Why using PayPal can cripple your business

By Peter Hinton

These days, PayPal is everywhere. As an online business, it can be hard to avoid them. For millions of people across the planet - PayPal provides an easy to use platform that has helped revolutionalize payment systems online - but it could be costing your business a considerable amount of money. We're going to look at why.

How transaction charges are hurting your bottom line

PayPal isn't free. As a business, they've got to make money somehow. PayPal charges a small percentage for each transaction. While this would only be a tiny amount for those making the occasional transaction - it really adds up.

Profit margins are now as important as ever and you could be paying a percentage simply for receiving your money. Although the percentage is small - for someone doing hundreds or thousands of transactions, this will undeniably add up. Such transaction charges could potentially cost your business a fortune in the long run.

Limited protection

Most credit and debit card purchases are protected against fraudulent transactions, adding an extra layer of security when shopping online. Unfortunately, PayPal isn't covered in the same way - anyone who makes a purchase with PayPal is waiving their right to protection under Consumer Protection Rights. For a business that makes a lot of online purchases, this could spell disaster if one of them goes wrong. And that's not all you're customers might be more reluctant to make a purchase at a site that only accepts PayPal - so this is costing you two-fold as it both affects your purchases as well as potentially putting off new customers.

Customer service and dispute resolution

PayPal isn't a bank - and some users have complained at their limited customer service. As a massive multinational company, PayPal's response time is sometimes limited, and people have felt that their dispute resolution has been lacking. They don't act under any financial regulation authority so are free to make decisions of their own choosing.

Account freezes

PayPal also has a reputation for freezing accounts - sometimes seemingly on a whim. Thousands of users have complained that their PayPal account has been closed for no apparent reason - and this puts off a lot of people from using the system. Not only could your business be crippled if your main account is unnecessarily closed - but you could be losing business if it happens to one of your major customers.

Only accepting PayPal could lose you customers

We've seen some of the many ways your business could be affected if something happens to your PayPal account - but that's not all. If PayPal is the only method you use to receive payments online, you could be putting off some customers. Although PayPal is generally well regarded, it does have a certain reputation in some quarters and this could mean it's losing you business. Customers want to see a selection of payment methods and if you only offer PayPal - you might lose them.

Peter Hinton has been providing business advice for nearly two decades. You can find some of the best merchant warehouse reviews at our site.

How Outsourcing Benefits Business and the Economy But Not Necessarily Individuals

Outsourcing does cause job losses, and can contribute to lower consumer spending but it can make corporations wealthier. Over the long run, wealthy corporations are advantageous to the economy especially if that wealth is used to grow businesses and increase employment.

For people who lose jobs it's difficult to rationalize the personal implications of being part of a greater economic formula that theoretically benefits the population at large. For businesses, outsourcing often has many benefits that assist in meeting corporate goals, shareholder expectations and economic objectives.

To not outsource would be riskier than outsourcing and the benefits of outsourcing outweigh any disadvantages if accounted for properly. In the long term outsourcing provides corporate, community and economic cures that would be a missed opportunity had outsourcing never taken place. Below are a few of the benefits enjoyed by companies that successfully outsource.

• Lower employment related costs
• Increased revenue
• More investment capital
• Creation and/or maintenance of more specialized jobs
• Improved competitiveness
• Outsourcing reduces the need for office space in pricier real estate markets lowering overhead costs.

The negative impacts of not outsourcing

Companies outsource to exist in a competitive world with the hope of getting an edge. If they didn't outsource they could potentially face lower profit margins, decreased equity capitalization, reduced advertising, marketing and research budgets in the short term alone. In the long term a chronic decrease in profit, equity, leveraging and operating budgets could lead to decreased market share, higher financing interest rates, even more decreases in profit and budgets and then possible downsizing, take over or bankruptcy.

Social consequences of outsourcing do not outweigh the benefits

While outsourcing may not be considered ethical or valuable to a community of workers the benefits outweigh the costs at both the corporate and macro-economic levels. The corporate advantages are outlined above and the economic benefits include the following:

• Potential for higher Gross Domestic Product (GDP)
• Increased financial leveraging both domestically and internationally
• Improved chances of economy improving innovations across various industries
• Possible increased market share and/or reduce market share loss
• Greater global market positioning in terms of GDP can lead to
• Sustained and/or improved confidence in national currency

It is evident outsourcing not only advances corporate goals but also national goals. While it is true that not everyone benefits from downsizing the advantages to a nation outweigh the costs. Laid off workers who retrain have a greater chance of improving their financial situations and in the long run a more specialized and skilled workforce can emerge in part from the effects of outsourcing. This more skilled and specialized workforce can be advantageous both at the community level, corporate level and national level in terms of know how, income potential and standard of living.

Outsourcing is more likely to be a cure for corporate ailments than a problem. The advantages can be seen across more than corporate balance sheets and income statements, but also in society, national economic performance in addition to corporate bottom lines. There a few negative short term impacts on local communities of workers, but in the long run, the advantages do outweigh the costs, and future generations may be thankful that outsourcing has taken place.