can pay immediately." -- Duane

"It is easy to use and all calculations are done for you." -- Walter

"I don't have to find my wallet get out a credit card and type in the account number etc."

"Gets the merchandise to you faster" -- Jim Nelson

"It's just so easy! PayPal stores all my credit card and bank information and commonly-used addresses for my friends, family, office, and home." -- Julie

"Saves time - I don't have to fill out billing information every time I make a purchase."

"It saves me a lot of time. I can pay a seller in about 5 seconds. I don't have to call with my credit card number or fill out a long form." -- Joanne

"Ease of use it's there when I need it and it's fast for me." -- Ann

"Convenience. It's there." -- Susan

"The paying process is way to easy once you have a PayPal account." -- Manuel

"It's easy as a buyer. As easy as sending an email! As a seller it simplifies the transaction." -- Brian

"It is easy and safe." -- Jessica

"I just find PayPal so convenient and reliable, I would have no reason to even consider another option as long as it remains much the same. I am a real fan." -- Ken

"PayPal continues to be innovative and its basic concern is to keep good records for its customers, while considering anything that will improve its offerings." -- Judy

"It's fast and easy, and integration is getting better and better, that is, I can buy from site A and the information is sent to PayPal without having to type anything twice." 

"Convenience" -- Ken

"It is easy. It is easy. It is easy!" 

"With some vendors, it is easier than using a credit card -- especially when you want your purchase sent some where besides the billing address. Credit cards will often delay those orders. That doesn't occur with PayPal." -- Jon

"I'm a 'buy it now' person and this method suits me just fine." -- Cheryl

"Convenient reliable and quick" 

"It's easy. They are the tops in their industry and it just keeps getting better. My strategy is to stick with Number 1." -- Charles Donovan

"PayPal has been fairly easy to use. I look for it. It was disturbing about the glitch where it was hacked few months ago." -- A.K.

"With a credit card I always have to type in all those numbers, which gets old real fast. With PayPal I just log in and approve the purchase. Easy!" -- Christina

"I also have a PayPal Debit and Credit card and use PayPal to accept payments from my visitors to my websites. It's great. Also, they are great to deal with whenever there is a problem of any kind." -- Ken

"I use PayPal on my website as well as for personal purchases. I like the convenience and security. They have a good follow up system with confirmations and receipts. I have never had any problems with them." -- Judy

Money is eBay account is perceived differently

"It's convenient, especially when there is money in the account instead of using a credit card." -- Brigitte

"I also sell on eBay, thus I have money going into PayPal to cover expenditure without having to worry about my bank balance" -- Pete

"I have more PayPal income than expense. It's an easy way to utilize the cash that's sitting in my PayPal account and I don't miss it when I spend it."

"Being an accountant I tend to view my PayPal account as the petty cash account and use it for making small day-to-day purchases in preference. I also much prefer to receive payments and affiliate commissions to my PayPal account, as this means I can transfer the money to my bank account at a much lower cost than exchanging checks." -- Pamela

"I use PayPal to make the non-commercial payments. If I want to pay a friend send money to a charity or pay for something where they do not accept credit cards I'll use PayPal." -- Brad

I like the debit from my banking account rather than a charge to my credit card."

"I can use it to pay by credit card or from checking account funds." -- Rod

"I basically use PayPal because I have their MasterCard Debit card and I can load my account from my bank or from relatives transferring dollars from their account." -- Rob

"I use PayPal mainly for auction site purchases and those spur-of-the-moment, this-offer-looks-interesting type of purchases." -- Rebecca

"It's too easy to whip out a credit card and spend, so I chose to budget my account by using PayPal for small purchases over the Internet." -- Rusty

"I am able to use debit card to pay business expenses." -- Susan

"Convenience. The money is already in my PayPal account" -- Sonny

"It's simple and secure. My information is stored and I don't have to re-enter everything. Also I have more than one PayPal account to pay from, so can choose which accounts to pay from." -- Nancy

"It really depends on how much is in the account. The only reason I would consider not using the PayPal account is if I had to draw it from my regular bank account. In that case, I'd rather just use my debit card or another credit card. But if there's money in the PayPal account I have no hesitation about using it." -- Jodi

Fraud Protection and a Sense of Security

"Keeps my financial information private and is fast." -- Steve

"Credibility, trust."

"When I buy I always have PayPal draw against my credit card. This gives me the added protection of my credit card company in case I am ripped off by the seller. I use PayPal primarily for eBay auctions." -- Tom

"Since PayPal already has my information it's really fast when ordering. I know I can get my money back if necessary (though I haven't used that option), and it gives me a level of trust." -- Judy

"I usually only use PayPal if I can't pay with a regular credit card. However, I recently bought a CD from a complete stranger and would have preferred to use PayPal rather than mailing a check and hoping that it got there -- and wasn't altered to read $1,500 instead of $15 or something similar."

"I feel I know a little more about whom I'm buying from when I use PayPal." -- Sharon

"With PayPal I avoid writing my credit information." -- Jorge

"I feel a lot more protected when I use PayPal. I have a credit card on file with them. When I use PayPal I feel I have two lines of defense against a seller, if they do not deliver. First, I can contact PayPal and have them help me. If that doesn't get me anywhere, then I know I can still turn to my credit card company and dispute the charge."

"I use it for eBay purchases (where seller's trustworthiness is completely unknown)."

"No need to expose my credit card on unknown sites." -- Gary

"I don't need give my credit card number." -- Bill

"Security more than anything else -- at least a sense of security. I don't like (and usually don't) give out credit card information to someone that I don't know or who doesn't have a physical address (on eBay in particular)." -- Chris

"It's safer for dealing with small unknown sellers." -- Amy

"I like that only one entity has my credit card information so I don't have to give that information to everyone I buy from." -- Aimee

"It's a hassle to send a money order or check and I like the fact that PayPal gives option of fraud protection." -- Bill

"I prefer not to give out my credit card number."

