However, PayPal isn’t perfect. Before setting it as your primary payment method, let’s discuss the advantages and disadvantages of using PayPal to collect payments from freelance clients.
The Advantages of Using PayPal in Your Freelance Business
Although there are dozens of payment systems online, millions of freelancers across the globe still prefer PayPal. It features a robust, widely accessible system. You can create a free PayPal account and start receiving payments within minutes.
Of course, using PayPal now and then is one thing, but setting it as your default payment system is another. Assess the platform’s advantages and gauge how they’ll benefit your freelance business.
1. PayPal Is a Widely Known and Trusted Platform
Regardless of your thoughts on PayPal, you can’t deny its prominence. The company states it has more than 325 million account holders from 200+ countries and supports 25 different currencies. Statista also reports that it has the largest market share at 42%.
Using a widely known platform is advantageous for freelancers, especially if you’re targeting international projects. Clients only use trusted, accessible payment channels. You’d do well to invest in popular online payment apps that your potential employers and partners likely already use. Don’t expect them to download new digital wallets to accommodate your preferences.
2. PayPal Follows Rigid Anti-Fraud Security Guidelines
PayPal follows several rigid security guidelines that protect buyers and sellers alike. For instance, unlike other digital payment platforms, it doesn’t require users to share too many details when sending and receiving money. The parties involved only need their email addresses.
Moreover, PayPal encrypts every piece of information that goes through its platform. Senders and receivers can only access specific transactions through unique, one-time public keys assigned to their accounts. No one else can decrypt private payments.
Should a fraud attack bypass PayPal’s security, you can dispute the transaction. Go to the Resolution Center > Dispute a Transaction > Item Dispute, then provide the necessary details. Afterward, PayPal’s fraud detection team will review your request.
3. Merchants Can Explore PayPal Loans
PayPal provides flexible loan products for SMBs and entrepreneurs. Depending on your financial standing, you could secure anywhere from $1,000 to $500.00 in just one business day. You don’t even need to upgrade your account to qualify for a loan.
There are two PayPal loan products: Business Loan and Working Capital. The former lends $5,000 to $500,000, but it requires applicants to have a business that makes $42,000+ per annum and fair credit standing.
Alternatively, Working Capital has more lenient requirements. Although it only lends $1,000 to $15,000, it assesses your creditworthiness based on your account history.
4. Merchant Account Holders Get Extensive Customer Support
Premium PayPal account holders get extensive assistance through the Merchant Support program. You’ll find this very helpful if you process multiple orders through PayPal. Unlike free account holders, you can contact human customer service representatives much quicker and expedite dispute resolutions.
The Disadvantages of Using PayPal in Your Freelance Business
Although PayPal is convenient and accessible, it still has several flaws. Familiarize yourself with these disadvantages. If the advantages don’t outweigh them, consider using other platforms to collect payments from freelance clients.
1. Steep PayPal Transaction Fees Will Cut Your Profits
Most freelancers leave PayPal for its hefty rates. When you send money on PayPal, you can classify the payment as either Goods and Services or Friends and Family. The latter’s free, but removes buyer protection. Alternatively, payments under Goods and Services are protected, but they come with a 2.99% + $0.30 transfer fee.
You can ask your clients to shoulder the fees or send payments via Friends and Family, but don’t expect many to agree. However, both setups will make you look unprofessional. We advise computing the charges beforehand and adjusting your rates accordingly.
2. PayPal Takes Several Weeks to Resolve Disputes
The Buyer-Seller Protection program lets users contest potentially fraudulent transactions. Once a dispute is filed, the reported funds will remain frozen until the investigation team reaches a verdict.
Although PayPal states it needs 15 to 30 days to review reports, manage your expectations because users often complain about delays. Reviews could take more than two to three months if you have several missing requirements.
You can still use your account during the dispute. Just make sure to adjust your personal and professional finances, or else the frozen funds might compromise your cash flow.
3. The PayPal Seller Protection Program Doesn’t Cover Most Freelance Services
Contrary to popular belief, the revised PayPal Seller Protection program doesn’t cover most freelancers yet. The guidelines only touch certain intangible products and services. For instance, you still can’t win disputes involving intangible digital services like copywriting, graphic designing, or social media management.
Even if the guidelines cover your services, the anti-fraud team will only consider your argument if you received the disputed payment through a PayPal-integrated checkout page. Otherwise, you’ll have minimal chances of unfreezing your money.
4. Users With Free Accounts Get Limited Customer Service
PayPal provides merchant protection for premium account holders. Freelancers using free accounts can only contact PayPal through its public email address and phone number. Unfortunately, both channels rarely respond on time. You probably won’t even get a human representative to respond to your emails, much less answer your calls.
Should You Use PayPal to Collect Payments From Freelance Clients?
Like most freelancers, you’ll likely come across several clients who prefer paying via PayPal. You’d do well to create at least a free account. With that said, whether or not you should use it as your primary online payment system will depend on your freelance business’s needs.
Don’t blindly use PayPal for its popularity. Objectively assess if it offers fair exchange rates, integrates with your existing bank accounts, protects the products/services you offer, and meets your client’s preferences. Otherwise, explore your other options. There are several affordable, reliable online payment systems on the market, so don’t limit yourself to PayPal.
