How I use Paypal for my online transactions of iPoor T-shirts

Creating a wonderful product based on a novel idea and which now sells like hotcakes has to have some sort of management system with which the products are sold. Following DT here addresses a small but important issue for ecommerce – how he makes the best of PayPal, and what you can learn from it.

Recently I have been exploring the highs and lows of Paypal.com while managing payments for my iPoor T-shirts. It’s not the world’s most perfect banking system, but in my opinion its a great online banking system that allows transactions to anyone or anywhere with a paypal account espically if your transactions are in small amounts.

Paypal started as an on-line escrow middle man for eBay payments where you can pull funds from your credit card AND your bank account for payment to someone else.

For small business it’s very ideal as it’s very low cost to operate the account. There is no minimum account keeping fee for very small amounts (even at $0). Operations wise, you can for accounting purposes, download transaction data into a spreadsheet or Quicken to track purchases or transactions. Also for each of my T-shirts sold, I can print out shipping receipts to insert with each of my transactions for easy reference of delivery information and order details. On the whole very professional if you ask me.

If your business conducts the majority of sales online, you can receive money from your buyers from either their Paypal account or from their credit card. This means you do not need to setup expensive credit card merchant accounts nor require minimum monthly transactions as Paypal is now your middle man. There is however a small commission about USD$1-2 depending on amounts, which I forgot to charge for my iPoor T-Shirts! How ignorant of me! But this is how Paypal makes money.

Also Paypal works in only a few major currencies such as US dollar, Euros and British Pounds, so if your local currency is not of their major currency, you will have currency exchange risks. However after comparing their exchange rate with XE.com, I find their rates pretty fair, but you will just have to deal with the ups and downs of the global currency market.

For example when I calculated my pricing for my T-shirts I calculated it based on 1US$ = 1.70SGD$, the Singapore Dollar has since strengthened and it’s now in the high 1.58SGD$ eating into my already low margins.

There are however quite a few limitations.

One is the ability to pay someone without a Paypal account. If that person needs to receive money, he/she needs to setup a Paypal account, other wise there is no way to receive the money. But in most cases I just transfer the monies from the paypal account to my personal account and pay conventionally.

However let me warn you, setting up the linking banking account is “Nasty”. I suggest you read all the instructions carefully before you set-up you Paypal account as your Paypal account and your Bank Account name needs to be exactly the SAME.

Another problem as mentioned is customer support. I made a mistake in my Paypal account and account name and have been sending emails to them to change it. They still have not done anything to date after 2 weeks of 5-6 emails sent.

In the end, with the help of my designer friend, I’ve decided it’s easier to set up multiple papal accounts which you can transfer money to each other just like having multiple accounts in a bank.