Why You Should Never Use PayPal
PayPal is a popular online payment platform that allows users to send and receive money. Founded in 1998, PayPal initially started life integrated with the online auction site eBay and allowed buyers to make secure payments from their bank accounts without the need to expose their card details.
Nowadays, it’s used by hundreds of millions of people around the world for a variety of purposes, from sending money to friends and family to making online purchases.
While PayPal is, for the most part, a convenient and safe way to send and receive money, it isn’t without its downsides, all of which we’ll discuss below.
10 reasons why you shouldn’t use PayPal
1. Fees
PayPal, unfortunately, isn’t free to use, unless you’re only sending and receiving money between friends and family in the US. If you’re a seller or business, PayPal will charge you a fee for every transaction you make. This amount varies depending on the country you’re in, but it’s typically around 2.9% + $0.30 per transaction.
There are also currency conversion fees if you’re receiving or sending money in a currency other than your own, and these can be as high as 4.5%.
This article does a great breakdown of how PayPal’s fees work.
2. Refunds are not guaranteed
If you’re a buyer, you might think that PayPal offers protection against faulty or incorrect items, but this isn’t always the case. While PayPal does offer a dispute resolution service, they are not obliged to issue a refund if the seller does not agree to one.
The decision to issue a refund is entirely up to PayPal, and they have been known to side with the seller in some cases.
3. Sellers are at a disadvantage
On the flip side, if you’re a seller, there’s always the risk that a buyer will open a dispute, claiming that they never received the item or that it was not as described. If this happens, PayPal will freeze the funds until the dispute is resolved, which can take weeks or even months.
During this time, you will not have access to the funds, and if PayPal ultimately decides in the buyer’s favor, you will not only be out of pocket for the item but also the original shipping costs.
4. PayPal can decide to hold your money arbitrarily
As we mentioned above, PayPal has the power to hold onto your money for any reason they see fit. This can be extremely frustrating, especially if you’re a small business owner who relies on PayPal for income.
There have been many reports of PayPal freezing accounts for no apparent reason and without warning, which can cause serious financial difficulties for the people involved.
This has been known to happen when you open a new account, receive a lot of payments in a short period, or if PayPal suspects that you’re involved in fraudulent activity.
5. PayPal requires too much information
When you sign up for a PayPal account, you’re required to provide a lot of personal information, including your full name, address, date of birth, a form of ID, and social security number.
This is a lot of information to hand over to any company, and in the age of data breaches, it might not be worth the risk.
6. PayPal can suspend your account whenever they want
Similar to holding your money, PayPal also has the power to suspend or even close your account at any time and for any reason.
Countless people have had their accounts shut down without warning or explanation, and this can cause serious financial difficulties.
If your account is suspended, you will not be able to access the funds in it, and if it’s closed, you will lose all the money in your balance. You also won’t be able to open a new account under your own name.
7. Not available in all countries
PayPal is not available in all countries, which can be frustrating if you’re trying to send money to or receive money from someone in a country on their banned list.
The company purposefully excludes some countries due to high fraud rates, which some might consider to be discriminatory.
8. Too much power
Although PayPal isn’t the only game in town when it comes to online payments, it does have a lot of power. This is because so many businesses and individuals use PayPal, which gives the company a lot of leverage.
It doesn’t exactly have a monopoly on online payments, but it’s close. This gives PayPal the power to set the rules and regulations for how its platform is used, and these rules can be changed at any time.
9. Founder Peter Thiel has a controversial past
PayPal co-founder Peter Thiel has been involved in, what some would call, controversial activities over the years.
Some of these include bankrolling a lawsuit against Gawker (i.e. funding Hulk Hogan’s sex tape lawsuit) and supporting controversial right-wing causes and candidates for president, including Donald Trump.
Though his views and actions are not directly reflective of PayPal as a company, it is something to be aware of.
10. People who are considered “controversial” are not allowed to use PayPal
If you’re considered to be “controversial” by PayPal, then you could find yourself either banned or having your account and funds frozen.
This has happened to several people who are involved in, what PayPal considers to be, “objectionable” activities. This includes, but is not limited to, people who sell adult toys, promote illegal drugs, or engage in what they consider to be “hate speech”.
You might be thinking this is a good thing, but it’s actually a form of censorship. PayPal is essentially saying that you’re not allowed to use their platform if they don’t agree with your views or activities.
A recent example of this was in September 2022, when PayPal shut down the account of The Free Speech Union, a UK-based organisation that supports and advocates freedom of speech.
Alternatives to PayPal
Those are some of the main reasons why using PayPal may not be wise. But what is a person to do if they need to send or receive money online?
There are several alternatives to PayPal, and some of them might even be better. Here are a few of the most popular ones:
- Stripe
- Skrill
- Payoneer
- Google Pay
- Apple Pay
- Amazon Pay
- Wise
Each of these has its own set of pros and cons, so be sure to do your research before settling on one. You might even find that using a combination of different payment methods is the best way to go.