Every so often, a product name that was once a household term becomes irrelevant and starts to fall off the radar. With the company’s recent restructuring and aggressive plans for innovation, PayPal is certainly not off the radar yet, but it’s also no longer hailed as the amazing solution that it once was – not by as many freelancers, at least.
Tired of payment delays, unresponsive customer service, tools with bad user experience, spontaneous account freezes and unreasonable fee structures, the growing community of independent contractors is moving on.
The irony, of course, is that PayPal is huge. The company has made itself invaluable for small business payment processing, peer-to-peer payments and other direct payment situations, where neither check nor credit card will do (and where cash is simply not feasible, usually because of physical distances).
One might think that the service would be the go-to means of payment for freelancers, as indeed it has been for some time. But today, there are several innovative contenders stepping up and offering virtual payment platforms that are superior.
Indeed, the grumbling of freelancers disillusioned by PayPal is growing in volume. Sure, some of the complaints are likely a result of distrust for a business that rose from nothing to global leader in the span of just a few years. On the other hand, just because PayPal managed to establish itself as a go-to platform before any serious competition came on the scene does not make the company immune to using unscrupulous and/or unfriendly tactics and procedures.
So what are they doing, exactly, that has the freelance community all up in arms? How do they pull it off? And what can we do about it?
- Unilateral, Indefinite Commandeering of Funds
PayPal has been known to spontaneously freeze accounts and seize funds from account holders, with no warning, no explanation and no legal recourse. Why don’t PayPal users have the rights to our money? Because we’ve essentially signed it away, it turns out. PayPal’s terms of use stipulate that in cases where fraud is suspected, they can do as they please.
As important as it is to take measures that protect payers and payees from nefarious activity, scores of freelancers maintain that it’s happened to them when nothing shady has transpired. The real problem is that once PayPal has decided unilaterally to freeze your account, there is not a damn thing you can do about it. Theoretically, they will eventually unfreeze your account too, but that can take literally months, and the odds are good that if you’re trying to run a business on your own, you can’t spare months to suffer frozen cash flow.
- Wretched Customer Service
When you’ve grown accustomed to a near monopoly on the service you provide, you don’t necessarily feel the need to fight to hold on to every customer. You might, just possibly, also let your standards of customer service slide. And that’s giving PayPal the benefit of the doubt, because their customer service procedures are so impossible to use that it’s a deterrent. Endless website menus that loop back to each other, irrelevant automated email responses, no system for ticket tracking, and the list goes on – PayPal is guilty of basically every support hindrance in the book.
If you do manage to get through to a human call center rep, he or she is unlikely to have access to any useful information and even less likely to have the admin privileges to fix anything in your account.
- Unreasonable Fees
Depending on what type of account you have, PayPal’s standard processing rates usually amount to 2.9% plus $0.30 for each transaction. It isn’t just you – 2.9% is actually high, especially when you consider that there are plenty of alternative payment platforms that charge under 2.5%.
Once again, having several years of no significantly threatening competitors leaves PayPal with little motivation to change their fee structures to be more in line with the way virtual payments ought to be.
All Thanks to PayPal’s Official Status
From a business perspective, it makes sense that PayPal’s management would be okay with profiting from less-than-friendly practices like these. But how does the company get away with it from a legal perspective? It all comes down to PayPal’s official status.
A platform that allows businesses to send and receive payments might smell, taste and sound like a bank, but PayPal isn’t a bank. Despite all the transactions that put money in accounts under their supervision, there’s no vault with gold or greenbacks, which led to the conclusion by the FDIC (Federal Deposit Insurance Corporation) in 2002 that the company doesn’t fall under its jurisdiction. As a “money service,” PayPal is exempt from providing security for your money and even answers about what its status is.
The Solution that Hurts the Least
All these complaints having been expressed, PayPal may actually be your least evil option, especially if you’re just getting started and need to start collecting from clients in a hurry. Onboarding is quick and easy, and people trust that logo with the double P. But as your business grows, keep an eye on your gateway processor options. You’re likely to find better value and less hassle elsewhere, and if you’re using a billing app like Invoice Ninja to integrate payment functionality into your invoices, you’ll have the ability to use dozens of PayPal alternatives.
