posted on April 30, 2003 02:22:06 PM new
having your own merchant account does not really do wonders when it comes to chargeback.
the customer credit card issuer has the final say-with internet sales,since we never see the card and swipe the card and obtain signature of the cardholder/scammer,we automatically lose the chargeback when it comes to fraudulent use of cc.
as to returns,remorse and no shows etc,sometimes ups signature does not mean much,delivered to the customer does not guarantee winning,terms of service such as return in good condition or restocking do not always stack up.
we do not talk to the customer cc issuer directly,we talk THRU OUR MERCHANT ACCOUNT PROVIDER WHO SHUFFLES THE PAPER BACK AND FORTH,it is really the battle of the clerks-the cc issuer clerk versus the merchant account clerk.
you just have to figure you make enough to sustain some chargeback just like shoplifting and inventory shrinkage.
intl transactions can incur chargeback up to 6 months- 1 year.
you just have to use your judgment and contain your losses.
on ebay,foreigners bidding on us auctions dont seem to mind using bidpay.
posted on April 30, 2003 02:47:05 PM new
You deal directly with the customer when you take the charge but there is someone who administers the card transactions. A couple of years ago, we used Merchant Services. We had a card user contest a charge 6 months after it was made ($350.00). Merchant Services allowed 7 days for retrieval from the date they mailed the notice. They mailed their notice to us to the wrong address and it was 8 days before we received it. I immediately called Merchant Services and their attitude was "Tough, it has been more than 7 days." We ended up eating the charge. After a second charge back involving another charge of $195.00, I did change administrators to a local bank that does in house processing. But even that doesn't totally protect you from a charge back. If you take a charge over the phone or the Internet and don't verify the address, you have no protection at all. (Read your merchant agreement).
I repeat, you are subject to charge backs on your own Merchant Account as you are with PayPal. I have the losses to prove it.
posted on April 30, 2003 02:58:38 PM new
Should have mentioned that both charge backs I mentioned involved transactions where we actually swiped the card and had a customer signature. They did not involve transactions where the card was not present such as the internet or telephone.
posted on April 30, 2003 03:05:43 PM new
Well, I'm now set up to print my own delivery confirmation labels and I will only accept Paypal payments from confirmed US addresses.
If ever I get a fraudulent chargeback from a transaction where I'm covered by Paypal's "seller protection policy," I'm dropping Paypal like a bad habit.
posted on May 1, 2003 06:59:38 AM new
>>If you take a charge over the phone or the Internet and don't verify the address, you have no protection at all.<<
Sure, if you do something stupid you suffer the loss, what does this have to do with paypal? This thread concerns the risks involved for sellers who DO follow the rules. I believe that a merchant account is safer than Paypal. Is it 100% safe? Of course not, nothing can be (except for maybe accepting only cash). But Paypal has ALL the risks of a merchant account plus a whole bunch more.
Paypal has also taken money away from party C which was received from party B because party B received it from A who used a stolen credit card. This can never happen with a merchant account. They don't know or care who your customer got the money from. All they are concerned with is the one transaction. A merchant account may reverse a transaction but they will never restrict your entire account without warning, as Paypal has done. And if they do decide to cancel your account due to numerous complaints, you will not be able to receive money - unlike Paypal's situation where the money goes in but it can't come out, even as refunds.
When a customer calls his credit card company to do a chargeback and claims the card was used without authorization, the company keeps a record of this. They often insist that the card be cancelled. Paypal has let the same people do this over and over, as long as the seller paid the costs. When complaints are brought against a seller via a merchant account, he generally has to prove shipping to the correct address or he loses. The money comes out of his bank account. It is not easy for a seller to cheat people on a regular basis via a merchant account. But Paypal has allowed scammers to cheat hundreds of thousands of dollars. The notorious Jay Nelson was on the lam, being hunted from state to state by the FBI, yet he continued to use Paypal to finance his escapades. I still don't understand how this was possible. How was he getting the money out? There are holes in the Paypal system that the scammers have learned to use to their advantage.
