Is PayPal worth it ?

[e-richard]

We keep hearing how "expensive" PayPal is, but the alternatives always seem to require a monthly fee.

So how do you calculate the relative values?

Here is an incredibly simple Excel spreadsheet that I wrote in 10 minutes to graphically work out how much you need to be transacting to make it worthwhile..

By all means download it and play, and if anyone wants to improve or contribute amendments, I'm all ears and will update this and keep it online for free.

[Hells Bells]

Thanks Richard, something to while away my time with.

[Hells Bells]

Interesting it looks like I may be around the borderline now, but French bank wouldn't let me have the merchant account last time I asked, so maybe I should try them again.

[la vache!]

That's great Richard! I did a similar (but far more unsophisticated spreadsheet model) a while back and this confirms for me that as from 10k revenue it is cheaper using my Payboxmail system. As well as the fixed fee you have to take into account the monthly charges for a business account (or at least I did), which came to 430€ a year.

[Normandie]

That certainly is great. Thanks E-R!

[LaVilleauTady]

Richard, here is an alternative way of looking at the expense of PayPal:

96.5% of something is better than 100% of nothing!

If we are missing bookings because we don't accept PayPal (credit cards), then the 3.5% fee (Europe) starts to look irrelevant.

I'm thinking of moving over to accept 100% of bookings via PayPal due a couple of recent issues like guests who don't have cheque books, and a bounced cheque, and sheer convenience. I just need to think about the flip side of potential guests that might only want to use more traditional payment methods.

[la vache!]

There are cheaper alternative ways to take payment by credit and debit card than Paypal. e-Richard's model helps you work out what is best, and Paypal definitely isn't the cheapest way for me.

[LaVilleauTady]

I agree LV. My turnover is not sufficient to warrant a merchant credit card account, and I don't think the deals available to you in France are available to us in the UK.

I was coming at this from a slightly different angle, which is that one's desire to avoid credit card fees (of what ever variety) may lose you bookings.

I noticed that VRBO have now integrated credit card payments into their site (but only for USA resident owners at this time), and I think accepting on line payments will become more important in the future.

[la vache!]

I was coming at this from a slightly different angle, which is that one's desire to avoid credit card fees (of what ever variety) may lose you bookings.

Sorry Martin - I misread, but you are right, I think taking credit/debit card payments is an essential now (except for French bookings, who still prefer cheque as there are no charges for a cheque bank account!)

[Nightowl]

Hmmm, I really was happy with paypal and thought their fees were worthwhile, until they slapped a rolling retention of 30% of income for 90 days on my account.

Hence, whilst I was happy with 96.5% of the income, receiving 66.5% of the income and waiting 90 days for the other 30% puts a completely different slant on things (and completely ****s up my cashflow.)

I used it for the same reason as others, it's an easy way to accept credit cards... but not if they are going to stop me getting at my own money....

There's a thread on it here somewhere with me whining about it....

[kendalcottages]

There's a thread on it here somewhere with me whining about it....

viewtopic.php?t=16429

[katiebythesea]

I very rarely (in fact only once) have been asked about taking credit/debit cards and all the bookings I have taken for this summer have been happy to pay by bank transfer so I don't think that it is necessary to use pay pal or have a merchant account.
I had one last year for a few months but because I had no need for it I cancelled it.
Might all change again though and am open to new ways around this problem.

[ThaiCharles]

This is an interesting tool.

Much will depend on how holiday rental owners charge for their properties. We have opted for a partial deposit at villa booking, with the remainder due upon arrival. The relative cost of Paypal for making such deposits is thus lessened (as Paypal is not getting a percentage of the cost of the entire villa holiday), whilst guests can make this deposit online, from home, without having to visit the bank.

Interestingly, whilst we offer a bank transfer option, the vast majority of bookers choose to use Paypal. Maintaining this option, in our eyes, forms part of our "customer service" - making things simple for guests. We also feel that the global recognition of Paypal helps in reassuring holidaymakers.

Clearly there are "no show" risks here, but over the past ten years of operating villas in Thailand we have found that these are minimal, especially as our deposit policy encourages guests to book new dates should they be unable to travel.

If we were asking for the full holiday cost upfront, we would in all likelihood use another, less costly system - although some would consider that the fees are not dissimilar to what a villa owner may pay to a travel agent or tour operator.

And finally, an interesting - and true - anecdote, from the book "Freakonomics". An experiment was carried out at a blood donation centre. Upon entering into the clinic and facing the nurse with her syringe, half of the donors had one of their arms grasped, and the blood was taken. The other half were asked whether they wanted the blood drawn from their right or left arm. Afterwards, each donor was asked how painful the procedure was. Those given a choice of arm reported markedly less discomfort than those given no choice....

The moral? How would you like to pay? focuses the buyer on his or her choice of payment method. That will be US$300 can sting like a needle!

[wallypott]

LV Currently most of my guests pay by bank transfer, if I took credit card payments using your system do you think the majority of those guests would then pay by credit card?

Currently I only take my damages deposit by Paypal regularly. I probably take less than 10k annually by Paypal currently, and certainly keep less than that of it.

If I refund using the credit card system you use, do I have to pay two lots of charges?

Thanks

[la vache!]

LV Currently most of my guests pay by bank transfer, if I took credit card payments using your system do you think the majority of those guests would then pay by credit card?

If you tell them that is the only payment method (like I do) then yes.
Yes, I do pay charges I pay if I refund, 0,45% + 0,15c. I don't take a security deposit so it isn't an issue for me, but understand it would be for you.