There is no argument that PayPal has firmly established itself as one of the most recognized and widely used payment platforms in the world. That’s why, for small business owners, it’s often the go-to solution for sending invoices, collecting payments, and selling online.
Quite simply, with its ease of use and broad customer adoption, it’s easy to see why so many businesses gravitate toward opening a PayPal business account as the default option.
Having said all that, although it has many positive attributes, PayPal isn’t perfect. It also comes with some limitations that every small business owner should consider.
Here’s a breakdown of some of the main pros and cons of using PayPal from a small business perspective.
Easy setup and integration
Without a doubt, one of PayPal’s biggest advantages is how easy it is to get started. You can set up an account in minutes, and it integrates seamlessly with most major e-commerce platforms like Shopify, WooCommerce, BigCommerce, and numerous others.
Another positive is that there’s no lengthy approval process, which is ideal for new or small businesses that need to start accepting payments quickly.
Automatically trusted by customers
It is a positive point that customers are often more comfortable buying from a business that uses PayPal. With its buyer protection policies and brand recognition, PayPal can increase trust and potentially boost conversions.
Many shoppers already have PayPal accounts and prefer using it rather than entering credit card information on a new site.
Its invoicing and business tools are user-friendly
PayPal offers built-in tools that make it easier for small business owners to operate. You can easily create and send professional invoices. It’s also a cinch to set up recurring billing and generate sales reports directly from the dashboard.
These sorts of features are useful for freelancers, consultants, and service-based businesses that want a simple all-in-one solution.
High transaction fees are a turn-off
While the simplicity of use is great, the cost of using this payment behemoth can soo add up. PayPal’s standard transaction fee for domestic payments is usually north of 2.99%.
For international payments or currency conversions, the fees are even higher. For businesses with small margins or high sales volume, this can eat into profits fast.
Account freezes and holds are a real nuisance
Arguably, one of the most frustrating aspects for small business owners is PayPal’s tendency to freeze accounts or hold funds without much warning.
If your account is flagged for unusual activity or if you experience a spike in sales, PayPal may limit access to your money while they reviews it. This can quickly disrupt cash flow and make it hard to fulfill orders or pay vendors.
Add to that the fact that PayPal’s customer service has been hit or miss for many users, and you start to see that there’s a price to be paid for convenience and simplicity.
With all of these factors in mind, the smart choice would be to use PayPal alongside other payment methods and have a backup plan in case of account issues.
