If you’ve been selling anything online, you’re probably using Paypal as one of the methods of accepting payments. And if you aren’t using it yet, you might be wondering if you should use it or not.
While you’ll find a lot of “bashers” vs. “pros” online, you want the straight forward facts from someone who has used it for years.
Paypal is an excellent source of sending and receiving payments for people all over the world. If you do any business in North America (United States and Canada), and the UK, in particular, you definitely want to have a Paypal account.
But people complain that their accounts have been frozen… and they can’t access their funds. Here’s the main reasons why, and how you can avoid it.
Issue #1: Type of Account
People are attempting to receive payments (business sales) from other people – when they only have a personal account. It’s okay to receive limited payments if they’re from friends, family etc., but NOT for selling items of any kind. Not even on eBay. Did you realize, that its not really more expensive to have a business account? Yes, a personal account is free to receive money – but if you are doing business, you do NOT want to risk having your account frozen for going against their policy.
A premier account is the next level, higher than a personal account. It does let you do “some” business transactions within Paypal. i.e., you can sell on eBay, accept credit cards and debit cards, for a small fee. (The fees are really minimal – lower than most pay for merchant accounts).
A business account is the highest, and the one I recommend most if you want to sell online. You can send and receive money in all formats (including credit cards and checks), plus it gives you much more credibility with Paypal (and your buyers). The fees are still minimal, as with the premier account.
Issue #2: Type of Product/Offer
Okay, so you have gone and upgraded to a business account for full legitimacy. Does that mean you can sell anything and everything? NO.
One of the most common things entrepreneurs attempt to do, is create some sort of MLM/Network Marketing program, and get their users to pay for their accounts through Paypal.
Here’s the facts: Paypal WILL NOT allow you to run any type of MLM, Network Marketing program, Matrix, One-Up, or however you want to term it.
Even more: they’ve recently updated their policy that they don’t even allow “2 Tier” programs – which many have used. While it’s not really MLM, Paypal still deems it as such because you receive a “bonus” or “incentive” (% of sales) from people you refer – on people they refer.
If you want to offer bonuses to say special “Joint Venture Partners”, as incentives for them to refer people, do it manually and only for them. Don’t do it as an across the board compensation plan.
Issue #3: Instant Pay Commissions
With an abundance of “firesale” type strategies, many decided to offer “instant commissions” for any sale you referred. It was also known as “Instant Split” commissions – where the buyer had to make two payments, the first (usually) to the affiliate, and the second to the product owner before they got access to their product.
A lot of people raised flags over this – those who bought the products didn’t like having to go through the extra step of paying a second person, and even affiliates were concerned they’d lose sales for this reason.
Issue #4: “Prelaunch” Offers.
Companies often offered “prelaunch” sales – we did it several years ago ourselves. However, due to an abundance of abuse by unscrupulous thieves who walked away with the money and didn’t actually produce anything for the people who paid, Paypal no longer allows pre-launch sales.
Paypal does allow a limited time frame on these, for example, if you have a product that is ready to go, but you want to offer your subscribers an “early bird” deal, i.e., if its going to be shipped within say 10 days, then Paypal is okay with that. Click here for their actual terms on this policy: https://www.paypal.com/us/cgi-bin/webscr?cmd=p/gen/ua/use/index_frame-outside&ed=presale_list.
The important point is, don’t attempt to say, “In 3 months we’re releasing this this and this – and you can buy now for a fraction of the cost, and we’ll send it to you (or give access) as soon as it is ready to go”.
Make sure its ready or will definitely be ready within just a few days.
The fact is, Paypal updated their policies to disallow these “instant pay” commission programs. If you run an “instant pay” offer of ANY kind, you will have your Paypal account frozen or put on limited access.
How do you get around these issues?
It’s simple.
- Get the right account – if you want to earn money online, get a business account.
- Don’t offer any type of MLM, network marketing, matrix, 2 tier or remotely similar affiliate program. A straightforward commission affiliate program is the only one Paypal likes.
- Don’t offer “instant pay” or “instant split” commissions. Pay your affiliates out yourself – even if you have to do it weekly.
- Make sure your product/offer is ready or will be within a few days.
And what if Paypal has suddenly flagged your account and put it on limited or frozen access? Don’t freak! When Paypal does this, they feel they have just cause, or have received too many complaints from people, or they have a concern.
All you need to do is answer them! So many people don’t bother with this step, or they don’t provide the proof or information that Paypal asks for.
Just answer what they’re asking, give them what they’re looking for – and if you do have an issue that violates their terms, correct it VERY quickly and notify them that you have.
We had the “instant split” commissions up at the same time Paypal changed their policy. I was notified of their change in policy and promptly closed the offer. A few days later, Paypal contacted me, putting our account on limited access, and requested a log in that they could verify that we weren’t doing anything against their terms.
Since I had pulled the offer, I updated the terms on my site to state that we no longer did the instant split commissions as it was a violation of Paypal’s policy. Then I replied to Paypal, gave them access, notified them that I *had* had it running but had very quickly corrected it even before they contacted me, and that I had updated my terms.
Paypal replied and after verifying the site/offer, reinstated my account and thanked me for correcting the issue quickly.
If you abide by their terms, you won’t run into issues. If you seriously want to earn any money online – then you absolutely must have a Paypal account.