When starting up an eCommerce for the first time there will always be things that you have not thought about. These are a few of many issues I have had to solve along my journey as Co-founder for www.teterum.com – a subscription service that offers tea on subscription. As a subscription service you don’t pay the product when you buy it; you pay once and then PayPal handles the recurrent payments. This can cause problems if you don’t have control of how that service works.
If your eCommerce is recurring, for example a subscription service (like www.teterum.com) and you offer PayPal as payment method to your customers, read this.
Three things to think about when using PayPal as payment method
- Set up your discounts to fit PayPals way of working – you can only increase a recurring charging with 20%
- Make sure your backend plugin or theme is compatible with PayPal – people may not use the same emails for their PayPal account as they may have signed up with on your site
- Recurrent payment for PayPal counts from the date the first payment was made – your recurrence for your subscription needs to match that
Set up your discounts to fit PayPals way of working
My service-launch discount was 50% of the total price. The total price was 10€ for monthly subscription and 30€ for quarterly subscription but only applicable for the first month. We didn’t realize that PayPal only let you increase the total sum with 20% during a period fo 180 days. This means that for the second month, you will be not be able to increase the monthly charging to full price for the product/service you supply, you will be charging less which affects (or eats up?) your profit.
Solution: limit discounts to 20% and explain the situation to your affected customers (if any), give-a-way something when asking then to cancel the subscription and do a new one or just “live with the fact”.
Risk: you risk losing the customer; you impact on your perception.
Gains: I believe that honesty is best solution to these situations.
Make sure your backend plugin or theme is compatible with PayPal
You must be able to identify what payment goes with what order. People don’t always use the same email and profile names. Not all plugins extract the PayPal information to visualize it for your order in your backend interface.
Solution: choose a theme or plugin that is easily integrated.
Risk: if not integrated, you lose control and can not troubleshoot properly.
Gains: we believe that your reputation is based on how you handle the customer. Let them know that you have control in the whole process.
Recurrent payment for PayPal counts from the date the first payment was made
Our cancellation policy is that you can cancel the payment until the last day of the month. We wanted to make it easy. PayPal charges recurrently the day after the date of payment each month which means that a customer could have paid e.g. the 2nd of January and then decides to cancel the 29th of January. According to our rules, its correct and we should refound the payment. But PayPal will charge you for the management of the payment as usual (as the payment was done) and on top of that the refound will cause you administration.
Solution: inform the customer about the recurrence so that they are aware and state the benefits of aligning cancellations with the subscription date.
Risk: you pay for the “sign-out” of your customers if this situation occurs
Gains: you don’t complicate the process for the customer by making it easy for them
What other experiences do you have with PayPal?