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Using PayPal for small businesses: Pros & Cons explained

If you are a small business owner you’ve probably been wondering whether to choose PayPal payments for your business or not. PayPal is known to be one of the first digital assets to bring convenient digital payment options to the masses and is currently one of the most trusted online payment solutions. PayPal has more than 22 million merchants and 305 million consumers in 200 markets and more than 100 currencies.

Using PayPal for small businesses: Pros & Cons explained
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Overall, it is a solid choice for small and medium-sized businesses, offering transparent fixed processing rates, dozens of integrations and no monthly commitment for both online (PayPal Commerce) and in-person (PayPal Zettle) sales. However, it is worth mentioning that it might not be the perfect solution for every small business as some retailers and other small business owners have reported various possible drawbacks for the platform. 

Below, we’ll walk you through the advantages and disadvantages of this widely-used platform.

How can small businesses use PayPal?

As a small business owner who is looking for the best payment service provider, you need to consider the fact that you should conduct your transactions using digital funds, keeping business funds separated from personal funds. Not every customer accepts paying in cash. That’s when the need for an online payment service provider comes to the surface.  PayPal can help you attract the attention of existing companies, increase your bottom line by managing costs, and extend your marketing options

Your small business can accept payments for goods and services through PayPal. Using a PayPal business account, you can accept online payments, as well as in your store or business office, through a mobile card reader, and by phone. PayPal can also process payments made with major credit and debit cards.

Pros of using PayPal for small businesses

The following are some of the reasons you should consider using PayPal for your small business.

1. Price

Most payment service providers sustain themselves through monthly or regular payments by the customers. Signing up on PayPal is completely free of cost and you only pay when you sell. This way, you don't have to pay extra service charges though you are not having sales. PayPal is your pal and has got your back when it comes to payments!

2. Security

PayPal users are protected against any form of online fraud, using encrypted customer data technology This means that your data is stored on a server that is not connected directly to the web. The data is updated frequently by servers which are entitled to check your browser and ensure that your details are up to date with their system.

3. Convenience

Setting up PayPal is very easy. Either by creating a PayPal account or using the PayPal iPhone or Android apps, you can transfer money with a touch on screen. All you need are a valid email address, a business address, customer service contact info, and a bank account.

4. Fees

PayPal offers a wide range of services, that's why PayPal’s transaction fees are extremely transparent, allowing merchants to accurately predict their monthly payment processing costs. This also means small business owners only have to pay for services they want to use and at the level they need them. When analyzing the big picture, the cost of doing business with PayPal has a lower overall cost that’s worth the value of the service quality it offers.

Cons of using PayPal for small businesses

Everything has its advantages as well as its dark sides. PayPal is also no exception.

1. Extra charges

Not every service on PayPal is free. One example is PayPal Payment Pro, which costs $30 a month, with $0.30 and 2.9% of sales for every transaction. In addition, when transferring money to other banks a fixed amount of money is usually charged even if you receive a dollar in your PayPal account. Also if a client demands the return of his money through his bank account, PayPal  will charge you a fee, unless the transaction was protected by Seller Protection Policy, in that case PayPal covers the fee.

2. Customer service

You can get customer service from PayPal but it may not be at the speed you’d wish, especially when you want answers right away. There are no numbers easily available on the website and even when you find the numbers, there seems to be nobody at the other end of the line. There have been complaints of emails receiving only automated responses. Even when one manages to get representatives on the line, they are not of much help as they state that the problems are totally out of their control.

3. Intermediaries

Although it may not seem like a big deal in the first glimpse, the fact of transmitting from the main website into a third party site to complete the financial transaction may not be good for well-established businesses. Even though some amount of styling and customization is available, the payment gateway will never resemble the original site. This will be a problem for brand conscious sellers.

4. Frozen accounts

PayPal’s strict terms of use, though helpful for user safety, may lead to account restriction. This means you're gonna have to jump through hoops to prove your identity. Time will vary, normally PayPal will want to wait and make sure the customer doesn’t start a complaint, and fater that will release the money. Or if your account gets suspended it can result in frozen funds for months.

Alternatives to PayPal

Already not satisfied? No need to worry as there are always tons of other options for you on the table to cover up for the shortcomings of some other. Check out the below list for these alternatives.


PayPax is a cross-board online payment gateway and an alternative to PayPal, which helps customers send, receive and accept payments in more than 50 cryptocurrencies and digital money. Signing up for a PayPax account is easy and free of cost and  also by verifying your account you can have higher security and lower fees. PayPax support center offers 24/7 customer support for you to be able to easily solve your possible technical issues. 


Payeer is also another alternative and an e-wallet that allows users to shop online or receive money almost instantly without using bank account details. It is present in more than 200 countries and supports more than 150 currencies. Users can use the Payeer Mastercard to withdraw money and pay on both online and offline stores worldwide that accept MasterCard.

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