So, you’ve made your decision. You’re setting up a Woo-Commerce site. Good for you!
Welcome to the most popular e-commerce platform on the planet.
Now, the next big decision is, which payment gateway is best suited to you and your business needs.
There are a number of viable options on the market. And like most things, they all have their pros and cons. Probably the most popular (currently) are PayPal, Payfast, PayGate and the new arrival Peach.
What is PayPal?
PayPal is one of the most well-known online payment service providers (PSPs) in the world.
Purchased by EBay in 2002, the platform is well-established, trusted, safe, fast and super-easy to use.
You would think with that kind of opening statement, all would be well with the world.
But, it’s not that simple. Especially for South Africans. Or more specifically South African based e-commerce.
Our relationship with PayPal can best be defined as a love-hate relationship.
Because the reality is, while PayPal has some significant, indisputable advantages, it has some very expensive and glaring cons.
What we like about PayPal
- PayPal is genius in its simplicity.
Whether you open an account as an individual or business, the process is pretty straightforward. You just load up your details, confirm your email address, link your bank account, and set up payment processing options. And that’s it! You are good to go.
- PayPal links directly to your bank account, so once you have money in your account you can purchase to your heart’s content – without a credit card.
- It’s also super simple for your customers. They don’t even need to have a PayPal account themselves, as PayPal accepts payment from:
Credit cards accepted by PayPal business accounts
Debit cards accepted by PayPal business accounts
- Added to that, it integrates with hundreds of commerce platforms, including custom online stores like WooCommerce. A big plus!
- PayPal is 100% guaranteed against fraud
- Payments are cleared instantly
- It is one of the simplest and quickest ways to send money abroad
- And, they offer some really great supporting PayPal services including PayPal shipping, loans, invoicing which allows you to create and send invoices right through your account.
And the cons….generally speaking
- PayPal charges about 2.9% of the total amount held in your account. Plus $0.30, approximately R4.18 per transaction, depending on the exchange rate at the time.
- PayPal retains the right to freeze your account at the sign of questionable conduct in your account. So,with PayPal’s stringent security measures you are more than likely, at some stage, to run into frozen account situations. Which, even under the best of circumstances, have been known to take a while to resolve.
- PayPal can hold back payments made to you for up to 21 days – if they are concerned the payments may not clear.
So, aside from the above mentioned cons, does PayPal work in South Africa?
The short answer is…yes!, but….
“Yes but…” #1 | ZAR is not yet a recognised currency
This is a big one. PayPal does not yet recognise the South African Rand.
So, what does that mean?
Well, firstly, if you use PayPal, you have to set your store currency to dollars…or any of the below listed currencies PayPal does accept.
This means you will have to input all your product prices in the currency that you have selected, and YES, your store prices will reflect in this currency on the front end. Which is not great – and very unsettling for the typical SA buyer. Seeing the price of a product in dollars can be very disconcerting.
It also means, practically speaking, that you have to manually convert all of your product’s prices based on the Rand Dollar exchange rate.
Yes, there is a currency converter plugin available to make the process easier. But for the purchaser they still don’t see just the Rand value of the product. Instead they will now see your prices in all the different currencies on the front end – including the Rand.
And having done so, it doesn’t change the fact that you will still have to set your store currency to one that is supported by PayPal.
These are the currencies currently supported by PayPal:
Australian dollar (AUD)
Brazilian real (BRL)
Canadian dollar (CAD)
Chinese Renmenbi (CNY)
Czech koruna (CZK)
Danish krone (DKK)
Hong Kong dollar (HKD)
Hungarian forint (HUF)
Indian rupee (INR)
Israeli new shekel (ILS)
Japanese yen (JPY)
Malaysian ringgit (MYR)
Mexican peso (MXN)
New Taiwan dollar (TWD)
New Zealand dollar (NZD)
Norwegian krone (NOK)
Philippine peso (PHP)
Polish złoty (PLN)
Pound sterling (GBP)
Russian ruble (RUB)
Singapore dollar (SGD)
Swedish krona (SEK)
Swiss franc (CHF)
Thai baht (THB)
United States dollar (US)
“Yes but…” #2 | You will need an FNB account.
You can only functionally use a PayPal account through First National Bank. You can cash out your PayPal account into any other bank you choose, but you will have to sign up with FNB Online Banking and process your PayPal funds through them. So. If FNB is not your current banking institution of choice, you will need to sign up with them to support PayPal. Although, that said, provision has been made for non-FNB customers who can transact via the FNB Withdraw service.
Take a look at FNB’s site for what you need to qualify for this service and how to sign up.
“Yes but…” #3 | 30 days withdrawal policy
According to the South African Reserve Bank regulations you have to withdraw any funds paid into your PayPal account within 30 days of receiving it.
So…is PayPal a worthwhile consideration? Does it work in South Africa?
Yes, but ….as a South African citizen there are a few hurdles you will need to jump through. And possibly, keep jumping through.
We’re not saying that the pros necessarily outweigh the cons of offering PayPal on your online shop. But we are saying weigh your options carefully. If your store specifically targets international customers you should be fine.If not, there are other really excellent options to consider.
If you want an easier option for your shop, take a look at this article, where we briefly discuss our favourite alternative for South African E-commerce stores…Payfast.