"My credit card number is in only one place -- not given with every purchase." 

"Protection. PayPal and ClickBank both demand a refund if the product or service was not as it was described. I have never had to use PayPal's return force, but I have used ClickBank's and I imagine it's about the same." -- Sherri

"They keep on top of security measures and notify me if their are any spoofs to watch out for. They also keep a good record of my transactions." -- Lanny

At sites where the product is upscale and the site offers a professional appearance with a good guarantee, I prefer to use my credit card directly. I guess it is a matter of trust. PayPal does offer a more protected way to pay when you do not know who you are dealing with or in those situations where you may suspect a shady deal. I also find ClickBank to be a great way to pay for downloadable information and use it every chance I can." -- Rebecca

"I don't have to enter all my information each time I make a purchase which relates to time and security factors -- the greatest of which is time" -- Stephen

"I don't like giving my credit card number to just anyone on the Net, because I'm not really sure who is and who isn't legitimate." 

"PayPal provides an impartial way to send money. I know where my info is going (instead of just submitting to someone's credit card page."

"Mainly the fraud protection. I also like that PayPal has my card bank number and I don't have to spread it all over the Internet. I understand that there is still a risk. However, I think the risk of credit card theft increases if you use your credit card in multiple places." 

"I really, really like being able to make quick easy online purchases without having to give the seller my credit card information. I've been in a few situations where I had given my card info over the phone. I agreed to one purchase, but within two days the company had over charged me by $400. It took three weeks for the company to fix their mistake. I think that the company may have been deliberately trying to temporarily float my money to buy themselves time on their own bills." -- Debra

"The security of PayPal gives me peace of mind." -- Michaele

"In Italy, the media and newspapers do not inform people so much about secure payment and secure systems, so PayPal or credit cards are not used. People are frightened to use it." -- Andrea

International Payments

"Wide acceptance even here in Europe." -- Manuel

"Easy to send and receive payments from around the world including currency conversion." -- Marco

"PayPal only allow Malaysians to keep money inside the PayPal system. I can't withdraw it to my bank, so it is a good way for me to spend and buy products online." -- David 

"No other payment provider allows for the international flexibility that PayPal offers us. We have a bank account in Canada and a bank account in the US, and we use PayPal to transfer funds back and forth as needed all online from our home here in Mexico!" -- Todd

"As a Canadian, I like their fair currency conversions and willingness to allow me to withdraw money to a Canadian bank." -- Brian

"International purchases are far more convenient to finish a quick transaction, too." -- Rusty

eBay Purchases

"PayPal is fantastic service and the only company I will do business with on eBay. I have never had one problem with them ever. Payment is instant for both parties buying and selling on eBay." -- Jacque

"More eBay sales."

"Some eBay sellers insist on it."

"I will use it for eBay -- many vendors do not have real credit card offering."

"Saves the expense of a cashier's check for eBay purchases."

"I believe they are reputable -- more so than some of the sellers online." -- Lisa

"eBay links" -- Ann

"Works on e-bay!"

"We generally use it only for eBay purchases. Generally, we will not bid if we cannot pay via PayPal."

"I've bought a lot on eBay using PayPal as my payment method. I've never had a problem with them and appreciate the ease of transactions."

"eBay -- and only eBay." -- David

"I typically only use it for eBay shopping."

"Streamlines auction purchases" 

"PayPal makes paying for auctions easy and you have instant documentation of the transaction. It is basically hassle free and allows me to pay for my auction win and forget about it. I don't have to worry about forgetting to send a check the hassle of getting money orders or worry about the not-always-reliable USPS to deliver it on time. I have stopped bidding on auctions that do not accept PayPal." 

"I purchase items on eBay and usually that is the only payment accepted. I was skeptical at first but actually I have not had any problems. I don't hesitate to use it now." 

"I buy on eBay and most sellers prefer PayPal. It makes buying, paying, and shipping fairly seamless." -- Stefani

"Easy from online auctions and often preferred by sellers" -- Sarah

"I only use it for eBay purchases. It's easier than mailing a check." 

"It is what works for eBay" -- Doug

"Most reputable people who sell on eBay prefer that you pay by PayPal" -- Judi

"Convenience of use on eBay" -- Eddie

"The primary factor is the ease of payments to eBay sellers (primarily small businesses). Before PayPal, I typically sent money orders, which are a hassle to acquire and receiving merchandise takes longer. In short PayPal is a fast and easy way to complete an eBay transaction with a small business." -- Yvette

"Some eBay folks only use PayPal to accept credit card payments." -- Robert

"Many times it is the only choice available from a vendor." 

"Easy for eBay transactions." -- Bill

"I like the ease and convenience of using it to pay for eBay auctions. Also you have some sort of protection if you use PayPal for auction payments." -- Christine

"It's tied in with eBay for ease of use." -- Steven

"It depends on what I am purchasing and from whom. I use it primarily with auction sites. For other online purchases I use a credit card." -- Bekki

"Great for buying and selling on eBay." 

"It is really great for paying for eBay purchases and those e-mail specials." -- Richard

"It's the easiest way to complete eBay transactions." -- Jerry

"Perfect for eBay." -- Levi

PayPal is the Only Choice

"Occasionally I run across an online seller who for whatever reason does not have a merchant account with a bank and without their being able to accept my credit card payment through PayPal I would not be able to buy from them." -- Phil

"This is the only option offered by some of the people I purchase services from." -- Dean

"Am finding more online sellers offering only a PayPal payment option." -- David

"The merchants I bought from didn't take credit cards."

"I use it infrequently -- only if credit cards are not an option."

"I will use PayPal if a credit card option is not available." -- Jen

"Sometimes it's the only option."

"If a trusted vendor or friend wants payment that way." -- Chris

"Most of the time it is the seller not the buyer who chooses the payment processor. I don't mind using PayPal but I don't actively choose it."