I haven't even gotten to the lousy customer service. Numerous folks have reported being unable to reach them or getting through to some rude clerk who couldn't care less. I have never had a problem reaching my credit card company or the company that handles my merchant account. In the three chargeback attempts made, I was always given the opportunity to respond. With a merchant account, I know what my risks are and I know what to do to minimize them. With Paypal, it's anyone's guess how a particular situation will be handled. I would never accept a credit card payment via Paypal even if whether the address was confirmed.
posted on May 1, 2003 08:00:37 AM new
paypal is not for everyone,if you feel it does not work for you,then cancel the account and just accept checks or money order.
merchant account has monthly fee-statement fee,minimum discount fee and sometimes a committment of 6 months or more,not everyone sells enough to justift having his own merchant account.
posted on May 1, 2003 08:19:49 AM new
>>merchant account has monthly fee-statement fee,minimum discount fee and sometimes a committment of 6 months or more,not everyone sells enough to justift having his own merchant account<<
Okay, the rate is a bit higher than paypal, but it is a REAL merchant account. It actually works out to less overall because I encourage folks to use other payment methods and offer discounts for doing so, unlike Paypal where once you have a business account, you pay for ALL payments received even if they are from existing paypal balances.
Also, my merchant account has a 3-tier approach where the rates go down as usage goes up. It uses the authorize.net gateway (the most popular on the net) which works with just about any shopping cart. I can have orders go directly for processing or I can have them held pending my approval (which is what I choose to do). I get address verification and even CVV verification.
posted on May 1, 2003 08:40:25 AM new
yisgood, yis is good! Thank you for your wonderful informative articles, which ahve helped me outmore than once. goodby paypal for me, too, maybe! I might give your guys a try.
"And All Shall be Well, and All Shall be Well, and All Manner of Things Shall be Well"
posted on May 1, 2003 09:11:46 AM new
We have been selling since 1996, and never took paypal. In my opinion paypal was bad news so I avoided it like the plague. Bidpay is a wonderful service and we have many customers who use it, many repeat customers. It is a cheaper more reliable service than paypal for sellers with no worries about chargebacks.
posted on May 1, 2003 09:46:32 AM new
I wrote some articles for auctionbytes about different merchant accounts. Versions which I update regularly are available at
http://www.ccs-digital.com/merchantact.asp
At the time I was doing over $1,000 a month in credit card charges and (because the account had a $25 minimum which means I paid the first $25 in charges even if I didn't use them) I was building the fees into the prices even though I hate making people pay for what they don't actually use. Why should someone who pays me by check pay an extra 2% to cover a credit card fee? So I modified my shopping cart to add a "handling fee" to every order and deduct it if the customer paid with something other than a credit card.
Now a lot of my customers pay by check or money order to get the discount and my charges sometimes don't reach $1,000 a month. So I cancelled that account and switched to the pay-as-you-go system offered by Intelli-collect. Then I-C's processor decided that they didn't want to handle such accounts so I closed that one and switched to a similar offering from Payquake. What I like about PQ is that as my sales go up, I can switch back to a regular account with lower fees in return for a commitment to a monthly minimum just by clicking a button on the site.
If you expect to do $1,000 a month or more up front, then Intelli-collect offers slightly better rates than PQ. And if you plan on doing foreign business or are based out of the U.S., Bueno offers good rates and handles foreign accounts.
I have no real experience with Bueno. I came across them while doing research and we exchanged emails. They seem to offer a whole range of services including shopping carts, web sites, etc. I-C and PQ only give you the merchant account. You have to do the rest yourself. But both have provided excellent customer service and answered emails promptly and even called me.
If you have questions about setting up shopping carts and the like, feel free to email me. I wrote my own shopping cart in ASP and you can have the source code if you want it but your site must be able to run ASP. It won't work on a Unix or Linux based site, which is what most of the cheap web hosts offer. If you want a Windows based site for about $10 a month with excellent support, I can put you in touch with the firm that has handled my site for about 3 years now.
posted on May 1, 2003 10:04:29 AM new
What is the address for Bueno? Since I am looking to relocate outside the US I would be very interested in checking into their sevices.
posted on May 1, 2003 10:15:45 AM new
yisgood, a lot of the issues you raise with Paypal seems like old news. I realize they had some growing pains when they started, but their policies have changed to handle freezing of accounts. I've also noticed a remarkable improvement in customer service and infrastructure since they first started.
