This is a topic which many dropshippers will experience; getting banned by PayPal. Maybe you are even reading this article because it already happened to you ? In that case, don’t worry! In this article, you will find the solution to your problem and read about how you can prevent being banned by PayPal in the future! 

Suppose you want to minimize the chances of being banned by PayPal while dropshipping. In that case, you should always have your business registered, provide real legal documentation, have excellent communication with your customers, and upload real tracking numbers.

To understand how you can prevent getting banned by PayPal if you are dropshipping, we will first take a look at why PayPal often bans dropshippers ! 

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Why does PayPal ban dropshipping stores?

Like every other online payment company, PayPal wants to keep a reputation of being the safest and easiest payment method on the Internet. When PayPal is available as a payment option, people should be very comfortable with using it and shouldn’t have to be worried that the store they are buying a product from is fraudulent.

Many dropshippers however, don’t really care about the product they are selling, the delivery time, or their customer communication. They only think about receiving money. Customers that are treated like that will, of course, experience an awful customer experience and start a dispute on PayPal!

Many times, the main topic of their dispute is:

• The product did not arrive or is still in transit
• Broken product
• Poor quality product
• No tracking information
• Product is not as described
• No customer communication/no replies on contact attempts

What makes it even worse, is that on average, dropshipping stores make themselves guilty of the above topics more often than other ecommerce stores. Because they hate disputes, PayPal is extra careful with dropshipping stores in particular.

Need more information on how to treat your customers? We have made a complete guide about customer service for dropshipping stores here.

PayPal Business account vs. personal account?

If you are still setting up your PayPal account, you will have to choose between a business or personal account.

Some people aren’t sure which one to choose, but let me tell you, always choose a business account!

Not only is choosing a business account required by PayPal if you are planning to sell online frequently, but it will also decrease your chances of being banned by PayPal when dropshipping.

With a business account, you can submit your business’s legal documents to PayPal, which shows them that you’re a serious seller. Also, they will expect you to have more transactions and eventually disputes than a personal account.

If you’re interested in learning how to set up your PayPal business account, then I suggest going to this article from PayPal here.

Read CorpAgent’s guide on PayPal Pro here

Now that you have set up your account correctly, let’s discuss some methods to prevent being banned by PayPal!

The 4 things you should be doing, to prevent getting banned by PayPal

To help the whole dropship community, I have written this article, which includes everything you should be doing to prevent being banned by PayPal if you are dropshipping!

1- Set up a real company and provide legitimate documentation

In most cases, when you set up your PayPal account for the first time, you will only need your business name and address and you’re ready to go. But what happens if you suddenly make lots of sales or, even worse, receive a dispute? PayPal will then ask you to submit more documentation regarding your business, such as proof of registration or proof of address.

Since anyone can start dropshipping without submitting their legal business documents, most people won’t be able to provide these when PayPal asks them to. Other people will even try to submit fake documentation!

Yup, their PayPal account gets banned, and their funds will be withheld for up to 180 days!

Thus, the first step to prevent getting banned from PayPal when dropshipping is to set up your business in the country you’re from! This way, you will be able to provide all legal documentation PayPal asks you for.

2- Provide real tracking numbers for your order

When picking a shipping method for your products, I highly recommend picking one which includes Track-and-Trace and therefore a tracking number. In PayPal, you can then add each tracking number to its corresponding order. 

This will help you prevent getting banned by PayPal in the following ways:

• Provide proof of shipment: With a tracking number, you essentially give PayPal proof that you have shipped out the package for your customer. Therefore, PayPal will know that you are trying to be a legitimate business and get your orders to your customers.
• Reassure your customers: Having access to a tracking number is so relieving for your customers. Imagine waiting 2 to 3 weeks for your package without knowing where it is in the shipping process or if it will even arrive at your house. Customers that have access to a tracking number can check the status of their order everyday! They often won’t contact you any more about where their order is and won’t open disputes on PayPal about not receiving their package.
• Insanely helpful for winning disputes: When you have a good quality product, chances are most of your disputes will be about the customers claiming not receiving their package. PayPal will only ask you to respond to your customers’ dispute with a message.