"Being able to pay small merchants and/or individuals for transactions that would otherwise require a check through the mail" -- Michael

"I can pay via credit card using PayPal on eBay" -- Jim

"I only use it when it's the only option, but I have no objection to using it. I prefer using my MasterCard or Visa check cards, but mostly because it's habit because most of my online purchases don't offer PayPal as an option anyway."

"I only use PayPal when it is the only form of payment the merchant I'm buying from accepts. This is not that uncommon, so I keep the account active." -- Arien

"The only time I use PayPal is when the web site doesn't accept credit cards." -- Cheryl

"I prefer to use only one credit card for online purchases and have PayPal only because in some instances it is the only available payment method outside of sending a check." -- Chris

"I use PayPal only when there are no other credit card options and I can not find another place with reasonable prices to purchase the item." -- Nicole

"I have a ClickBank and a PayPal account but so far I have only used them with vendors who ask for payment by either of these methods." -- Fred

"Some sites have PayPal as the only option." 

"Sometimes I don't have a choice when the person making the sale uses only PayPal." -- Gary

"I don't have a choice, since certain organizations that I purchase goods from only use PayPal. " -- Miriam

"Several e-commerce websites do not allow any other type of payment." -- Andrea

"Sometimes it's the only option a company will give and if I really want their product I'll use PayPal. I pay for my e-commerce shopping cart/system via PayPal every month though I've want to change it to their credit card processor." -- Sue

"I only really use PayPal if the merchant doesn't offer credit card facilities." -- Nick

"I'll only use PayPal if necessary, as I don't really understand it. Paying by credit card is a lot easier." -- Martin

General Comments

"The universalness of it. (I know that's not a word but you know what I mean.)" -- Doyle

"It is one of the best" -- Sanjay

"Has proven to be reliable. They got me to sign up by offering $5.00 free to simply establish and account. I used it and it sold me on future purchases." -- Mike

"It's easiest for use to people who don't have credit card abilities." 

"Becoming common usage" -- Richard

"I've used it about twenty times. No problems." 

"It's a widely accepted method of payment." -- Kendall

"It has name recognition. Most people have a PayPal account and it is the primary payment method on eBay." 

"Widely-accepted." -- David

"I finally forced myself to sign up for PayPal recently because I know it is better in many ways. The downside to signing up of course is the gigantic hassle of going through it. Once I got through this process however I felt like I had won a great war." -- Eileen

---

Appendix 3: Respondents' Comments Related to Seller Use of PayPal

This survey wasn't designed to measure seller feelings about PayPal, but those of buyers. However, since many of my readers are involved in e-commerce, many felt free to share comments about their experiences.

"I am a web designer have integrated PayPal for the first time. It was very easy to do with just basic knowledge." -- Lisa

"The ability to take payments of different types such as subscription payments." -- Glen

"Not for downloadable products. There's a delay between setting up and accepting credit card purchases." -- Trevor

"I am a customer of christianwebhosting.com and have a reseller account with them. Using PayPal allows me to set-up any accounts I resell on a subscription basis so that the money goes directly into my PayPal account each month and I don't have to hassle with billing." -- Larry

"I rarely use PayPal to accept payments. I have my own merchant account which is much better has great service and is more reasonably priced. If I sell an item on eBay I always offer PayPal." -- Tom

"I plan to use PayPal on my own site soon because all customers can use it to use cash or any credit card they have. My convenience of dealing with one entity. It still ain't simple but the best I've investigated." -- Will

"I like it very much that their selling fees are extremely reasonable -- great for small merchants." -- Sharon

"I use them for my own shopping cart on www.200words-a-day.com and find the accounting is basically 'all done' for me with PayPal. By accepting them as my payment service provider I found them perfect for the small business adding a shopping cart to an SBI site at ZERO set-" -- Kevin

"Other users can pay me through PayPal easily." -- Richard

"I am registered as a seller and use it as an option for online shops and eBay" -- S.B.

"It is the transaction agent of choice for eBay. That's what got me started. Now that I'm starting my own online business I will probably use them for my own account -- much easier than a merchant account." -- Erna

"I'm actually using the PayPal credit card (they give you a Master Card) which means that you can use the credit card anywhere but it's really like a debit card taking funds from your PayPal account. Every time I use it like a credit card I get a very small amount of cents back from the purchase too. I find it enormously convenient and it means that I have a credit card on hand instead of a debit card which is accepted in more places. I also find it VERY handy for clients who aren't in either the Canada or the US (I deal with a lot of clients in the UK for instance) to pay me." -- Jodi

"I use PayPal for selling and it's less expensive than most other options. I know a few people don't like PayPal but I've never had a bad experience with them -- at least not one that wasn't resolved in a timely fashion." -- Judy

"I can put a link on my website. It makes payments easy to send, receive, track, and hold." -- Mark

"I'm setting up website now. I'm having difficulty making PayPal functional. I've requested help three times and the only answer I received was an autoresponder asking how good the help was. I told them. I still haven't received help for my first requests and they still haven't gotten back to me." -- Rick

"I like it mostly because having a PayPal account to receive money for our merchandise is affordable. We are a very small mom and pop outfit, and to carry our own merchant account is too costly. Also we don't have time to check out the legitimacy of our customers' accounts. I like the fact that PayPal handles all the details and provides a safety net for potential fraud." 