Regarding PayQuake, there is a $0.50 per transaction in addition to the 3.75%. This adds quite an overhead for sellers who deal in low priced items (under $20) or in volume.
I tried to sign up with PayQuake, and they "assigned" me a different merchant account. (See text below). I've been battling with them for a month now trying to switch over what I signed up for, PayQuake. Who the hell is 1st National? The current merchant account charges for daily batch submit fee, statement fee, and the regular transaction fees. Its a real nightmare! Makes me want to serious go back to 2checkout.com - As for shopping carts, I use Mal's eCommerce. Its free for basic use (which includes Paypal interface).
Third, In the event that, for some reason, you are not be approved for a standard payQuake merchant account, payQuake will try its best to get you set-up with one of our "specialty Merchant Account Providers". The terms, rates, and fees may differ for the specialty merchant account placement partners. This is due to the fact that payQuake is the only provider of merchant controlled "Dynamic Merchant Pricing Technology". Rather than just decline you, we feel it is our job to try and find a payQuake partner who "specializes"
in setting up merchants who might not fit the standard merchant account set-up criteria. You will be informed of the pricing
differences if the use of one of our partners becomes necessary.
[edit] trying to edit the bold for the last passage, but its not happening [/edit]
[ edited by sun818 on May 1, 2003 10:27 AM ]
How much is a chargeback? For starters, if you lose it's the amount of the whole transaction <g>. But I assume you want to know how much is the chargeback penalty. I don't remember. Since I don't expect to get too many (none in 4 years and over 500 transactions), this didn't concern me. I didn't choose the neighborhood I live in based on how expensive a parking ticket is either and I do expect to get some of those.
But while we're on the subject, how much is a chargeback from Paypal? Considering that they can restrict your entire account and let money go in but not out, so you won't be able to ship and you won't be able to refund, it's a heck of a lot more serious than the $10 to $25 a merchant account might charge you. I know one merchant who was driven out of business and had to start all over again because of this, all due to one false complaint. I know another merchant who had $18,000 in charge backs, many from previous customers who claim they never made them. I don't know anyone who had this sort of problem with a merchant account.
posted on May 1, 2003 12:07:51 PM new
>>yisgood, a lot of the issues you raise with Paypal seems like old news. I realize they had some growing pains when they started, but their policies have changed to handle freezing of accounts. I've also noticed a remarkable improvement in customer service and infrastructure since they first started. <<
I won't disagree with this. Things have improved. But there are still too many complaints where I feel that Paypal dropped the ball and this would not have happened with a real merchant account. The case where A pays B with a stolen credit card and B pays C with paypal funds and the money is taken from C is still happening. This should never happen even once. C did nothing wrong. How would you feel if a customer paid you in cash and your bank took it away from you because your customer accepted it from a crook? How about the guy who withdrew $1300 from his bank account to make a purchase and paypal restricted the account because it looked like fraud? I agree that it looked suspicious, but what they should have done is FIRST call the customer. If they couldn't get hold of him, they should have not withdrawn the money. But what they did was first take the money, then restrict the account. So the customer lost the use of his money and still couldn't buy the item. Paypal's new terms invite buyers to return items for a refund. With a merchant account, it is up to the seller to set reasonable terms. The real concern is that paypal acts first and then waits for the customer to discover the action and then makes him jump through hoops to correct it. Even when I had the three charge back attempts, at no time was my account restricted, at no time was any money taken from my bank account until AFTER I had the chance to respond.
>Regarding PayQuake, there is a $0.50 per transaction in addition to the 3.75%. This adds quite an overhead for sellers who deal in low priced items (under $20) or in volume. <
There is always a transaction fee. It is usually 25 to 30 cents. Payquake's is a little higher. if this makes the difference between a profit and a loss, you should not be accepting credit cards for these items or you should find a way to build it into the shipping and handling.
