First of all I want to say I have amazing customers. Like, seriously fantastic customers who go above and beyond to show their appreciation of what I do for a living. I’ve had people cancel their subscriptions because they needed to focus their finances elsewhere, notice that they still had access to some episodes in iTunes, and email me to let me know that there might be a bug and offering to pay for any extra videos they got to watch as a result of the error. My customers are the best.

So fortunately, I don’t have to resolve many customer complaints. Still, every couple of months I get a notification that someone has disputed a charge. Sometimes it’s an honest mistake; they didn’t realize what the charge was for. In those cases we sort things out and everything’s fine.

But every now and then, someone apparently decides that the best way to cancel their subscription is to dispute a charge, rather than getting in touch with me.

When such a dispute comes through Stripe, it’s not a big deal. They have a perfectly rational dispute resolution process. I try to contact the customer, provide my evidence to Stripe, and wait for a conclusion. Usually the bank decides in the customer’s favor, because that’s how banks are biased. Which is not unreasonable. That’s just part of life for an online seller of products.

With PayPal, it’s a whole different story.

Here’s what I get from PayPal when there’s a dispute:

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When I log in to “resolve” the dispute, here are the options I’m presented with:

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None of these options make any sense in this context.

  • It’s an online video subscription, so there’s no shipping information to be provided.
  • The customer has used their account and watched videos, so the product was “shipped” in that sense.
  • No, I have not refunded the payment. The customer could have cancelled their account at any time. They could have contacted me asking for their account to be cancelled. Instead, they just disputed a charge.

The last time I got one of these notifications I decided to reply directly to it:

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You can probably guess what happened next: I got an auto-response informing me that the email address they mailed me from is not monitored.

PayPal goes out of their way to be unreachable and to make their “dispute resolution” process opaque and unusable. Their approach toward sellers boils down to the business version of “when did you stop beating your wife?”

And it’s not just disputes. I could provide dozens of other examples of why PayPal makes up 90% of my payment processing headaches.

This is why, despite presently processing thousands of dollars a month through PayPal, I plan on eventually phasing out PayPal completely from my product and subscription sales. They are simply not worth the hassle.

Published by Avdi Grimm

6 Comments

  1. I’ve had this happen with PayPal the other way too… screwed as a buyer. Purchased $100 of clothes which came from China (plus an extra $30 customs fee). Clothes arrived, were nothing like what I ordered (imagine you want some pants and they send you a pair of socks). I was told I have to cover the cost of shipping back to China… cheapest I could find was more than the entire cost of my original order (because I don’t have a great corporate shipping deal like they do)… so I was forced to give up the dispute, get nothing in return, and I ended up donating the clothes to Salvation Army.

    Reply
  2. The sad thing is that is appears to be just as bad for the purchaser. Unlike the credit card companies who are biased in favor of the customer, PayPal appears to be biased in favor of inactivity. I’ve had some bad ebay experiences and trying to get my money back through PayPal has been just as frustrating. Choose from a few, all inappropriate, options then get a reply from PayPal a few days later to the effect, “We have been unable to contact the merchant and will be ignoring you from here on…”

    Reply
  3. I don’t get it. Why don’t you just bitbucket the email?

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    • Unfortunately, any dispute resolved against me, no matter if unfairly, hurts my reputation as a seller. Payment processors track this stuff.

      I wish I could just ignore these emails, but I have to do due diligence every single time on the off chance that I will someday have to show that no, I am not some internet scammer ripping people off.

      Reply
      • I guess it hurts your rep on amazon – but if the choices are either ignore it or ditch it, and some of your users like the option – seems like ignoring it would be preferable.

        Unless paypal is sharing the data, in which case bailing seems reasonable.

        Reply
  4. grest article, thanks! If phasing out PayPal, what would be you next best alternative? Credit cards? Anything else?

    Reply

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