PayPal - an Internet credit card payment scheme

If you want to send money to someone on the Net or pay for goods overseas, PayPal could be the answer. But Ian Waugh wonders if this is a Pal he'd like to Pay with...

The Net has certainly opened up the world, both to commerce and personal communications. It's not unusual now to exchange emails with people in the far flung corners of the globe and to want to buy goods from companies whose offerings are cheaper than here (as is often the case in Rip Off Britain) or simply not available in the UK.

The ideal way to pay for goods is with a credit card. You usually get a good exchange rate and most credit card companies offer purchase guarantees (but not all so do read the small print) making it a safe buy. However, many small companies don't have a credit card merchant account, so what to do?

Middle men

Enter PayPal. This acts as a middle man, taking credit card payment from you and passing it on to the company. This isn't a new idea, of course, and there are several companies offering similar facilities and many others queuing up (and no doubt spamming your email in box) offering to do a similar job.

There's a charge for the service, of course, but this is usually borne by the vendor (more of this in a moment) and PayPal reckons it's one of the cheapest with the highest rate being a modest 2.9% plus 30c. It also claims to have 14 million members/subscribers world-wide so if that's true it's a fair old market to go for.

Pay a pal

In addition, you can send CC payments to any other PayPal member. You enter the transaction and they get an email saying you have sent them money, they log on and transfer the money to their account.

In theory, joining is easy. You log on and register your CC details. You can then pay a vendor up to $250. When you register, PayPal deducts $1.95 from your CC account. When you get your CC statement you go back to the site and enter a membership number which appears on the statement. This Confirms your account allowing you to make larger payments and PayPal refunds your $1.95. What a great way to do a security check!

If you're in a hurry, however, it can take four days for the amount to show up on an on-line CC statement and if you have to wait for the paper variety to plop through your letter box you could wait a month.

And then...

So far, this reads like a great idea and a great system and if nothing untoward had happened, this story would have ended there and the system would have had a great review.

As it happens there was a problem. Due to an ambiguity on the CC statement, I entered the incorrect Confirmation number. Not once, but twice and as it was being digested a second time, up popped a message saying that for security reasons you were only allowed two tries and that particular CC was being locked out of the system. Good security measure, eh?

It would be but trying to correct the error proved impossible. It took five faxes, two emails and ten - count 'em! - phone calls (their number isn't listed on the web site, so it took some detective work to track it down) over a period of almost two weeks before I got an email response. Promises that someone would return my calls were as empty as a politician's.

Email schizophrenia

In fact I got three emails from three different people but all from the same help@paypal.com address. The first (from Dennis) said he could find no details of my account. In the meanwhile the PayPal system had deducted another two charges of $1.95 which, as I gently pointed out, was a remarkable thing to do if they claimed my account did not exist.

I joined PayPal in order to transfer a sum over $250 which is why I had to Confirm the CC number. The second email (from Dale) said as I was an "International customer" I could not Confirm my account (and, therefore, not send over $250). This was not mentioned anywhere on their site and, as it happened this information was totally incorrect. Oh dear...

The third email (from Mary Beth) did apologise but only for the two extra charges on the CC, but two weeks later these still had not been refunded.

None of the emails made any attempt to address then source of the problem or to rectify it, so I registered a second CC - successfully this time - and everything went as it should have done the first time round.

What I didn't discover until later is that as an "International customer" I was charged 2.6% plus 30c on top of the CC amount...

Summary

They say you only find out how good or bad a company is when things go wrong and PayPal is one classic case which proves how correct that is!

When things go wrong - especially when it concerns money - you want a company that will sort it out - or at least talk to you. I feel the rating of zero for customer support was rather generous...

You have to draw your own conclusions and make your own decision. Use PayPal by all means - it's a great idea - but if things go wrong, and not just with the Confirmation process, on current form the company is incapable of handling it so you may have to take any complaint direct to your credit card company.

With PayPals like these, who needs enemies...?

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Ian Waugh