What is PayPal?
PayPal is a third party service that allows businesses and online merchants to pay, send money, accept payments online without the need for a payment gateway. PayPal's service is secure and protected by SSL to ensure that all sensitive data is protected.
How does PayPal work?
To start using PayPal to accept payments on your website you first require a PayPal account. Sign up for a standard business PayPal account is free. Once you have an account created there are multiple ways PayPal can be integrated into your website.
Once PayPal has been integrated into your website customers can start making payments to you using the PayPal interface. The basic set up looks like:
- Customers choose a product or service from your website.
- The checkout process is completed on your website, for example all address details and personal information is entered on your website.
- At the final payment page customers can choose to pay via PayPal.
- With the free PayPal account customers are then redirected to paypal.com where they re-enter some personal details and can make payment either via credit card, or if they have a PayPal account themselves via PayPal credit.
- Once payment is completed customers are redirected back to your website.
What are the pros and cons of PayPal?
PayPal offers an easy way to start accepting payments online without the need for a payment gateway or hosted payment page. However there are a few disadvantages of using PayPal as your payment processing facility.
- Customers are redirected from your website to PayPal to make payment. This results in an additional step in the checkout process.
- Often personal details will need to be re-entered resulting in customers having to enter their details twice - this make the checkout process slower.
- PayPal takes a small percentage of each transaction completed via their service. The amount they take is dependent on the volume of sales that are processes through PayPal.
On the flip side to this, PayPal does have some advantages and it's often a good idea to offer PayPal as an alternative payment method for customers.
- PayPal is a well known payment service - they are trusted and well known by a lot of online shoppers meaning that there is little to no reluctance to use the service.
- PayPal offers a highly secure service. Due to the massive amount of transactions processed and the sensitive nature of the data PayPal deal with only the highest level of security is appropriate.
- PayPal is easy to set up and easy for customers to use. Once a customer has a PayPal account they can easily use this for multiple e-commerce websites, making their online shopping experience very efficient.
