After doing business with PayPal for 4 years now on a larger scale I’m learning more and more about that now-ebay-owned organization.

1. PayPal has account managers

Believe it or not, it’s not just a money-sending script, but they have humans – not only for account review and support issues, but they have account managers… I was assinged one last year… and in recent re-orgs I got 3 new names mailed in the last month…

I stick to sending my issues to the first one I got plus one or two names I can still remember… but still – talking to them is good and I already had some issues looked up in the last weeks

2. PayPal cancels subscriptions too fast

If you got a client on subscription and he shall be charged on an outdated card he gets a reminder mail and a retry every 2 or 3 days (not sure how that’s calculated)... after 3 trials they cancel the subscription (most of the time).

The SAME problem occurs IF paypal (or the backend clearing house) detects high charges in the current pay month, or have some other signals of possible fraud (like interncontinental payments that I do with US clients are most of the time)

This means, it COULD occur that a payment doesn’t go thru just because that guy spent too much via PayPal already, even if his CC has an unlimited spending limit

3. PayPal does not cancel subscriptions after not paying

I have a situation where a client would have had to pay in December via subscription, and the charge didn’t go thru. I didn’t receive an mail, and in contrast to the above said, the subscription it is NOT CANCELLED.

In fact the paypal subscription lookup still says “next charge date DEC-28-2006” ... well guys.. that was TWO months ago. No warning sign, no intervention by paypal – just uncleared invoices that I’m sitting on thanks to paypal.

While the previous case often causes hassles with good standing clients, this case is (the first) now where I’m not sure to see the money anytime soon as the client doesn’t even respond

4. PayPal mails are missing all the time

I’m putting the email receipts fro PayPal into my books which works good. EXCEPT for the cases where PayPal mails are missing. I often wondered what the reason for that might be, looked thru all spam filters, junk-mails etc, but no sign of PP mail for the missing ones.

Then just some weeks ago I found the “Sender Verification”-feature in the exim mail server, which does verify the mail domain from a service sending to you.

OBVIOUSLY this feature is enabled to filter out all the forged emails…

Well, PayPal is, in some cases at least, missing this check. They are forging their mail headers obviously.

A notification service from SoftLayer (hosting provider) does the same, they are sending from “noreply@softlayer.com”, where “noreply” is not a user account there. This caused the mails to be dropped.

The explanation for forging your legit mails? “We want users to get an error messages if the reply to noreply”

Well bummer, that could be done easier.

I assume the PayPal software architects got a similar bright idea when they built it.

In any case, mails are missing – and that causes some confusion … and USUALLY mails are missing around the 1st of a month… which could in turn have to do with higher volumes for rebills then… whatever… it’s a bit of mess

and you should be aware that ONLY your paypal account shows the accurate data (except for cases like the above subscription)

5. PayPal kills your income stream when Credit Card changes

Whenever a client changes it’s funding source, i.e. because the card simply expired, all new subscriptions are charged (should be) on the new card.

However, IF he removes the outdated one (which is not a valid card anymore) then ALL the subscriptions he had with you are CANCELLED. And the message you get is the same message you see if he just cancels cause he wants to discontinue your service.

In fact this forces me to follow up with EVERY cancel and find out about the client’s intention. And it’s a 50:50 game.

Most clients are not even AWARE that PayPal does not charge the subscription from their current funding source.

In fact the data model of the PayPal subscription system sucks big times.

Clients are forced to WADE THRU their transaction log history, click on every single subscription creation transaction (even if if’t 2 years ago, which would mean to wade thru aprox. 4000 transactions for me) and THEN check if the old credit card is used for THAT subscription.

If you got a dozen or a hundred subscriptions for various services, that’s a hassle you just won’t do.

Result is that your subscriptions get cancelled and you as the buyer aswell the vendor has extra work to re-setup subscriptions or just communicate on the intention.

It’s a mess and kills your own profits as well as those of PayPal.

I spoke to my account manager in January and meanwhile you see a small message telling the client,

that he has to perform the above process… before that he wasn’t even informed upfront that all his

subscriptions would be cancelled… what a mess. Of course just displaying the message doesn’t help much

except to avoid the big surprise to receive 100 cancels for all your subscriptions.

6. Big companies don’t like PayPal

Why ? maybe it’s some of the above reasons…

I don’t know – but despite the fact that you can use PayPal for charging cards, it doesn’t work to charge cards for recurring payments, which I do quite a lot.

That alone is the reason to look for an alternative if you plan to do long-term business via recurring charges.

In fact, the subscription hassles are reason enough.

But despite the fact that you can use PayPal for charging cards,

it doesn’t work to charge cards for recurring payments, which I do quite a lot.

So judging from all of the above, while PayPal is quite a nice solution for small businesses,

it starts to become a hassle or even a threat to you when you grow – thanks for suboptimal implementations.

But then, my account manager told me they didn’t hear before about such hassles and promised bettering.

Let’s see what happens in the next months.

BONUS-INFO:

Nice, eh? I refuse to perform these 8 hassle-steps by hand, too ! Tell them that it sucks! Spread the word!