The solution might be to stop using PayPal-based payment systems (such as e-junkie) and start using a real registration provider, such as Advangate, Plimus, etc.
Yes, their commisions may be higher. However, PayPal introduces an uncertainity factor.
There are hundreads of stories of people who used PayPal, were happy, and then got their accounts closed and funds frozen for no reason at all – and couldn’t do anything about it.
This is a comment point of view among folks running uISVs, and it comes up in the Business of Software boards fairly frequently (as night follows day, so shall PaypalSucks follow Paypal). I respectfully believe it to be mistaken, and as this is a crucial decision for a business to make, have decided to address it here rather than in a comment.
I have used a “real” registration provider. The experience was worse for me, and for my customers, than the experience with Paypal has been. Whereas I have never lost a dime on Paypal in 7 years, I have never successfully recouped a penny off of close to $100 in sales on eSellerate due to obtusely difficult processes to connect me to my money. Their ordering pathway is also inferior to Paypal’s, and their workflow is tedious and overly complicated for my needs.
My relationship with Paypal (since 2000), like my relationship with my bank, with Google, and with the Java community, is a calculated risk. I cannot be sure that my Paypal balance will not be frozen tomorrow. I also cannot be sure that my bank will not suddenly lose my records, that Google will not consign me to PRgatory, and that the Java ecosystem will not evolve in a way iminical to my interests. In the meanwhile, these calculated risks save me hundreds of dollars versus the next best alternatives.
Why is this a crucial issue? The dollars make sense. On my 2006 sales, Avantage would have cost me $270 extra. Plimus. approximately $150 extra. etc, etc. That is on a pre-tax profit of approximately $1,250. That cost, unlike almost every other cost in my business, scales linearly with sales. When phenomenally successful Andy Brice asks “What am I getting for an extra $880 per thousand transactions?” that is not a hypothetical question. (Ahh, a thousand transactions — maybe next year. My 2007 goal is 400.)
Even if RandomSharewarePaymentProcessor were able to offer me 4.16% processing fees (($24.95 * 2.9% + $0.30)/ $24.95), I would be very hesitant to leave Paypal. In my market, where non-technical customers abound and eBay is a way of life, customer trust for Paypal is a heck of a lot higher than customer trust is for Patrick McKenzie. Trust is currency, because without trust I get no currency. The Paypal name means “Buy here and you’re covered” to the astoundingly high seventy percent of my customers who have an account with them. Its like the Good Housekeeping Seal of Approval, 2007 Edition.
Finally, speaking of ecosystems, Paypal is big enough to have one. This has resulted in numerous services springing up around Paypal, such as e-junkie and Payloadz. I have sung the praises of e-junkie on many occasions.
P.S. If the prospect of having your Paypal account frozen is still too scary to contemplate, consider a) telling them to “auto-sweep” (transfer the entire balance daily into your bank account) or b) sweeping manually, keeping perhaps 2 sales worth to cover any refunds you may need to issue or chargebacks you may need to absorb. This limits my maximum losses on Paypal to approximately $50, plus whatever damage to my business continuity the freeze would cause before I could type “mv purchasing_esellerate.htm purchasing.htm” into a terminal somewhere. If you’re particularly paranoid, get an extra account at your bank to link Paypal to, since they can’t then use ACH to muck with the cash in your real bank account. Most banks will hand out checking accounts like they are candy (although it might cost you a hard inquiry on your credit report).