"A lot of people on eBay use it because they don't have to set up a merchant account somewhere else." -- Robert

"I'm a fiction writer who's published her own novels as e-books and am trying to sell them off my website and other places that allow for it. I use PayPal on my sites as a way for people to pay for any purchases they might make. My second choice was 2Checkout. Also have a Yahoo PayDirect account. Not happy they started charging a monthly maintenance fee for that." -- Anita

"I originally set up my PayPal account to accept donation and subscriptions for my Internet site. The subscription idea didn't really work out but I'm still hoping that someone makes a rather large donation. :-)" -- Nick

"A lot of auction sellers accept it and it's easy for me to accept payments on my website ("buy now" buttons, etc.)." -- David

"They have done everything they said they can do for me and when my website gets up and running (I want to sell craft kits that I assemble ). I will be putting PayPal for credit cards acceptance on my site. I do however wish one day that they will be able to accept e-checks from buyers, rather than my having them send them to my PO box." -- Michaele.

"We do eBay. It's a great way to accept payment without credit card merchant account and it's fairly inexpensive." -- Brian Duvall

"The main reason I use PayPal is because it allows me to receive payments from a broader range of buyers, including both those with and without credit cards -- and those who have credit cards but don't want to use them online."

"I sell online. It makes transactions faster and more certain and secure." -- Carole

"PayPal makes it extremely easy for purchasers to make payment to me even when they do not have a credit card. They can pay me by check and even though I do have the delay of PayPal receiving the money from their checking account It becomes almost a non-issue since you are able to factor out the waiting period for the purchaser to mail the check to you and then having to deposit the check." -- Gary

"I don't yet know if PayPal is the best payment method for us to offer to online customers wanting to buy our 'management training courses'. PayPal's explanations of what is involved are formidable, not really user friendly, and (for the novice) confusing." -- Peter

"I have a web business where our customers use PayPal. For over two years haven't had any problems with it. It is easy to refund to any customers who have problems using the system (double payments, etc.)" 

"I like the fact that it is a secure easy payment option for small businesses that do not have a merchant credit card account. I think the PayPal system allows a crucial segment of micro-businesses to operate in a quicker way than they would have to if people had to send money orders or checks." -- Bill

"It's quick and easy -- both as a purchaser and a seller, that is, as long as you stay below the dollar amount where they start dinging you with a % charge. If I were a high volume seller through PayPal, I'd probably find some other way to process payments." -- Jeff

"I make jewelry and plan to sell it online. Although PayPal no longer requires joining for making purchases, I am reluctant to use it for my future e-commerce website because I believe it has the stigma of eBay/amateurs." -- Daniel

"As a seller, 95% of my customers pay with PayPal. It allows them to pay instantly and to use a credit card. At the same time, I don't need a separate merchant account." -- Patty

"I am now starting a business using PayPal as my sole ecommerce solution." -- Nicholas

"PayPal has been brilliant for me. In fact, wonderful. We now take these things for granted but I have received thousands of dollars in sales revenue without having to know much computer-ese." -- Kevin

"Will not use PayPal as my payment processor until the simplified (non-login) processing is available for non-US selling accounts. When this happens PayPal will be a strong contender for my selling business due to attractive pricing. Outside the US merchant accounts are an expensive business."

"I sell domain names online and accept payment by email or wire transfer." -- Steve

"I have a start-up site that will likely use PayPal." -- Bob

"I recently sold baseball tickets on an online ticket exchange site. The transaction required that I set up a PayPal account. Fortunately, the transaction went through with no problems. However PayPal was a pain to set up and I was hesitant to give a third party that I had no direct dealings with my personal information." -- Sheila F.

"I am in he process of setting up my web site and will be using PayPal's shopping cart to start off." -- Ann

"As a seller PayPal is even better now that they let my customers pay by credit card without signing up for a PayPal account." -- Christina

"PayPal is a low cost tool for me to try out my product without investing in another payment gateway. Like ClickBank, it doesn't require me to open a merchant account and, unlike ClickBank and 2CheckOut, doesn't require a setup fee. I still don't know whether my product can sell or not, so it is just a kind of trial." -- David, Indonesia

"I use PayPal in my business, but rarely make purchases online." -- Jill

"I was doing a series of certification trainings on our software in the US and UK. That's why I opened the account (in order to have an easy payment option). Much to my dismay it appeared only verified PayPal users could pay the $ 967 fee using PayPal. For this reason only one of my customers used this payment option (out of about 20)." -- Paul

"Selling using PayPal is a pain in the neck. A month ago I decided to collect all my hosting renewals via PayPal. Only 1 out of 14 customers was able to make it and it was because he already had a PayPal account. The rest of them had problems while trying to send the payment, mostly because of the pay-but-first-enroll concept of PayPal." -- Manuel

"I use it for online sales." -- Margot

"I like PayPal, but it seems that sales have slowed since I changed to PayPal." -- Connie

"There is a perception (that seems to be changing) that PayPal is less professional than other payment processors. As an e-book seller, we use PayPal as our secondary payment option. I noticed my sales dropped considerably when I only offered PayPal as an option in 2002." -- Sue

"As a buyer I am not overly excited about using PayPal. As a seller PayPal is convenient and cost effective for both me and my customers." -- Chris Jones

"I sell my own books from my website using PayPal. I have had two people complain to me that PayPal was hard to use and they couldn't figure it out. I don't agree. The few transactions I've had have been satisfactory."

"I'm using PayPal at my site and have had problems with it. Corporate card users tell me they can't get authorized. Other buyers tell me the "no registration" payment process will time-out and frustrate users. I'm currently looking for other options." -- Frank

"I know that when I start my online business within the next few months I plan to use Pay Pal as the e-commerce application." -- Bekki

"I have considered dropping my credit card system and going PayPal only to save money. My site does not generate enough purchases to justify the fees I have to pay out every month." -- Richard

"PayPal is an excellent system but I have heard some horror stories about PayPal freezing accounts because of a complaint, not quickly adjudicating the account, not accepting phone calls to resolve the problem, and being completely unresponsive to emails. This effectively closes the business involved.
I use and like PayPal for eBay payments and some commercial payments, and I accept it for my personal sales on eBay but I would never trust them with serious commercial business, since a single complaint (that could be completely without merit) would close my business by immediately eliminating the ability to accept payments and blocking my access to my funds that PayPal holds. They need some kind of third party process for commercial accounts that requires a process before blocking accounts." -- Brian