>>I tried to sign up with PayQuake, and they "assigned" me a different merchant account. (See text below). I've been battling with them for a month now trying to switch over what I signed up for, PayQuake. Who the hell is 1st National? The current merchant account charges for daily batch submit fee, statement fee, and the regular transaction fees. Its a real nightmare! Makes me want to serious go back to 2checkout.com - As for shopping carts, I use Mal's eCommerce. Its free for basic use (which includes Paypal interface). <<
I don't work for payquake so I can't comment except to say that my sign up was smooth and I got the account I applied for. In any case, you don't get billed (except for actual transactions) for three months and there is no cancellation fee, so if you don't like the account you have, what stops you from closing it? As far as I know, Payquake is the only company offering pay-as-you-go merchant accounts. If your profile doesn't fit the kind of merchant they are looking for, their only option is to offer you something else.
An alternative is Propay. Their fees are: $35 sign up, 3.5% + 35 cents per transaction. One catch is that a transaction is a deposit or withdrawal, so you could actually pay 70 cents, when you charge the card and when you withdraw the funds. The other catch is that this is not a real merchant account. Propay is acting as a middleman. There are also severe limits like $250 maximum transaction and $1000 maximum per month. I outgrew them pretty quickly. I also found their AVS severely lacking. But it is another service you can try until you outgrow it and then go to a real merchant account.
>>Y - there is no form on the link for the Bueno info.<<
The first link gives general info. It provides a second link for more detailed info
The second link provides urls to payquake and intelli-collect and a form for more information on Bueno.
>>whatever happens to the guy from texas who took paypal to court and lost??
he used to post here <<
Sad story. This is what he told me: He is in his 60s and suffers from heart problems. He was using Egold to finance his retirement and doing pretty well until he started accepting Paypal. He was a bit naive and didn't understand the risks. He first lost in arbitration and then found evidence that the "judge" was not exactly an unbiased party and some of the rulings were contrary to law. The first ruling stated that he owed Paypal $300,000 for legal fees incurred in suing him for $18,000. The final ruling said he only owed them $18,000 less the $5,000 seller protection coverage. By then he had spent over $60,000 on legal fees and had about $30,000 taken from his Paypal account. His retirement is gone and I don't blame him for being bitter, though his posts went over the edge. But like the woman who made a deal to process Paypal payment for a Romanian crook to the tune of over $20,000, when you enter into a legal and financial arrangement for so much money, you should carefully examine the risks. When someone complains that they lost a few hundred dollars through Paypal, I can sympathize. When someone says it is thousands of dollars, though I still sympathize, I can't help feeling that they share some of the blame. Ignorance is not bliss.
posted on May 1, 2003 12:30:08 PM new
Izzy, just dropping in to say hello to you. Thanks for the updated information on Merchant Accounts. My own website is in the planning stages, with a view to launch by September, so this is timely for me.
Glad to see you posting at AW, oops...I mean Vendio. I'm one of your monthly newsletter subscribers and I enjoy reading it. Thanks for all the hard work.
posted on May 1, 2003 01:34:51 PM newThe case where A pays B with a stolen credit card and B pays C with paypal funds and the money is taken from C is still happening.
What case was this? Do you have documentation or news articles regarding this?
posted on May 1, 2003 01:54:58 PM new
I must be one of the lucky few who hasn't had a problem in years. I did experience the "frozen account" issue in the beginning when I accepted a fraudulent payment and shipped some Western Digital hard drives to Thailand. But I learned my lesson there. After that incident, it has been smooth sailing. Lets put this into perspective. Think of the number of transactions you've accepted through Paypal, and how many of those had problems.
This is the story regarding the man from Texas who used Arbitration.
posted on May 1, 2003 01:55:25 PM new
y - once again - it may be a Mac thing but there is no form below where there states there is a form to get info on Bueno.
posted on May 1, 2003 02:02:39 PM new
There have been dozens of cases reported right here in the Paypal thread where accounts were restricted because
- they received funds from other accounts that had received fraudulent funds
- they had a similar email ID to a fraudulent account
- they logged on from a similar IP address to a fraudulent account
The bottom line is that none of this would happen with a merchant account. First, there is no such thing as an account restriction. The account is either open and accepting money or closed. Second, the processor isn't looking at what IP address you use or what your email ID is or where your customers got their money. Suppose your customer never paid his credit card bill? Would you expect the bank to come after you? But if your customer has a negative balance in their Paypal account due to a complaint against them, Paypal can and has gone after the next seller down the line. Third, when paying with a credit card directly, it is extremely rare that a defrauded buyer can't recover. My credit card company has never told me, "Sorry you were defrauded, but the seller has no money in his account."
