PayPal has thrown its hat into the mobile payment acceptance arena with its launch of the “PayPal Here” mobile payment app and card reader. The service is yet another carbon copy of other mobile credit card processing services like Intuit’s GoPayment, Jack Dorsey’s (founder of Twitter) Square and North American Bancard’s Pay Anywhere, but, of course, PayPal Here has its own spin on the idea. PayPal Here’s chief innovation is that it is integrated into a regular PayPal account and, therefore, merchants have access to a wide range of other features not found with most competitors. Funds from PayPal Here transactions that fall within normal risk tolerances will be available immediately to the merchant within his/her PayPal account. Merchants have the choice of transferring the money into an attached checking account or using an attached debit card to make purchases and ATM withdrawals. PayPal advertises that by accessing the funds through purchases with its “PayPal Business Debit Card,” merchants will receive a 1% cash back bonus and can bring their effective processing rate down to as low as 1.7%. GoPayment also offers the option of using a debit card to access funds and Square only offers automatic fund transfers to attached checking accounts. Dan Schulman is listed as the CEO of PayPal.
PayPal Here Products and Services
- Debit and credit card processing
- Sales reporting
- PayPal mobile app payment acceptance
- Electronic invoicing
- Cash and check transaction recording
- POS equipment integration
Sales & Marketing
Key Points - Sales & Marketing
|Uses independent resellers?||No|
|Promotes deceptive rate quotes?||No|
|Discloses all important terms?||Yes|
Because PayPal is such a high-profile company, PayPal Here is marketed primarily through the PayPal website. The PayPal Here website is easily navigated and clearly outlines the terms of PayPal Here, including a notice regarding the keyed-in rate of 3.5% plus $0.15. Merchants are advised to bear in mind that key-in transactions almost always carry a higher transaction fee because they are higher-risk transactions than swipes. The company’s use of direct marketing and its clear disclosure of pricing and contract terms have earned it an “A+” rating in this category.
PayPal Here Marketing Example
Costs & Contract
Key Points - Costs & Contract
|Keyed-in rate:||3.5% + $0.15|
|PCI compliance fee:||None|
Like most of its competitors, PayPal Here offers a free card reader and app that is compatible with most iPhone and Android devices. The swipe fee for processing a VISA or MasterCard transaction by sliding a card through the attached reader is a flat percentage of 2.7%, and the keyed rate is 3.5% + $0.15 per transaction.
PayPal Here formerly had some caveats in its pricing that apparently expired on April 15th of 2012. For instance, PayPal Here charged 3.5% for swiped American Express cards but was rebating merchants the difference to bring the final fee down to 2.7%. It appears that the rate for all cards, including American Express, is now lowered to 2.7%. Additionally, merchants who already use PayPal’s Virtual Terminal may see an increase in their pricing as all Virtual Terminal Transactions are subject to a rate of 3.5% + $0.15, which also applies to Key-In PayPal Here transactions. Lastly, merchants who already use PayPal Pro products may see a decrease in their pricing as all PayPal Payments Pro transactions are charged the 2.7% that applies to Swiped PayPal Here transactions. It’s a little confusing, but these rare cases may occasionally cause merchants to notice pricing discrepancies.
In order to deal with fraud risk, PayPal Here handles its merchant processing limits and fund holding procedures in a very similar fashion to Square. Merchants who key in more than $2,500 in sales within any rolling seven-day period will have the funds over $2,500 held in a reserve for 30 days before they are released (details available in section 8 of this document). Also like Square, this limit does not apply to swiped transactions, for which the exact processing limits and reserve procedures are ambiguous and based on “risk” factors.
Complaints & Service
Key Points - Complaints & Service
|Live customer support:||Yes|
|Most common complaint:||Fund holds|
We have located approximately 70 PayPal Here negative reviews, some of which accuse the service of being a ripoff. By far the most common issue encountered by merchants appears to be fund holds by PayPal, which is a problem that PayPal Here has in common with its parent company. Merchants are cautioned to understand PayPal’s fraud prevention policies in order to avoid having accounts frozen or funds withheld.
One of the biggest frustrations merchants have with PayPal’s competitor Square is the lack of live customer support and communication regarding reserves and fund holds. PayPal Here has both live phone and online support; however, it is difficult to determine how the company handles communication regarding holds and reserves, and how the customer support fares with the new service. PayPal itself has a very high volume of online complaints, but it is also a huge company that services many merchants, some of whom might be uninformed and easily frustrated. GoPayment and PayAnywhere both offer live phone support and do not seem to suffer from as many complaints regarding holds. The comments located here and elsewhere that specifically discuss PayPal Here do not seem to have an issue with its customer support, so PayPal Here will receive a “B” in this category until further information is available.
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Key Points - BBB
Note: We have adjusted this company’s BBB rating according to our own standards. To better understand why we adjust BBB ratings, please see our Rating Criteria.
Since PayPal Here is an app created by PayPal, there is no Better Business Bureau report specifically for PayPal Here. The BBB report for PayPal, however, shows accreditation and an “A+” rating despite having 5,130 complaints filed in the last 36 months. Of the complaints, 2,387 are related to problems with the service, 848 have to do with billing and collection, 1,566 are due to advertising and sales issues, and just over 300 are related to other issues. PayPal has resolved 1,784 complaints to the satisfaction of the complainant, while the remainder either were resolved to the dissatisfaction of the merchant or did not receive a final assessment from the merchant. The BBB justifies the company’s high rating with the length of time PayPal has been in business, the complaint volume versus PayPal’s size, the company’s response to complaints, the rate of resolution of those complaints, and the fact that the BBB has sufficient background information on PayPal. The CPO-adjusted BBB rating for PayPal is a “C” as of this update, but since PayPal here is only one aspect of the company’s service, we will split the difference and adjust the BBB’s rating to a “B” in this case.
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About Phillip Parker
Phillip Parker is a former merchant services agent turned small business advocate and the author of "Fee Sweep," which teaches merchants how to dramatically lower their processing rates, eliminate junk fees, and avoid fine-print scams. He founded CardPaymentOptions.com to help merchants enact positive change in the credit card processing industry. Schedule a Consultation with PhillipSchedule a Consultation with Phillip