The Pros and Cons of Using PayPal for Your Small Business

Food truck owner accepting payment from customer

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If you are a small business owner doing business online, you have probably looked into online methods for taking payment for your products and services. If you have, you undoubtedly found PayPal during your search.

PayPal has more than 325 million active accounts in 200 markets and more than 100 currencies around the world.

Despite its popularity, though, PayPal isn't the perfect solution for every small business. Here is a look at the pros and cons of using PayPal as your primary online payment processor for your small business.

Key Takeaways

  • The ease and convenience of PayPal's platform is one of the biggest advantages of the service.
  • PayPal for businesses has industry-competitive merchant fees but chargeback fees can be hefty.
  • Alternatives to PayPal include ApplePay, GooglePay, and Block (formerly Square).

Pros of Using PayPal

  • It's easy to setup and use.
  • Your clients/customers may already be familiar with PayPal.
  • You don't need a merchant account.
  • Your clients/customers don't need a PayPal account to pay you.
  • You can create and send invoices right through your account.
  • PayPal's fees are less than many merchant accounts (currently 3.49% + $0.49 for debit and credit card purchases).
  • You can set up recurring payments.
  • You can integrate PayPal with a number of shopping cart systems.
  • It's safe.

Cons of Using PayPal

  • There are hefty fees for chargebacks, currently $20.00 per occurrence.
  • You are limited in terms of use and are subject to account suspension at any time which can result in frozen funds for months.
  • It can take up to three days to receive your funds.
  • There are a number of people who refuse to use PayPal, which may result in lost business.
  • It can be difficult to contact PayPal's customer service department.

The decision to use or not use PayPal as your primary online payment processor is a big one and can certainly impact your business. It's always a good idea to explore your options before making a decision. Here are five online payment services (four in addition to PayPal) to review.

Frequently Asked Questions (FAQs)

Is PayPal for small businesses free?

PayPal's fees vary depending on your location and the size of the transaction, but PayPal charges 3.49% plus a flat fee of $0.49 on most transactions.

What are the disadvantages of using PayPal for business?

Some of the downsides to using PayPal as the payment servicer for your business include

  • High chargeback fees ($20.00)
  • It can take up to 3 days for PayPal to send you your funds
  • Your account can be suspended or frozen at any time
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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. PayPal. "About."

  2. PayPal. "Fees."

  3. PayPal. "Sign Up for PayPal for Business."

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