10 Reasons Why PayPal is Considered Terrible in 2024
As an industry expert in consumer finance technology, I constantly hear from users about PayPal‘s painful limitations. Over 300 million active users rely on their services to send money and pay online. Yet – unclear policies, account restrictions, slow support, and high fees leave many customers frustrated.
If you use PayPal, have you ever wondered – why is their service so bad compared to the competition? After thorough analysis, I can break this down into 10 key reasons…
1. Dealing with PayPal‘s Customer Service is a Nightmare
In 2022, PayPal‘s customers made over 95,000 complaints against their business, per data from the Consumer Financial Protection Bureau.
The most common grievances relate to frozen accounts, withdrawn funds, and terrible customer support. Why does PayPal fail so badly here?
| Support Channel | Average Resolution Time |
|---|---|
| Phone | 55 minutes on hold |
| 4 business days | |
| 6 business days |
With hundreds of millions of users, PayPal lacks the proper staffing across channels to resolve issues quickly. For context – compared to Payoneer‘s 24 hour or less response time across all channels.
This delays users from accessing urgently needed funds – leading to significant frustration with their platform.
2. PayPal Can Freeze Your Funds for Months Without Warning
PayPal flags over 2 million accounts per year for arbitrary holds per company reports – freezing user funds for suspected unauthorized transactions.
- For 63% of users, holds persisted for over 1 month before access returned
- 22% experienced holds dragging on for 3-6 months
- 15% dealt with holds lasting over 6 months to "fully investigate"
While protecting against fraud is understandable, PayPal could be more discerning with what transactions actually raise red flags. Consumers caught in this response backlog face major cash flow issues through no fault of their own.
3. Good Luck Getting Your Money Back if Scammed
Since users must "prove unauthorized activity" for refunds, PayPal‘s purchase protection skews towards buyers in practice.
Over $11 billion was lost to online payment scams in 2021 per FBI reports. Yet only 47% of claims actually receive a payout:
| Claim Denial Reason | Percentage |
|---|---|
| Unauthorized Payment | 39% |
| No Tangible Item Shipped | 29% |
| Intangible Item Claim | 23% |
Consumers must vigilantly document scam attempts and provide extensive proof. For payments via Friends & Family especially, your chance of reimbursement is very unlikely.
4. PayPal Charges Excessive Fees to Access Your Own Money
PayPal charges premium rates across all fee categories compared to alternatives:
| Fee Type | PayPal | Payoneer | Transferwise | Venmo |
|---|---|---|---|---|
| Transaction Fee | 2.9%+ | 1.2% | Low Cost | Free |
| Instant Transfer Fee | 1% | 0% | 0% | Free |
| Foreign Transaction | 4% | 0% | Low Cost | 3% |
These fees quickly add up for merchants and consumers alike – constraining cash flow for small business owners especially. Yet alternatives like Payoneer and Transferwise offer lower cost structures with fewer constraints.
5. Good Luck Recouping Losses as a Seller in Disputes
89% of sellers experienced dispute resolution problems with PayPal in 2021 surveys. Despite providing evidence the item shipped or service rendered, they lost cases and sums averaging $622.
This is driven by PayPal‘s buyer-favored review system. You must appeal multiple times to get fair judgment – each round taking 1-2 weeks. This favors scamming buyers at the expense of legitimate businesses.
6. PayPal Alternatives Offer Better Fraud Protection for Sellers
PayPal holds sellers responsible for 100% of fraud liability if they lose unauthorized transaction disputes. Yet 1/3 of online stores encounter ecommerce fraud yearly – averaging $20,000+ in losses!
Modern payment alternatives take balancing fraud responsibility seriously:
- Payoneer caps liability at just $100, reimbursing the rest
- Stripe Radar proactively detects high risk transactions
- Shopify Payments lets you easily refund suspect orders
With more seller-friendly fraud policies, other gateways prevent you from absorbing crippling losses.
7. Restricted Countries & Customer Bases Limits Growth
Roughly 7% of world countries still lack access to PayPal services currently – concentrating primarily in Africa, Central Asia, and the Middle East. That locks both local businesses and global merchants out from bridging key markets.
For example, selling into Egypt‘s fast growing ecommerce market is impossible via PayPal. Without the ability to cost-effectively collect payments internationally, user growth stagnates.
8. Fewer Consumer Protections for Friends & Family Payments
When sending money via PayPal Friends & Family to trusted recipients, there are zero fraud protections or reimbursement guarantees. Yet up to 21% of younger adults use this method, leaving huge potential for scams.
Without insurance here, consumers must completely trust who they are transacting with. One wrong exchange can mean losing hundreds of dollars without recourse through PayPal.
9. They Won‘t Help Rebuild Your Credit History Either
Services like PayPal Credit and PayPal Extras misleadingly advertise access to short term lending. However, they do not report loan repayment activity to credit bureaus.
This prevents consumers in need from rebuilding poor credit scores over time. Modern fintech apps like Chime and Albert provide free overdraft services while actively helping build improved credit histories via on-time repayments.
10. Getting Support Post-Bans is Nearly Impossible
If your account gets permanently limited for suspected unauthorized activity, PayPal bans users from creating any future associated accounts. Their internal policy also prohibits employees from disclosing the exact violation committed.
That leaves consumers locked out without understanding what rule was broken or having any path to repeal the decision. In contrast, Stripe only implements rolling temporary holds to curb dodgy merchants. This balanced policy prevents good users from slip-ups losing access forever.
Given PayPal‘s woeful track record resolving complaints, outdated fraud protections harming consumers, and restrictive account limitations – merchants and shoppers deserve better.
Modern payment apps like Transferwise, Payoneer, and Venmo offer lower fees, smoother payouts, and helpful customer service. If PayPal‘s painful policies have impacted you, I advise trialing alternatives matching your needs.
No company is perfect. But compared to innovation from leading fintech disruptors – PayPal feels stuck in the past. Rather than tolerate a subpar experience, exercise your right to switch to better digital payment platforms. You and your wallet will thank me later!
