The Sav incident is another example of how PayPal mistreats its customers.
I rarely buy individual company stocks, preferring to invest in index and target date funds that don’t require constant attention. But during the market decline earlier this year, I picked up a handful of battered stocks. One of them was PayPal (NASDAQ: PYPL).
I didn’t hold it long though. The next time I logged into PayPal after buying stock, I asked myself, “Why did you buy stock in this company again?”
Let’s face it. PayPal has horrible customer service and treats its customers like a statistic. Its only advantage is the network effect: everyone has a PayPal account.
Here’s an example: Last year, PayPal decided to remove the account view that shows your latest transactions with the current balance after each transaction. This was helpful in reconciling your account with your accounting software.
Not only did PayPal remove the balance column, but for some reason it’s still calling this view Activity (including balance and fees), although it obviously does not include the balance. This view is on the main dashboard when you log in. Having a big error on the dashboard for so long is worrying.
About a week after buying PayPal stock, my podcast editor emailed me saying they were moving PayPal’s payment processing to another company. I don’t blame him. PayPal is horrible for recurring payment businesses because accounts can’t be transferred if you’re selling a business. I’ve also had issues when payments didn’t go through, and finding and managing active subscriptions can be troublesome as well.
Do you want help ? Good luck getting a quick response that answers your question. Compare that to Stripe, which I use for one of my businesses. I can start chatting with a Stripe representative in minutes and they are always able to answer my question.
Most of the emails I get from PayPal these days are offering me loans or telling me they’re raising their fees. And don’t get me started on the many mailings I receive each month introducing me to PayPal loans. It looks like desperation.
But the nail in the coffin is how PayPal treats merchants. If there’s a whiff of something fishy going on with an account, the first thing the company does is deactivate the account. Consider what happened to NameBio two years ago. (The situation with Epik was also concerning, though it’s unclear exactly what happened in that case, and Epik’s response didn’t help.)
Last week, PayPal did the same to Sav. Here is what Sav wrote about the problem:
Last night we received an email from PayPal stating that we can no longer do business with PayPal. The email did not state any more information except that there was a trademark or copyright violation regarding the sale of an item. We never received any additional information about the alleged violation. Also, we never received any notice or chance to explain a transaction before being banned.
Today Sav announced that PayPal has been restored. Sav.com wrote:
We learned this morning that our account was disabled last week solely due to a domain name that had no association with Sav.
It’s similar to what happened with NameBio.
PayPal has systems in place to detect potentially harmful behavior. Its good. But his first inclination when something is reported is to shut down the account altogether. Sav.com had to scramble to identify the problem and get PayPal’s attention through a social media campaign. His customers were at risk if their renewal payments were not made.
A business that wants to work with their merchants should contact them first to resolve the issue.
Why is a merchant working with a payment service that cuts them off when something is flagged? Well, they feel like there’s not much choice because of PayPal’s network effect.
If that’s all PayPal has to offer, it’s not a good long-term recipe for success.