Paypal may have started as a way for amateur merchants to accept credit card payments for online auction items, but these days it’s not uncommon to find businesses that use the service to get paid by customers or clients. What are the up and down sides to the practice?

One of the big downsides to Paypal is also one of its strengths: A lot of people use it. Easy and convenient, all it really takes to get set up with Paypal is an e-mail address and a pulse. The simplicity also makes Paypal a prime target for hackers and cyberthieves who routinely target the site for their activities.

Associating with a site that has routine security breaches could tarnish a business’s image — and for an organization that depends on a squeaky clean reputation (attorneys, physicians, dentists, accountants, etc), that’s to be avoided.

For many businesses, however, the price of accepting credit card payments can far exceed Paypal costs. Although Paypal charges transaction fees that are similar to those of a credit card company, businesses can save in overhead and personnel costs by using the online service because they don’t have to:

• Pay monthly service fees
• Hire staff to process card payments
• Rent card machines to perform transactions, or
• Install a separate phone line for credit card machines.

One caution: Professionals need to make sure that the way Paypal functions doesn’t conflict with any professional ethics guidelines.

Tags: business, online, payments, PayPal, professional services