"I am presently working on a business plan to open my own online store and to sell on auction sites. I will probably begin the middle of next month." -- Dennis

"Find PayPal to not be the most user friendly option for my customers when it comes to the critical purchasing process." -- Jay

"I am in the process of setting up an online business. I plan on using PayPal as a method of payment, as it is better for us as it is easier to set up and deal with than to setting up and maintaining credit card accounts." --Jon

"As an e-commerce web developer, I frequently recommend PayPal to new customers getting started selling online. Eventually I move customers up to different credit card systems based on their quantity of sales. Some customers are happy to stay with PayPal. I personally use it on some of my web sites to accept payment for products and services." -- Ted

"I use PayPal for selling on eBay. I've always used for as long as I can remember. I haven't tried anything else, but if there's something cheaper, I'd be will to try it for accepting payments." -- Christine

---

Appendix 4: Respondents' Comments on Things People Don't Like about PayPal

Though the survey wasn't designed to assess PayPal dislikes, I felt it important to allow respondents to give both their positive comments as well as their negatives about PayPal -- and report that to my readers.

Be aware that a number of the comments below refer to previous policies that have since been changed by PayPal. I invited Dave McClure of PayPal to rebut some of these misunderstandings, but he didn't feel that much comment was necessary.

He said, "The main thing I'd like to emphasize is that PayPal signup is no longer required to complete a payment/purchase, for customers of US-based sellers using a PayPal website, make payments or send money (excluding subscriptions and eBay transactions). Furthermore, and we plan to extend the 'PayPal Account Optional' functionality to non-US-based sellers sometime later this year, hopefully by early in the 4th quarter.'" https://www.paypal.com/cgi-bin/webscr?cmd=p/mer/WAX_landing-outside

He refers readers to various PayPal webpages that provide policies and answers to other concerns: 

Security Center & Tips for Safer Online Shopping:
http://www.paypal.com/cgi-bin/webscr?cmd=_security-center-outside
http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/holiday-tips-outside

PayPal Buyer Protection / Seller Protection info:
http://www.paypal.com/cgi-bin/webscr?cmd=_pbp-info-outside
http://www.paypal.com/cgi-bin/webscr?cmd=p/gen/protections-outside

Buyer Complaints & Customer Service Contact info:
http://www.paypal.com/cgi-bin/webscr?cmd=_protections-buyer-outside
http://www.paypal.com/cgi-bin/webscr?cmd=_contact-general
http://www.paypal.com/cgi-bin/webscr?cmd=_contact-phone

My own experience with payments via PayPal has been uniformly good and I use it in my business. However, these respondents have felt some pain, and their thoughts may present legitimate problems and are representative of some buyers on your site. Having said that, here are the negative comments:

Negatives from Merchants

"They say they can accept payments by credit card anywhere but then force you to move from one level to another" -- Glenn

"I would like to see the merchant be protected also." 

"When selling something through PayPal and collecting money, it's a pain to be forced to go into my account and transfer the money into my checking/savings accounts." -- Michael

"It's way too easy to use. They usually side with the buyer when there is a issue and take unwarranted actions without question stating always something in their text of terms of service." 

"I am a seller and PayPal is increasing their costs to sellers as well as since purchased by eBay. It is very difficult to get customer service. Most of their customer service reps are rude and unhelpful." -- Jim

"They are very unfriendly toward MLM companies and anyone else who is not involved with eBay. eBay is the only business where I will consider using PayPal for a transaction. They should advertise as an eBay only service." -- Yank

Dislikes from Buyers

"1) They don't make clear how much info is disclosed or made available to sellers. 2) Their terms of service agreement is so long and complicated that I feel I need an attorney." -- Johnny P.

"It is hard to sign up and a confusing screen. It took me three times to secure an account. I remember being angry and decided I would only use it if I had to." -- Mary

"You can't get help when you need it." -- Rick

"It's way to difficult to use." 

"I use PayPal on my site but I'm looking for other options. It seems that the unscrupulous can intercept payments -- it's just not as secure as I had hoped." 

"PayPal appears to be a product resulting from eBay and thus does not give me the confidence that I have in using my Visa or AMEX. I prefer credit cards but PayPal is entrenched in some sites. I don't trust PayPal like they would want me to trust their services." -- Ed

"I find it impossible to switch from check to credit card when putting money into the account. Also switching credit cards, if necessary, is beyond my comprehension." -- John

"The process seemed complicated as I recall." -- Jan

"Instructions and information about accounts should be up front, not hidden." 

"I've had several phishing attempts - emails were sent to the email address under which my PayPal account is registered and I nearly got caught once (save for a typo in the message which made me think twice). I would much rather use VISA directly than use my VISA through PayPal. Also, transferring bank funds from PayPal takes too long (5 - 8 business days in Canada) and I don't want to disclose my bank account information to PayPal." -- Vida

"It's just plain a pain to use" -- Sandra

"The PayPal registration process was embedded in the purchase process at a Yahoo store I recently visited. PayPal was the only option which was very frustrating. I found the sequence very confusing and even afterwards wasn't clear whether my purchase had been completed or not. PayPal sent a receipt in addition to the merchant but PayPal's receipt didn't confirm the purchase process was complete, just that payment had been made. Overall just a bad customer experience." 

