Ask HN: Why do 37signals and others not accept PayPal?

[egmike]

Hi all,

I've been wondering about this for a while. It seems as though there are a lot of people out there who would prefer to use PayPal to pay for things online, either due to lack of a credit card, or because they already have a PayPal balance from selling things online, or even just because they feel PayPal is secure and/or familiar.

I've searched the 37signals' website and blog for a reason, but didn't find anything, and it seems like others are taking the same approach.

Can anyone shine any light on this?

Thank you.

[ramit]

I accept a fairly high volume of payments and intentionally don't accept Paypal. Here's why:

1. 99.9% of my paying customers have a credit card <---this is #1 for a reason

2. I've only had ~3 customers ever complain about my lack of Paypal. I made a special arrangement for 1. She ended up canceling.

3. Paypal doesn't allow the custom flows (upsells, cross-sells) that I can do with my shopping cart

4. Paypal doesn't integrate as nicely with my backend analytics, and I prefer to have all my sales centralized

5. Hearing bad bad horror stories about Paypal is just another, distant reason why I feel no urge to use them

Hope this helps.

[daliusd]

Question here:

2. You say that 3 customers complained. Is your product/service so specific that users that can't pay using PayPal complain? Are you sure that they just don't go away? What if you lost 297 customers?

[ramit]

Doubtful. In order to find out why people don't buy, we do heavy, ongoing customer research/surveys/phone calls with people who are on our prospect list but haven't purchased after the expected purchase time frame.

Hardly anyone, ever, has said "I haven't bought your course because you don't support Paypal."

[egmike]

It certainly does help, thank you Ramit. Have you done any split testing to see if your conversions increase with PayPal though? Any thoughts/data on having PayPal as a secondary payment option, for those who prefer it?

[ramit]

Great question.

No, we haven't split-tested the addition of Paypal. We're constantly running tests, but this is a low-priority one for us based on extensive customer research.

Since we can't test it all, we pick the biggest potential wins (e.g., headlines and offers) and run them as rigorously as possible.

I do know that IMVU offers an insane number of payment options, but I think this may have more to do with their particular userbase.

[camelback]

Hey Ramit, for reason #1, I thought paypal also does credit card processing aswell?

[JacobAldridge]

Sure, but if you already have credit card facilities then that PayPal feature is redundant.

[sscheper]

Makes sense.

What do you use instead of Paypal? Authorize.net?

Also, what shopping cart do you use?

I'm currently using e-junkie, but curious as to what else is out there that works well.

Thanks, Ramit.

[ramit]

I use Authorize.net with 1Shoppingcart. It works pretty well. I'm starting to come up against some technical limitations (like a lack of trigger emails for shopping-cart recovery), but overall, I'm very happy with the solution.

EJunkie and Payloadz are actually very good for simple shopping carts. In fact, they can do some pretty complex stuff like cross-sells and affiliate tracking. When you start finding yourself hitting technical limitations (like upsells not working the way you want them to, or you want to do more complex trials), you'll know it's time to upgrade providers.

[hellweaver666]

I frequently look for a PayPal button / logo because I'm lazy. My card details are saved with PayPal and it's easier to enter my email address and password, then click confirm than to get my card out of my wallet and type the details in manually.

As a consumer, it doesn't make a damn bit of difference to the end cost (most of the time, unless the merchant charges a PayPal Premium) and saves me time.

It's the same reason I buy most of my music from iTunes and pretty much everything else from Amazon.

[mansilla]

I recently stated this in another comment regarding payment systems.. I wouldn't rely on just one. A merchant account through a bank CAN get suspended or put on hold if you trip any risk ratios (e.g. inquiries, chargebacks, refunds). So, indeed, PayPal does have its share of stories of accounts being suspended without explicit reason; however, merchant banks have the same power and believe me when I say that they can lock/suspend your account, and hold your funds for 6 months without ANY detailed explanation and without interest.

Secondly, PayPal does have a new API called PayPal Adaptive Payments. It's very flexible.. pre-approved payments, distributed payments (refunds also mapped backwards), chained payments (multiple source accounts for making payment). Full details on their API PDF docs (easy to understand):

https://cms.paypal.com/cms_content/US/en_US/files/developer/...

So, even if you don't feel all warm and fuzzy about PayPal.. you should have an account handy, and think about having it as a payment option on your site. Some users swear by it because they don't have to share any sensitive credit card information (including CVV coddes) with the merchant.

[desigooner]

>>Some users swear by it because they don't have to share any sensitive credit card information (including CVV coddes) with the merchant.

I tend to be one of those .. Dispute resolution with Paypal is a much better experience as compared to dealing with, say Bank of America ... I was lucky to have had my paypal account on itunes when I had some fraudulent purchases .. No long claims process as with a bank .. The investigation and the matter was settled within 3-4 days ..

Now I've read about paypal arbitrarily stopping services without any warnings but other banks can be the same..

[philwelch]

Bank of America is a particularly crappy bank. US Bank is marginally better in my experience, and ING Direct is by far the best. Particularly in terms of dispute resolution, US Bank was very easy to work with, and settled the matter within I think less than a week. (My ING Direct debit card number has yet to be stolen, and when a whole bunch of debit card numbers were leaked by a third party, they preemptively mailed me a brand new card along with a friendly letter explaining the situation.)

But the real solution for dispute resolution is to use an ordinary credit card and put through chargebacks on any and all fraudulent purchases. Lacking the stomach to keep a credit card I don't do this myself, but I hear chargebacks are very easy by design.

[egmike]

Interesting points. I'm leaning towards having PayPal as an option, but I don't think I'd use them as my main provider, at least not for long... Thank you both.

[noodle]

probably because of the fact that paypal is an unreliable source on which to build a business once it becomes big enough.

there are too many horror stories.

[hellweaver666]

This was a constant worry in my previous business (in the retail sector), but we did over £140,000 (GBP) of sales through PayPal over the two years we were active and never had a problem.

I'm considering using them with my new startup just for the first few months while I get up and running, purely because the setup cost is free. If I can prove the business idea works then I'll upgrade to a "proper" payment gateway.

[nRike]

Well, i think 37Signals, YardEngine and GitHub uses BrainTree instead of Paypal, and IMO BrainTree is the best solution. I was helping the guys of http://rega.la to build the online payment part and i noted that for Credit Card payment is so cool. Other way you can use is BOKU(http://www.boku.com/) which uses mobile carriers to make the money transaction in 3 simple steps.

[pjhyett]

I'd add Paypal support to GitHub if Braintree integrated it with their system so I wouldn't have to interface with Paypal directly. Too many horror stories.

[pinksoda]

http://news.ycombinator.com/item?id=1598227