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Good riddance, PayPal

(UPDATE, 24 hours after posting: it seems this blog post found its way to the powers-that-be at PayPal HQ and I received a phone call telling me that I could now access all the funds in my account. I’m grateful for that, but I still won’t be using PayPal again.) Over the years, I’ve heard countless tales of PayPal screwing over my friends who choose to sell products, services, or tickets through their system (UPDATE, 2 hours after posting: how timely — now it looks like Andy has got his account frozen, too). I’ve read numerous horror stories about what happens when PayPal’s staff blindly follow their draconian rules without applying common sense; I’ve seen whole conferences cancelled thanks to PayPal’s unforgivable treatment of event organisers; I’ve watched from the sidelines as my friend Johno battled to keep Codex magazine afloat after PayPal applied ruthless account freezes. And concurrently, I’ve suffered my own problems: from the very first day 8 Faces #1 was launched, I was hit with PayPal’s idiocy time and time again. By and large, I got off lucky with only temporary holds on my money, until yesterday, when a 100% freeze was applied to my account.

Fortunately for me but unfortunately for PayPal, I’d already been planning my exit strategy and today, after over two years of being treated like dirt by a company whose entire revenue stream depends upon business from people like me, I’m happy to be taking that business elsewhere.

So why such vehemence for PayPal? Am I just another seller bemoaning my punishment for pre-selling a product when PayPal clearly states that pre-sales are something they discourage? Well, no. When people ask me what exactly I have against PayPal, I say the same thing every single time:

PayPal have all the power of a bank and yet none of the responsibility.

And really it all comes down to that. If PayPal want to hold your money, they can, and they will. A freeze on your account means you absolutely cannot get at your own money, and even if you eventually do, it will only be after a hefty delay and in staggered percentages. Can a bank do this to you? No, they can’t. So why should PayPal?

A brief history of fuckwittery

Let’s back-track a little. I want to briefly describe my history with PayPal, from launching 8 Faces through to the present day. Other legitimate sellers out there will recognise most — if not all — of these activities:

  • When the first issue launched and sold out in two hours, it caused a large spike for a previously-quiet account and it set off all the alarm bells at PayPal. This was completely understandable, of course, so I didn’t hold it against them when they placed a temporary freeze on my account. However, after getting stuck in an endless automated phone call loop (good luck ever speaking to a human at PayPal unless they call you), I became less sympathetic. Luckily for me, I knew someone who worked at their head offices at the time and he was able to escalate the case for me. The freeze was lifted and all was well with the world, but only because I had that man on the inside. Who knows if it would have ever been resolved otherwise?
  • After this initial contact, PayPal’s EU Office of Executive Escalations encouraged me to email a dedicated address just before I put every issue on sale to warn them of a spike. I was grateful for the dedicated contact, but is making money really such a suspicious activity?
  • The next couple of years went by with several smaller — but still infuriating — issues sparked by PayPal’s paranoia. I was frequently asked to provide information I couldn’t ever hope to conjure up, like postal delivery receipts for — wait for it — PDF copies of the magazine. Yes, you read that right. Various transactions were reversed (often without the actual customer’s knowledge) and in the process, PayPal took back not just the cost of the item, but also an ‘administration fee’ that cost more than the magazine itself. As an extra display of their woeful ineptitude, I’ve had an alert for an ‘open case requiring [my] action’ for the last year or so… even though there is quite. Clearly. Nothing. There.
  • So, lots of general annoyance, but nothing as bad as what so many of my friends were going through. Until yesterday.

The dreaded freeze

In all honesty, I knew a freeze had to be coming. I received a phone call from PayPal last week, during which I answered several questions about the nature of my business, such as the price, frequency, circulation, and delivery of each issue. The lady on the phone was polite, but clearly interested in the space of time between orders being placed and magazines being shipped: it was obvious she was dubious about whether or not my customers’ orders were technically pre-sales, which is what scares PayPal so much, and is the reason for their paranoia surrounding conference tickets. I knew this, which was why I’d intentionally been closing the gap between orders and shipment: issue 5 was being printed while we opened the shop and is being shipped this week. I also explained to her that technically it wasn’t a pre-sale, since every single customer receives an automatically-generated link to the PDF edition with their order receipt. She made lots of positive ‘mmmm’ sounds and said ‘that’s good’ a lot, but when she said that they’d be in touch again in a few days once they’d concluded their inspection of my account, I wasn’t holding out too much hope.