"The main issue is that a credit card is just so much easier to use than PayPal..." -- Elizabeth

"I had problems logging in and was also leery of having them store my credit card information just because they're so visible and probably a hacker target. I ended up using a separate credit card from my normal online process with a smaller credit limit and elected not to store the information with them for future purposes. It was also a lot of extra steps. If my trusted vendor had just accepted my credit card on an SSL secure page, it would have been easier for me." -- Cynthia

"I find it just plain inconvenient. Too many steps compared to a using a Credit card" -- Ted

"It seems like a company is not big enough to do real business when they only take PayPal, so it lowers my confidence in doing business with them. It makes sense for individuals who are selling an item on eBay, but if a business only takes PayPal, I hesitate a bit." -- Lisa

"I was the successful bidder on some software on eBay but never received the software. I had $40 balance in my PayPal account so I used my credit card to purchase the $200 software. When I didn't receive the software I filed a complaint with my credit card account. PayPal with out my knowledge or authority applied the $40 to the purchase When I learned that I was dealing with a scam artist I was out only $40 but would not have been out a penny if PayPal had not given the money over to the scam artist." -- Bruce

"My granddaughter sent me the money to purchase a computer we used PayPal. There was a ruse with the computer and it took a long time to get our money back. It took even longer to get PayPal to clear my account -- over a year to be exact. I had to send all my account numbers and IDs and everything else they could ask for at least three times before it cleared. I appreciate them wanting to be sure it was me doing something, but it was proved to them I did nothing. It left a bad taste." -- Elaine

"I've researched PayPal for use on my future ecommerce website. I've read too many complaints about problems with frozen bank accounts and terrible customer service. I use PayPal only for eBay purchases when regular credit card purchases are not available. I dislike the limit on my total PayPal purchases without letting PayPal further into my accounts than I like." -- Daniel

"I'm worried that my account might be suspended/restricted by accident and my funds will get stuck due to strict security procedures of PayPal." -- Anthony

"Setting up accounts and bank details were not helpful. Relevant information was only revealed after set-up procedure" -- Shoshana

"Cumbersome. They keep trying to default me to my bank rather that hitting my credit card as I want them to do. I do not want my bank listed, but they now force you to do that." -- Rod

"I recently tried to recover money from a merchant under his 90-days guarantee (the digital product was not satisfactory). The guy has ignored all my e-mails and PayPal said they could do nothing. If I'd bought through ClickBank, I would have had my money back by now. PayPal is a no-no for me unless I know and trust the merchant." -- Ian

"It is difficult, if not impossible, to change my profile information on PayPal." -- Steve

---

Downside of using PayPal from PayPal users

Question: What are the reasons you might NOT use PayPal for online payments? What is the downside for you? (optional) (Answered by those who have an active account.)

"I had someone takeover my eBay account. Now I don't trust either eBay or PayPal to look after me and don't not use it much now. They blame me, not the baddie. It will be very difficult to get money back, if taken by fraud. I trust my bank, not PayPal." -- Ann

"Some international buyers/sellers don't know about it." -- Steve Holmes

"Their site and system still needs a redesign. It does not flow. It's especially confusing for occasional users (customers)." -- Will

"Service charges." 

"Sometimes transactions are refused for no obvious reason . Also sometimes it easier to use one means of payment for everything, but difficult to implement" -- Graham

"The fees they charge." -- Lynn

"I may have more protections in transactions using a credit card instead." 

"Length of time for transaction to clear." 

"I don't like not being able to have some funds reside in the account, but have the charges go to the credit card. PayPal forces you to pay with funds in the account before it will allow you to pull funds from another source." -- Doug

"Knowing that the seller is getting charged." 

"None really. I would always choose the credit card option if available" -- Martin

"Once my account was set up I had to use that credit card they had on file. I would have liked the option of changing it. But once you submit it's too late. What would happen if I cancelled that credit card?" -- Lisa

"My credit card offers airline miles for using it. So I'll use the credit card to make purchases. PayPal also lets me use my bank account directly. However there are no perks for doing so." -- Dean

"My credit card gives me rewards that PayPal doesn't. Also I'm not completely comfortable with anyone (including PayPal) removing money directly from my checking account." 

"Their default payment is your bank account. Even if you say pay by credit card, it is overridden and they take the money from your bank account, which leaves you stranded." -- Lilian

"Transactions are too slow Confusion on how to pay at first use." -- Dennis

"I generally prefer to use a credit card. The thing I don't like about PayPal is it's confusing to me when I want to change the payment source. And most of the time I miss it and the payment ends up coming out of my bank account, which I don't like. But other than that I like PayPal." -- Ted

"I don't like having to keep funds in the account. Last time I read, it takes three or four business days to transfer from my bank account into the PayPal account. Money is really tight and it would be more appealing if the money came from the account immediately." -- Paul

"Downside is that it takes two to three days for money to transfer. I sometimes need it quicker." -- Jo

"Have to put money in my PayPal account first." -- Andreas

"Service fees." -- Ricky

"For me there is no real downside. The only thing I don't like is the initial hassle involved in setting up and verifying a new account." -- Sharon

"When there are no funds left in my PayPal account, it is a bit annoying having to find password, login to PayPal, and top up. I just use a credit card then." -- Kley

"I want to make sure I have the credit card protection when I buy something. Credit cards are easier to deal with on returns." -- Ed

"In dealing with an unscrupulous seller, they were absolutely no help at all. Their procedures were difficult to find and difficult to follow -- all for them to tell me in less than 24 hours that they could do nothing for me." -- Lisa

"1. Cannot pay India which is sometimes a pain, as I sometimes hire a writer or designer from India. 2. It is my preferred method of payment due to the ease of use." -- Kevin

"Required username and password" 

"For me it's okay, but for some it's in English and not in Portuguese. As we in Europe have 20+ languages I quite understand the problem of offering one site in so many languages." -- Manuel 

"Can't buy on time -- the transaction happens immediately." -- Jen

"I won't use PayPal if the eBay seller says they only take payments from cash balances or bank transfers. This tells me the person is using a personal account for a business and I have to wonder how serious they are. Also, there's much less protection as a buyer if I pay from a cash balance or bank transfer" -- Patty

"I worry about security" -- Jenny

"If there are too many stories about PayPal deductions or if there is a spate of phishing attacks associated with PayPal, I would hold off and look for reassurance." -- Chris

"It used to be a cumbersome process, but they have streamlined it recently (note: only for US seller accounts). The first time I used PayPal, this was a huge turn-off. In fact, I think I interrupted the first three or four attempts because I didn't understand the membership concept. All I wanted to do was to use my credit card." 