  However, you can actually insert the corresponding tracking number into the dispute by clicking “Add tracking number”. This way, PayPal can see that the package is still in transit, and you will always win the dispute if the package gets delivered a few days later!

3- Keep in close contact with your customers

One of the main advantages of dropshipping is that you don’t need to keep your own inventory. However, this comes with a price if you’re dropshipping from China. It’s your job to set realistic expectations for your customer and update them on every step of the shipping process. Often, customers do not mind that they will have to wait 2-3 weeks for their order, 

• Day 0: Send an order confirmation mail.
• Day 1: Packaging confirmation mail. Tell your customer that their order has been processed and that you’re currently working on packaging their order.
• Day 2: Order packed mail. The customers’ order is packaged and ready to leave the warehouse!
• Day 3: Shipping confirmation mail. This is one of the most important mail to send. It will include their tracking number with a link to your tracking page, which they will be able to reference, and an expected overview of the shipping process. 
• Day 7: Package left the country of origin mail. Here, you will tell your customer that their package has cleared customs in its country of origin and is on its way to the destination country (ideally by plane).
• Day 10: Arrival in the destination country.
• Day 14: Out for delivery by last-mile courier. Ideally, you will want to send this email 1 day before the package gets delivered. Tell your customer that their package has almost reached them and is scheduled to be delivered tomorrow!
• Day 15: Delivery confirmation mail. Send a confirmation of the package delivery with a title like: “Your package has been delivered!”.

By utilizing this template and keeping in contact with your customers, you can greatly reduce your chances of getting a dispute and therefore have less chance of being banned by PayPal!

4- Respond to disputes correctly

What is a dispute?

If you don’t know already, a dispute is a process facilitated by PayPal in which a customer can open a dialogue with you about a complaint they have of your service or product.

Within PayPal, a dispute can be opened for one of the following two reasons: 

1. Item Not Received (INR): Here, the buyer claims that they have not received their order yet.
2. Significantly Not As Described (SNAD): Here, the buyer claims that the item they have received is significantly different than expected based on the seller’s (your) pictures/description.

Assuming your product is of good quality and you have an excellent product page, the most disputes you will get will be of the Item Not Received type. Also, the fact that you’re dropshipping and often will have longer delivery times increase the chance of getting an INR dispute.

How to respond to and win disputes?

To prevent your funds from being withheld, losing money, and being banned from PayPal, winning the disputes you get is crucial. The first thing you should remember is to answer the dispute as fast as possible

If you get an INR dispute, follow these steps to resolve it:

• The most important thing is to submit the tracking number to PayPal if you haven’t done it already.
• You can do this by clicking on the dispute, and then you will see a button “Add Tracking Info” at the bottom of the page.
• By clicking on this button, you will be able to paste the corresponding tracking number, select which shipping company you use, and add a message. 

Conclusion

Many people think PayPal only wants to ban dropshipping stores, however, it’s perfectly possible to have a successful dropshipping store and never be banned by PayPal! The most important thing to have is excellent customer service and a product of good quality.  Make sure that your shipping method is reliable and includes a tracking number so that customers can track their orders at any time. Additionally, set up a mail sequence to keep your customers updated on the shipment status. All this will lower the chance of getting a dispute and therefore getting banned by PayPal when dropshipping.

If you experience any other problems with PayPal, such as account limitations or want more information about topics such as disputes, then check out the official PayPal problems FAQ.

CorpAgent is proficient in its area. But more so, we have 10 years+ in the business and a strong bond with PayPal Singapore. We have helped thousands of foreign businesses start with PayPal Business and PayPal Payments Pro, and we look forward to helping more as we develop more insights and form a stronger bond with PayPal Singapore (and PayPal Hong Kong, for those who are interested), we are confident that our service quality is unmatched especially in the SEA region.

CorpAgent is also a long-time provider of Singapore corporate services including:

Company Formation in Singapore (for associations with PayPal Singapore)

Company Formation in Hong Kong (for associations with PayPal Hong Kong)

Accounting Services in Singapore

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