Post: #1

Hey, just curious if any of you guys use Paypal for your business or ecommerce site? More specifically interested in if any of you have rolling reserves put on your account?

I got a call the other day from Paypal Merchant Risk Dept. Was wondering if they were going to shut me down but almost as bad. They said I'm in a high risk category, that and my sales volume brought some attention to my account. They said I can continue doing business but they are taking $10,000 right off the bat to hold in like an escrow type account. That's bad enough 10k is alot of money but I can survive.

The kicker is they are also taking 25% of my sales and holding them for 90 days. I've been doing over 200k for the past few months, so you figure that's about 50K a month in holds, over the course of that 90 days Paypal is going to be holding 150K of my money plus the 10k they hijacked right off the bat. I don't got pockets deep enough to take a hit like that and still keep ordering inventory.

Wondering if anyone else has run into the same problem and how you've dealt with it? Raised prices? Took a loan from someone? Shut down your store temporarily to give some time to free up some more cash?

Post: #2

Most merchant accounts will have reserves, especially for high risk markets.

They will take hold 10% per day and release that 10% after 91 days. How are you getting 25%? They may also have a minimum reserve amount where they hold a certain amount of money regardless of your transactions but it looks like that 10% will probably be enough to reach that minimum.

So, if you are doing 200k for 60 days that would be about 3333k a day. 10% of 3333k a day would be 333 a day in reserves or roughly 30k in reserves for 90 days before you start getting day one released. Roughly 30k in reserves if you continue doing 3333k a day.

Minimum just means they want at least a certain amount in reserves at all time. If the 10% gets you there then no problems. If not, the minimum will always be in reserves regardless of the daily transactions. It sounds like they want at least 10k in your reserves at all time no matter the amount of transactions per day.

Post: #3

(11-07-2013 02:43 PM)worldwidetraveler Wrote:  Most merchant accounts will have reserves, especially for high risk markets.

They will take hold 10% per day and release that 10% after 91 days. How are you getting 25%? They may also have a minimum reserve amount where they hold a certain amount of money regardless of your transactions but it looks like that 10% will probably be enough to reach that minimum.

So, if you are doing 200k for 60 days that would be about 3333k a day. 10% of 3333k a day would be 333 a day in reserves or roughly 30k in reserves for 90 days before you start getting day one released. Roughly 30k in reserves if you continue doing 3333k a day.

Minimum just means they want at least a certain amount in reserves at all time. If the 10% gets you there then no problems. If not, the minimum will always be in reserves regardless of the daily transactions. It sounds like they want at least 10k in your reserves at all time no matter the amount of transactions per day.

Yeah I've read about others who Paypal told them they wanted 30K in reserves and could take say 5k or 10k off the top and then a percentage until that 30k is built up. In my situation however they are taking 10k off the top, they said they will release that in a month or so if all is good with my account but they will still hold the 25k for 90 days, on the 91st day the first day of holds gets released, 92nd day the second day of holds released, etc.

To me the 10k is the least of my problems, it's the 25% thats killing me. I guess after 6 months they will re-evaluate and maybe lower that percentage. They havn't said to what but I think 15% is going to be about as low as htey ever go regardless of if I have no chargebacks, no refunds, no complaints, etc.

I'm looking into merchant accounts but almost nobody allows my category of sales. Just found one company who apparently does high risk merchant services. Gonna call them back later but guessing fees are gonna be pretty stiff. As long as they don't have reserves or they are reasonably I figure I can try to to maybe 80k of my monthly business away from Paypal and have access to a little more cash.

Post: #4

(11-07-2013 02:55 PM)outhustleu Wrote:  I'm looking into merchant accounts but almost nobody allows my category of sales. Just found one company who apparently does high risk merchant services. Gonna call them back later but guessing fees are gonna be pretty stiff. As long as they don't have reserves or they are reasonably I figure I can try to to maybe 80k of my monthly business away from Paypal and have access to a little more cash.