After a day or two, I decided to transfer the balance of the account to my bank, which at the time was a pretty substantial, five-figure sum. I half-expected the request to be denied, but to my pleasant surprise the money cleared in my bank account a couple of days later.

And thank god I made that withdrawal when I did, because yesterday came the second phone call, informing me that a reserve would indeed be placed on my account. At the time I didn’t mind, because I do appreciate that PayPal have to protect themselves from fraudulent sellers, and I was told that I’d have staggered access to percentages of my funds after 7, 10, and 30 days. It sucked, of course, but it wasn’t completely unreasonable.

What was completely unreasonable was the email the followed our phone call: an email that stated that the reserve on my account was for 100% of the funds, and that the staggered releases would only start once the balance reached… £15,000.

Yep, fifteen thousand pounds.

Where had this figure come from? On the phone call, I had been asked what the approximate revenue was per issue and had said around £15,000, but as I’d just made a large withdrawal fairly close to that and the initial spike of sales was over, there was no way the account balance would get anywhere near £15,000 until the next issue’s release in November. Worse still, it effectively meant that all of my sales between now and then — PDF editions of the current issue and our four back issues — were being subjected to the freeze, even though those orders offered immediate digital deliveries and were absolutely not pre-sales. I explained this in a reply, but PayPal’s response was simply that the reserve would remain. Again: no common sense applied; no consideration whatsoever for the type of product being sold; just a generic, blanket response.

Enter: the merchant account

Fortunately, as I said at the beginning, I’d been planning my exit strategy for a while. When Keir and I started Viewport Industries at the end of last year, we were determined not to use PayPal, given the many issues I outlined above. Instead, we chose to do things the truly professional way and get our own merchant account from HSBC, our business’ bank. Combined with Shopify for the e-commerce front-end and Cardstream for processing the payments and gluing the whole thing together, we’ve had a pretty robust system ready to go for quite some time, and we quietly rolled it out a few weeks ago for anyone who wanted to get some Insites: The Tour coasters. (We wrote about our ‘holy trinity’ payment set-up in length for issue #228 of .Net magazine, and they’ve since republished the article online.)

I’d been toying with the idea of using VI’s e-commerce set-up to sell 8 Faces, but had never made any serious moves to switch over. Until, of course, PayPal put a freeze on my account and gave me the best reason in the world. Thanks, guys.

So, if you buy anything from 8faces.com from today going forward, your payment will be processed by Viewport Industries Ltd. and will be displayed as such on your bank or card statement. We still accept all major credit and debit cards, so it should make absolutely no difference to customers whatsoever, unless of course you like to pay by PayPal because you treat account like a slush fund: sorry, you’re going to have to put your card details in. The switch also means we can now take payments from countries who don’t have access to PayPal, so if anything, this is actually far better for customers, and it’s certainly better for me and my business from an accounting point of view.

Most importantly, it means that I can finally leave PayPal behind. Sadly, I expect I’ll have to battle to withdraw the £600 or so that’s still sitting in my account, but hey, PayPal have been sued before for withholding sellers’ money and I’ll take them to court if I have to. Is it worth it for £600? No, but it might be to make a point.

My decision to quit PayPal means they’ll lose fees on annual sales of about £40,000, if you combine the magazine, the prints, and a few other things I had — until today — put through their utterly abysmal service. I’m sure that’s a drop in the ocean for them, but if you’re a seller with a decent turnover, I would urge you to take your business elsewhere, too, whether that’s to an alternative provider, or to your own merchant account environment (don’t be daunted by the scary paperwork — it really isn’t that hard to set up). Perhaps a mass-exodus of sellers would be enough to make this clueless company wake up.

From my experience and that of others who’ve suffered the same, it’s clear that PayPal are interested in buyers, not sellers. Why else would they provide customers with refunds at the drop of a hat, but withhold money amounting to thousands — literally thousands and thousands and thousands — from buyers without any valid reason, when not even your bank is legally allowed do that? (I’ve expanded on this point in this comment.)

PayPal, you are the scourge of the internet. Fuck you.