Here are just a few examples. I only went back to 100 days of messages:
posted on May 1, 2003 02:30:16 PM new
yisgood, thanks for those links. Most are one-time posts by users. Its hard to guage how accurate or truthful those posts are. And we don't know the full story, and probably never will. That was my motivation asking for news articles... they would at least be investigated by a news reporter which holds more credibility.
I'm not saying Paypal does not make mistakes. Lets just keep it perspective. For me, I have had 2804 successful transactions and 1 negative transaction. That makes Paypal successful 99.9% of the time, for me anyway.
posted on May 1, 2003 02:34:33 PM new
Here's Paypal's User Agreement regarding Closing Accounts and Limiting Account Access:
https://www.paypal.com/cgi-bin/webscr?cmd=p/gen/ua/policy_closing
I will say Paypal's verification policy is not as stringent as a merchant account and can see fraud being easier to commit because of it. Realizing that Paypal is a pure Internet player and traditional rules and ways of tracking fraudulent activity don't work.
But restricting an account -- if this is true --by IP address is not wise, especially for an Internet company that should know better.
posted on May 1, 2003 04:34:31 PM new
to argue back and forth why sellers/buyer use paypal and not merchant account is like arguing why cant street hawkers go inside the mall and open a store across from macy or neiman marcus??
we as buyers and sellers all know why we use paypal-for convenience,economy and by popular demand.
i know those one time post of how individuals got themselves in to trouble with paypal,some of them would get into trouble with their merchant account provider if they qualify for one!!
dropshipping snafu led to buyer filing complaint with paypal which leads to account restriction,which disable seller to pay his drop shippers which led to more complaints.
This is due to flaw in his business model-dropshipping and not having enough working capital to stay in business.
others like college students sharing accounts ,trying to link other people 's bank account to his/her paypal account or going overseas and try to access paypal account from a country not on paypal country list.
most people have few problem using paypal,else ebay would not buy paypal.ebay is not stupid,paypal is just as much a cash ringing register as ebay.
i prefer my bidders of small ticket items to use paypal ,as it relieves me of the work of processing their credit card.
posted on May 2, 2003 10:33:52 AM new
>>yisgood, thanks for those links. Most are one-time posts by users. Its hard to guage how accurate or truthful those posts are. And we don't know the full story, and probably never will. That was my motivation asking for news articles... they would at least be investigated by a news reporter which holds more credibility.
I'm not saying Paypal does not make mistakes. Lets just keep it perspective. For me, I have had 2804 successful transactions and 1 negative transaction. That makes Paypal successful 99.9% of the time, for me anyway. <<
Yes, it's always hard to judge the accuracy of posts on a forum, but some common sense also helps.
- for every person who finds a place like Vendio to complain, there are probably 100 others who don't know about it or don't bother.
- complainers are more vocal than people who like a service, so any forum will probably have more complaints than praise
- some of the complainers are long time ebay sellers with hundreds of positives and few to no negatives
- many of the posts have the same common thread: an account restricted without good reason, no response from paypal despite numerous attempts
- there have been numerous reports including the Wall St Journal, Cnet, Bankrate, etc about problems with Paypal. There are several class action lawsuits. You can find some of these at
http://www.ccs-digital.com/paypal.asp
I have also had no problems with paypal but I don't accept credit card payments and rarely ship to unconfirmed addresses. I have never had a bounced check but I can understand who some folks won't accept them. I have never been mugged on the NY subway but that doesn't mean it is safe for everyone. Like everthing else, Paypal has risks. My problem with them is that they make promises that fool the gullible into thinking they are safe.