I would be surprised if there were no reserves on those high risk merchant accounts.

Post: #5

We run a lot through Paypal but it's low-risk. We have no reserve requirement, and no rollling reserves. I can transfer all received money out of our account within minutes of receiving it (then the usual 2 business days for it to arrive in our bank account).

As you stated, your business is high risk so they're acting accordingly. You may find other merchant processors who can offer better terms -- ask around. When we looked, the merchants we found offered worse terms in our category (like a rolling reserve).

If your business is doing well, and it's just the cash hold against some of the money, just get a line of credit from some other source to cover cashflow.

Post: #6

I'm also looking for a paypal alternative, they take 4% every time I receive a payment. It's not a dealbreaker but it does add up to a shizload of money.

Skrill, Wepay and amazon payments only take 3%, which is better but only slightly. Any other suggestions people can vouch for?

Post: #7

(11-08-2013 12:36 AM)shibby Wrote:  I'm also looking for a paypal alternative, they take 4% every time I receive a payment. It's not a dealbreaker but it does add up to a shizload of money.

Skrill, Wepay and amazon payments only take 3%, which is better but only slightly. Any other suggestions people can vouch for?

At higher volume, your Paypal rates go down. We're at 2.7% and they have rates as low as 1.9%.

We looked at a few other options a year or two ago (we pay a lot of Paypal fees also.. in the thousands including forex fees), and none of the other options seemed to match Paypal in terms of easy and quick access to funds, easy for our customers to use, etc.

I think if you can probably find some options at a slightly lower rate than Paypal if you look hard... so then it's just a matter of deciding if it's worth the effort involved in making the switch... that could be a huge project in itself depending on how your payment system is integrated.

Post: #8

(11-08-2013 07:36 PM)paninaro Wrote:  At higher volume, your Paypal rates go down. We're at 2.7% and they have rates as low as 1.9%.

We looked at a few other options a year or two ago (we pay a lot of Paypal fees also.. in the thousands including forex fees), and none of the other options seemed to match Paypal in terms of easy and quick access to funds, easy for our customers to use, etc.

I think if you can probably find some options at a slightly lower rate than Paypal if you look hard... so then it's just a matter of deciding if it's worth the effort involved in making the switch... that could be a huge project in itself depending on how your payment system is integrated.

You haven't looked into a real merchant account with a bank?

WIA

Post: #9

Paypal fees and the way they do business is complete bullshit. Look into Stripe (http://www.stripe.com) Pretty much superior in every regard.

Post: #10

google has a payment system too don't they?

Post: #11

or use Authorize?

Post: #12

(11-08-2013 08:29 PM)WestIndianArchie Wrote:  You haven't looked into a real merchant account with a bank?

I did a couple years ago, and the terms weren't good. It's complicated because of how the company is set up legally.

Basically this is one of the back-burner projects for us. It's better to spend an hour of time on other tasks which generate revenue, than an hour of time to reduce our cc processing costs (i.e. reducing costs).

Post: #13

(11-09-2013 12:32 PM)iknowexactly Wrote:  google has a payment system too don't they?

They're on their way out. I was surprised, I'd always thought that google was going to get their shit together with google checkout and win out over PayPal.

[url=http://readwrite.com/2013/05/20/google-checkout-closure#awesm=~omLPgOPTY9QZqR
]http://readwrite.com/2013/05/20/google-checkout-closure#awesm=~omLPgOPTY9QZqR
[/url]

Post: #14

Amazon payments?

Post: #15

Paypal used to be 'not a bank' but is becoming more of a bank despite its shitty customer service. I spent about 5 minutes looking for a link but on the business accounts they now write that it is FDIC insured.

My clients that have rolling reserves are high risk businesses that get a fair number of chargebacks each month. Its pretty crazy but their only choice for an easy way to do business internationally. Not everyone around the world has a credit card to run through stripe.

So yes, its the worst customer service but also the only service that is relatively universal in terms of people having access.