Is Paypal Safe For Business? The Complete Guide On Security
Consumers have been using PayPal to shop online for more than 20 years. It’s an online platform that allows anyone to buy and sell goods and services without sharing credit card numbers or bank account information. Instead, PayPal makes those payments on behalf of the user.
Dozens of online payment platforms have also grown with the ecommerce industry, but PayPal remains one of the most popular ways for people to pay for purchases. In 2021, it processed over 19 billion payments. More than 30 million businesses and 400 million customers use PayPal.
While online shopping and spending has been normalized for just about everyone with a Wi-Fi connection, running a business comes with extra security precautions. You may be wondering: Is PayPal safe for business? How can you manage money securely, and what do you need to know about keeping your business and yourself safe while using PayPal?
Ultimately, PayPal is safe for business. However, you need to remember that 100 percent security is nearly impossible, and scammers and fraudsters are getting smarter and smarter. Utilize PayPal for your business, but take every extra precaution to keep your earnings and your information safe.
PayPal Security Features
According to online studies commissioned by PayPal in 2020 and 2021, PayPal is the fourth most trusted brand in America, and one of the most trusted brands across all payment providers in the United States.
Like other online payment platforms, PayPal automatically encrypts every transaction that comes through, using SSL protocol technology with 128-bit encryption. There’s extra protection provided by PayPal, too. While credit card companies typically store data in multiple locations, PayPal uses a single online vault system, which is safer for personal and financial information.
PayPal promises business users the following:
- Fraud protection tools
- Data security
- Reliable customer service
As a seller, you will not receive any sensitive payment details from your customers, which leaves less liability on you. Monitoring is done 24 hours a day, and unusual events, payments, or transactions are flagged.
Paypal Vulnerabilities For Businesses
Scams are always a concern for consumers and businesses. Phishing has been an especially difficult problem for PayPal over the last five years. PayPal stores a lot of sensitive and financial information on behalf of its merchants and customers, and that’s an attractive grab for criminals engaged in fraud and theft.
PayPal has suffered a 305 percent increase in phishing threats during 2022. That’s going to make any online business nervous.
Fortunately, PayPal has installed new security measures to keep their site safe and remain vigilant against phishing threats and other scams. However, if you’re using PayPal as your preferred payment option for your business, you’ll likely need to incorporate additional security measures with the assistance of cyber experts (similar to those offered by pradeo.com) in order to minimize any potential malware attacks or fraudulent online schemes.
Don’t Expect Protection For Digital Merchandise
Business owners are protected through PayPal from any costs that arise from unauthorized transactions and merchandise that was never delivered. Unfortunately, that coverage only extends to tangible products and does not include any digital products.
If there is a dispute, your business will have the opportunity to provide proof of the transaction and a delivery receipt, but the process is not as easy when you’re selling digital goods and services rather than physical products.
Any dispute, whether it’s initiated by you or your buyer, may lead to your account being limited or frozen. That’s frustrating, and while it ultimately provides more security to both consumers and businesses, your work could be disrupted when your account is frozen or refunds are delayed.
PayPal is an aggregate payment processor, so transactions need to be processed in large batches, with other merchants doing business. To reduce PayPal’s own risk, they freeze business accounts quickly if it looks like something is amiss.
What To Know When Using Paypal For Business
There are a lot of excellent reasons to use PayPal for your business. The platform provides several merchant support benefits, including:
- Shipping discounts
- Marketing insights to help with attracting customers
- Recordkeeping and documentation, including tax forms
- Invoicing features
- Low merchant fees
- Easy integrations with most software systems
PayPal allows you to do business online seamlessly. You can accept different types of currencies, including crypto, and the app is user-friendly.
Is PayPal safe for business? Safety features are adequate, and while nothing is perfectly secure in the tech age where hackers are getting smarter and businesses are working overtime to keep up, there’s a reasonable expectation that your business information and your company finances are as safe as your own personal information when you’re using PayPal to generate income.
Shawn Manaher is a former financial advisor, has founded 5 online businesses, and is a coach, speaker, podcast host, and author.
He’s been featured on The Consults Corner on TAE Radio, The Writing Biz, What’s Your Story, and more.
He loves to share his personal finance tips and money management wisdom with others on his website, ShawnManaher.com, to help them find financial freedom.