The world of e-commerce is ever-expanding, and with it, the rise of dropshipping has revolutionized…
Why Paypal Bans Dropshipping Stores
8. Why Paypal Bans Dropshipping Stores
Paypal Bans Dropshipping Stores And Limitations:
Paypal is one of the leading payment gateways that makes sending and receiving money globally easy. So what makes Paypal bans dropshipping stores?
Paypal is used mostly by both individuals and business owners who have online businesses or personal affairs that require online transactions.
Dropshipping is the latest innovation in the eCommerce world, and by looks of things, based on the reviews and online cries, Paypal bans Dropshipping Stores and startups are worried why and how they get past having their money on hold for 180 days waiting for the period for cash release.
If you have been an active drop shipper then, I believe you are a member of either 2 or 3 dropshipping facebook groups, at least you’ve witnessed complains from members about PayPal having limitations on their accounts, or having the cash on hold and then later ban them from using the platform.
There are many reasons why 95% of dropshipping stores close without testing further, PayPal is one of the biggest reasons why people quit Shopify and dropshipping business in general.
Here is to why do Paypal Bans Dropshipping Stores
Invalid Tracking Info
As an online business dealing with products, you are categorized by default as an eCommerce by PayPal. They are aware you are shipping products from your store’s warehouse to your respective customers.
It is only normal for a product shipment to have tracking info which is designed to help handle disputes and act as a delivery proof.
When PayPal notices that mostly you ship your products without updating the shipping information in your Paypal account, they start scrutinizing the entire account from your website, product types and also check for any dispute related to the store.
Unlike the manufacturer in china, you are not dealing with shipping or inventory, hence you have no control over the process neither can you provide a tracking code.
Most stores end up limited by PayPal and can no longer access their cash due to failure to show proof of shipping.
As a drop shipper, you can use auto Paypal tracking code apps which automatically creates tracking codes anytime you get an order, this will help solve the tracking code issue by Paypal.
Lack of Inventory
Paypal hates dropshipping and thus why the hashtag #paypalsucks trends in almost all the dropshipping groups on facebook. They want you to have inventory and be able to ship products from your warehouse, lack of this only proofs you are dropshipping as of their say, dropshipping is a risky business they don’t want involved in.
The reason they normally give ”The type of business you are in is risky ‘ hence you will no longer be able to use Paypal.
This is because Paypal hates chargebacks and disputes, they want the seller to always win the disputes but one can’t really do it without proof of product and tracking info.
They tend to favor shops that sales products they are in control of and can ship from their warehouse besides providing tracking information of the same.
Paypal is in the business of making money and disputes and chargebacks mean losing money, they will do anything to clean their database and remove risk marked business from their platform.
Paypal is keen on how you handle your customers and the quality of the products they are getting. With dropshipping, disputes, chargebacks or claims are very hard to avoid.
This is because you have no control of the quality of the product, shipping duration and also inventory. You will face disputes from customers citing the following;
- Products not as described
- Broken Products
- Products never arrived
- Poor quality
If you are poor at customer care and replying to emails is one of your weaknesses,then customers will file disputes with intentions f getting a refund. The normal dispute rates accepted by PayPal is about 2%, when you hit above that they will have your account on hold or limited either permanently or temporarily until the issue is resolved.
This is one of the reasons why Paypal Ban Dropshipping Stores, you need to take into account, the time you take to resolved issues and how well you take care of your customers more so after-sales.
You can offers or incentives in order to reduce the disputes in your Paypal account, it works magic.
Lack Of Documentation
When starting a dropshipping business you are required to use a business PayPal account, the business Paypal account must entail your business name (Name of your store or company) Business number and other important business documents as per their policy
At some point, when faced with limitations or disputes they may require you to send the business supporting documents.
In most cases, drop shippers lack these vital papers, the account ends up restricted and later limited and money withheld for 180 days.
You need to register the company way before you sign up on Paypal, have legal documents that validate your online activities.
Proof of Address
We are living in a world of possibilities when selling online, some prefer to use other’s details and lie about the business location.
Paypal insists on this, they need to be answerable for tax-related issues hence the need of every user on their platforms to use their real details and exact locations.
When using Paypal doing dropshipping, there have transactions limit that when reached, you have to verify certain things like location, identify and others.
Failure to provide the location and identify proof will have your account banned. Most dropshipping store owners fail to provide this when needed by PayPal, some also use P.O.BOX addresses on their Paypal which Paypal can’t verify.
Conclusion on: Why Paypal Bans Dropshipping stores
Paypal bans dropshipping stores on a daily basis on failure to meet the above requirements,it hates the drosphipping business since it is full of disputes and claims. If you want to start a dropshipping business in 2019, then make sure you trade carefully on their platforms.
They sometimes just limit account with no apparent reason, some have accused them of extorting cash from well-perfoming stores by banning them from their platforms.
There have been accusations of Paypal trading with the withheld cash, make a profit and release the initial funds after 180 days.
What do you think is the best PayPal alternatives for dropshipping business owners?
Share your comments below.
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