For a vast majority of high-risk site owners and entrepreneurs, it’s difficult to find credit card processing that works. When new e-commerce sites need to process credit cards quickly and effectively, they often choose PayPal. Unfortunately, PayPal comes with its own challenges for high-risk business types.
At E-Commerce 4 IM, we help high-risk businesses accept online payments in order to help them grow. As we offer credit card processing, chargeback mitigation, and high-risk merchant account setups, we also want to help you avoid unnecessary issues. To help you along the way we thought we’d cover whether or not PayPal is an alternative for you and your high-risk business.
After all, PayPal is a huge name that most people are aware of. While PayPal offers a fantastic service for countless site owners out there, the fact is that it isn’t the best option for everyone. This is why we want to talk to you today about whether or not PayPal is an alternative that will work for you.
With our vast experience helping a range of business types with their payments, we want to offer our insight to help you know whether or not PayPal is a service you should use.
How does PayPal work?
Accepting credit cards is a particular problem for some startups and e-commerce entrepreneurs about to launch their site. Time is of the essence, and it’s crucial to process online payments sooner rather than later. This need and urgency are what attracts such a massive number of merchants to payment aggregators like PayPal. However, before we find out whether it’s going to be a useful alternative for you, we need to quickly talk about how PayPal works.
PayPal is a payment aggregator
As we’ve already mentioned, PayPal is what’s called a “payment aggregator.” This is a term that applies to payment service providers who compile a lot of merchants under one merchant account.
What PayPal offers to its users is a sub-merchant account, which “aggregates” under their main merchant account. Sounds great, right? It is pretty great for a vast number of site owners, and PayPal was quite revolutionary when it first launched.
There’s no upfront underwriting process with PayPal
As a payment aggregator, PayPal doesn’t conduct what’s called an upfront underwriting process. Not performing this process has two effects. First, it makes it possible to start accepting payments almost instantly. Second, it reduces the amount of information PayPal has about your business and limits the number of choices they have when experiencing issues.
Without a full underwriting process, aggregators like PayPal, Square, and Stripe can offer payment services practically immediately. This is a fantastic feature and a godsend for many. You’ll be able to set up an account and accept your first payment on the same day – pretty incredible!
However, without this process, PayPal is inherently incapable of understanding the particulars of your business and industry. This leaves certain e-commerce businesses vulnerable. If you sell high-risk products, then the lack of an underwriting process is very likely to cause you problems.
High-risk sites should investigate alternatives to PayPal
If you sell coaching or mastermind programs, nutraceuticals, supplements, or beauty and skincare products, for example, you’re selling high-risk products. What this means is that you’re likely to experience a higher chargeback ratio than lower risk businesses, or be more prone to regulatory issues, among other things. This is where the problems start happening if you’re using PayPal.
As a high-risk merchant, more likely than not, you’ll experience chargebacks and other elements that will throw a wrench in the works if you’re using PayPal. PayPal has very few options if someone using their services encounters problems like chargebacks. All they can do is freeze access to features, close accounts, or freeze funds.
In other words, if you sell high-risk products you really should find different ways of accepting payments online than Paypal.
What high-risk alternatives are there to PayPal?
There’s plenty of e-commerce software out there that you can use to sell your high-risk products. For many, the main challenge is finding the information they need to make an informed decision.
At E-Commerce 4 IM, we specialize in making credit card processing as easy as possible for high-risk sites. If you check our blog, you’ll also find plenty of tips and recommendations for e-commerce software you can use. For example, if you sell a wide range of product types your best fit is most likely with NMI. Feel free to check out our article on NMI for more information. If you’re looking for a site builder to market and improve your overall high-risk sales, you can check our article on ClickFunnels.