"I don't like having to check my balance when making a bigger purchase where a credit card will just go through and show up on my bill!" -- Erna

"It is typically more time consuming than just using an online credit card sales page." -- Candace

"Lack of extended warranty that comes with certain credit cards -- and no airline mileage." 

"PayPal can freeze an account without explanation or valid proof of infraction. Also PayPal's insurance for buyers is a joke. After filling in endless forms and waiting six months they recovered me $4 on a $1,600 computer. The procedure to file a claim is almost impossible for mere humans to complete and most of us would be lucky to live long enough to receive compensation." -- Julie

"I don't like to have or leave much money in the account. Although they are exceedingly useful to me, I don't trust them. I was a victim of ID theft amounting to $1,100 -- coincidentally just three days after confirming my PayPal account by fax two or three years ago." -- Pamela

"Unless money is available in the PayPal account, cash transfers from my bank are too slow, usually causing a delay in shipping." 

"It's a pain putting money into the PayPal account to cover purchases. I already have money in several bank accounts. I don't need another one." -- Jim

"We will not purchase from an online merchant (outside of eBay) whose only method of payment is via PayPal. Merchants that take PayPal payments but no credit cards are viewed as suspect and not running a good business or not having enough experience in business." 

"I use credit card when available just because I'm used to using it. Familiarity." -- Brian

"do not shop at merchants who use pay pal instead of investing in an e-commerce infrastructure. I question the size of the company when they use PayPal as their only payment medium." -- David

"Uncertainty of the buyer-seller relationship and accountability. I've used it three times in the past month (as a new PayPal user) and I am still waiting for the goods!" 

"I would rather use VeriSign and a standard credit card when possible. From working directly with VeriSign on other projects I know their security standards." -- Susan

"PayPal has some serious flaws when it comes to being a real financial solution. It is not a bank and I don't trust it with my money. I would never allow money to sit around in that account." 

"I think the charge to the seller is rather high. I'm surprised so many people tolerate it for larger purchases." -- Stefani

"Sometimes I want to get airline miles on credit card." -- James

"First, it was the fact that I needed to get an account to pay with my credit card. After getting the account, but before my account was verified, there were some limitations, which was a bit unclear to me and therefore kept me from using it. Today there are no objections and it's just like any other payment option." -- Paul

"I prefer credit cards. I believe there are better protections" -- Sarah

"PayPal always asks to use my checking account, but my bank has a monthly limit on electronic transfers, which I would easily exceed some months supporting eBay. So I usually use a credit card. Not every seller accepts credit cards via PayPal and I have to use cash. So I'm thinking about putting a small amount of money into my PayPal account to use for small eBay purchases." 

"99% of all sites I purchase from use one payment processor. Of course, when I make a peer-to-peer payment to another Webmaster I usually use PayPal for reasons of convenience." -- Shaun

"As a seller there are additional costs however these are usually mitigated by the convenience." -- Brian

"Security issues and protection from fraudulent dealings" -- Richard

"Haven't found any as of yet except perhaps the occasional visitor/customer who doesn't like using PayPal. But they are getting to be very rare." -- Ken

"It doesn't work with my bank -- Netbank." -- Doug

"Takes a little longer than just putting in your credit card information." 

"I do not like that PayPal has my credit card on file and it is very hard to update information such as name change credit card and e-mail address." -- Judi

"If it's a well known company -- one I trust and takes credit cards directly -- I'd rather leave PayPal out of it." -- Amy

"Not everyone takes it." -- Aimee

"Weak fraud protection, in my opinion. With a credit card, I feel confident that one phone call can get my money back, whereas with PayPal, the money is gone from my bank and it's not as likely to be returned." 

"Many of my suppliers don't use it; they have their own merchant accounts." 

"Fraud. For instance I've already received some of those emails that looked like they were from PayPal down to the logo and everything asking for lots of personal financial information. Of course it wasn't from PayPal (and I didn't fall for it)." -- Robert

"Real bad security issues. I've very nearly been caught out by a rogue e-mail claiming to be from PayPal" -- Steven

"I prefer to use only one form of payment -- credit card for online purchases." -- Chris

"Frequently hear of poor business practices on PayPal's part and refusal to correct mistakes made by them or their users." 

"I prefer credit cards and the protection afforded through them. I am not worried about card security, but there are some lingering trust issues with PayPal (from years ago). I prefer to pay a real business with my credit card and I like getting rewards (points, miles, percent cash back) from my card. PayPal has no such incentive." -- Brad

"Selling or sharing of my information" -- Ken

"I live in Canada. Non-US residents still have to join PayPal to use their services. (It became unnecessary for US buyers a few months ago.)" -- Alan

"Living in Canada I was encouraged to add my bank account to my PayPal account. Since I have done this, I have not been able to use my credit card to add funds to my PayPal account. I can now only add funds from my bank account. Sometimes I would prefer to use a credit card to purchase big ticket items, instead of my bank funds, which I require to cover bills, car payments, etc." -- Eric

"I've heard of sellers having their accounts frozen and they are unable to access their money, even if they are innocent of the allegations. This is a worry." -- Chris

"If a company cannot support credit card purchases and only has PayPal I feel like I shouldn't be buying anything from them and usually look elsewhere to purchase with a credit card. But I always use it on eBay." -- Nicole

" As a seller I always up the price a little to cover their fees." -- Sherri

"I've heard stories of improperly frozen accounts where users lose access to their money. I also have concern about phishing schemes. Sooner or later somebody will develop a scheme than can't easily be detected." 

"Personally I prefer to use my credit card. However it's the only way I can pay some of my suppliers that can't accept credit cards." -- Elaine

"I understand they some times they lock your account unfairly." -- Donald

"Length of time for money to be put into account after transfer." 

"I'm concerned about a lot of bad press about being hacked into and accessing names." --

"They have received a lot of bad PR for freezing the accounts of various people. They can make you jump through many hoops to get your own money. Many folks are fed up with them. I know there are lawsuits pending over this issue I have had no trouble myself, but do not use PayPal very often." -- Bill

"I have had problems with my eBay account that had to be suspended due to fraudulent activity. Someone tried to access my PayPal details to pay money from my account into another. I had to have my bank details changed, which was a pain. Although I like using the Internet to make purchases for cost savings, I am very reluctant to use it again." -- Miriam

"I mainly use PayPal for eBay auction payments. I once tried it as a way for my friends to send me money rather than mail a check, but I was charged a fee for the service. I don't recall seeing anything indicating that a fee would be charged, so that turned me off from doing it again." -- Christine

"Costs for PayPal." -- N Stott

"Charges!" -- Barbara

"My sister's bank account was emptied by someone going through PayPal. It took PayPal over a month to reinstate the money stolen. She was selling items through eBay. Now she has a separate bank account for PayPal because she cannot trust their security." -- Terry

"I've heard that there are problems with the way PayPal handles problems with payments and such." 

"Have to set up yet another account." 

"I have heard that PayPal is hard to get help from when problems arise and they will freeze you out and never respond to your requests. Unless that has changed it would be a real downside." 

"They don't accept Diners Club -- my main card" -- Doug

"I hate the way they default my purchase to my bank account." 

"I think many people might be worried that PayPal is tied directly to the checking account and puts them at some risk." -- Richard

"I'd rather use a credit card and get more cashback bonus, since I have credit card reward programs." -- Jerry

"As a seller: 1) Subscription to PayPal is necessary for international buyers. 2) With buyers that do not have a credit card" -- Stefania

"I'm concerned if PayPal's security decreased significantly." 

"It takes too long to get money out of my checking account and into my PayPal account. My last transaction took four business days. Come on. That is way too long." -- Bob Erwin

"There used to be hassles with the system verification for first time users, but PayPal has removed that concern by making PayPal membership optional for sending an online payment." -- Susan

"I need two PayPal accounts, if I want to buy online, as I use my Business account to receive payments and don't want to buy using that account. Which means I need to use two different credit cards. I had a problem setting one account up and now I have to call or fax in order to let them use my other credit card." -- Sue

"Process for choosing a funding source is not intuitive. The default is your bank account if you have nothing in your PayPal account. If you want to change the funding source, you must click to a different page to do so. Funding sources should all be listed on the summary page and a selection should be made there." -- Jared

"I don't like giving them my checking account number." -- Jerry

"I'm starting to be concerned about fraud with PayPal. Also they have very poor contact information. God help me if I ever really need support." -- Lyle

"Basically PayPal has been good. Only a glitch or two and it was corrected. I still worry if it is secure from hackers though." -- A. Kimbler

"The current downside is the perception by many that PayPal is for small-time vendors or that it is not a serious payment product." -- Glen

"I don't trust PayPal. I like e-currencies, such as e-gold evocash, intgold, etc." 

"I worked at a bank for six years and my daughter works retail. I just don't trust giving out my banking information. I have read at online fraud is very high." -- Rosiland

"I have heard too much negative comment concerning PayPal for me to ever consider using it; therefore I would never subject my customers to it. Also it's requirement for membership is a turn-off for many customers including myself." -- Don

"The only criticism I have about PayPal is their customer service -- it stinks. We tried for months to get a new debit card mailed to replace the one we lost and we still don't have one that will work. They report that they are trying to get better but…" -- Todd

"PayPal needs to speed up the process of getting money from checking account to a PayPal account." -- Bob

"Had an eBay account. Had a PayPal account. Cancelled both because of a bad experience. Never again."

"I don't use my PayPal account for this because I'm afraid they will decide to impound my account for some reason unknown to me. Some of my associates have had this happen and it's nearly impossible to resolve a dispute." -- Yank Elliott

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Appendix 5. Respondents' Comments from Those Who Don't Have a PayPal Account

Question: Why haven't you ever had a PayPal account? (other)

"I don't want to have so many payment methods and try to stick with credit cards." -- Ed

"Not totally sure how it works haven't needed one" -- Barbara

"Not sure how to use it" -- Boris

"I need human guidance to sign up." -- M.A.S.

"Just used Visa." 

"Never knew what was a PayPal." -- Diogo

"It doesn't allow payment in Australian Dollars" -- Chris

"I usually buy software from certain companies and use a credit card" -- Dan 

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Appendix 6. Respondents' Comments of Those Whose PayPal Accounts are Inactive

Question: Why is your account inactive?

"I've heard a lot of good things about PayPal. But I found it too cumbersome and complicated to use." -- John

"PayPal is a good service. However, when I lost my password, the retrieval process was just to much work for me." -- David

"Haven't had reason to use it again." -- Michele

"I was just testing it." 

"I just don't like it. Too busy. Too complicated. Too much trouble." -- Darryle

"I've tried to sign up on more than a couple of occasions; they use a security box that is not accessible to those who are "screen readers" only, which I require." -- Bill

"No reason to use it yet." -- Peter

"No real need" -- Gary

"It was used only for a specific event registration and the event occurred." 

"Just used it to receive money from a US citizen. I sold goods on eBay" -- Martin

"I stopped shopping online. Too dangerous..." 

"I only have a debit/load-as-you-get-the-cash card and they don't cater to us scum." -- Cliff

"They will not accept debit card top-ups in the UK." -- Ray

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Other articles from Web Marketing Today Premium, Issue 81, Summer 2004