PayPal seller protection mechanisms for Shopify entrepreneurs: the complete guide

PayPal seller protection Sep 14, 2021

The convenience of having different payment gateway helps business owners to set up stores easily across the world. This fast and easy transaction is also an opportunity to draw hackers and scammers at work, that is why choosing a payment provider with seller protection is a must. We know that an online business is extremely difficult and that we need to make sure that we do everything to protect our business, which is why we have created this article that provides Shopify entrepreneurs a  complete protection guide with PayPal.

To narrow down why you need PayPal Seller Protection, it simply allows you to retain the purchase amount and avoid any possible chargeback fees if buyers raise any disputes or at worst reverse the transaction. This saves you from any claims, chargebacks, or reversals that are a result of unauthorized purchases or items your buyer didn't receive.

To ensure that you’re aligned with PayPal seller protection, we will scale down each guide to maximize your protection against scammers and hackers.

What is the basic process?

  • It is essential to create an actual company whose primary address for your PayPal account must be in the United States to be eligible for PayPal seller protection.
  • Once you have decided on your company address; you won’t have any problems in setting up your PayPal Account. For Shopify Entrepreneurs, it is always recommended to always open a Business Paypal account and make sure to submit the business’s legal documents to PayPal, which proves to them that you are a legit and serious seller. If you are still undecided on which type of account you would open, check the guide below:

Source: PayPal

If you need a guide on how to set up your PayPal business account, then I suggest visiting PayPal’s article here.

  • Your product must be physical, tangible goods that can be shipped and  processed to your customer’s end. It is also easier to gather necessary documents in the event of claims. For Shopify Entrepreneur selling intangible goods that would require another Paypal requirement and I suggest visiting Paypal to check your eligibility protection requirement.
  • Store owners must ship the physical item(s) to the shipping address that appears on the transaction details page in your Paypal account. If items were redirected to a different address, your eligibility for Paypal’s seller protection is not enforceable.
  • Alternative shipping evidence or information relating to the transaction is required for items delivered in person.
  • We highly suggest responding to PayPal documentation requests in a timely manner.  Documents may include proof of shipment, proof of delivery, or signed delivery confirmation whichever is applicable, or any other documents relating to the transactions.
  • Purchase Items involved as pre-ordered or made-to-order goods must be shipped within 7 days after receipt of payment.
  • Online Store owners must mark the payment “eligible” or “ partially eligible” in the event of unauthorized transaction claims

Knowing the importance of PayPal seller protection provides online sellers a boost of confidence and peace of mind while transacting online. Optimizing your protection you must adhere to the eligibility requirements to make your contract protection enforceable.

Further, this article also elaborates the  different types of disputes that your buyer can claim:

What is a dispute?

To refresh you on the terms, in general dispute is a process when your buyer files a complaint through Paypal. PayPal will notify you via email for any claim raised.

Your Buyer can open the following disputes:

  1. Item Not Received (INR): The buyer pays the items and claims that they have not received item(s)
  2. Significantly Not As Described (SNAD): the buyer claims that the item received is different on the descriptions or different than what they order. Merely the physical attributes of the Item (s)
  3. Unauthorized Transactions (UT). Where a buyer claims a purchase was made under their details without their consent

Under PayPal Seller Protection claims that related to ‘Significantly Not As Described (SNAD)’ are not covered, for example, the buyer orders a blue handkerchief but receives a red one instead. But you can reduce SNAD complaints by:

  • Giving your buyer the correct descriptions of the items you are selling.
  • Communicating well to your buyer immediately is also a great factor to reduce complaints. Also, responding to your buyer’s questions about the item(s) quickly.
  • Being flexible to open resolving the issues like providing refunds, returns, and exchanges to prevent formal complaints.

How to address and resolve any disputes?

We all know the complaints are part of doing business, this could be due to technical or human error but what matters is how you approach and resolve issues between your customer(s). Receiving a dispute is quite crucial as your funds automatically being withheld by PayPal until the investigation is conducted and resolutions are served.

The first thing you need to do is to respond to the email complaint quickly, acknowledging the concern, and start the investigation promptly.

If you received a dispute regarding Item Not Received (INR) the essential action to do is to provide the Tracking details and submit them to Paypal. If you haven’t shipped the order yet due to some reason,  offer a refund of the payment and share proof of the refund to PayPal along with an explanation of why it hasn’t shipped.

As your online business is growing, updating your tracking info to Paypal could be a burden. We recommend our app named Paltrack that allows store owners to Sync Tracking details between Shopify & Paypal. It automates the process of adding a tracking number to orders on Paypal instantly. Through this app, it helps you reduce your possible disputes.

If you received a complaint related to Significantly Not as Described (SND), simply respond promptly with the relevant details and explanations to address concerns.

To conclude it is important to fasten your online business with  PayPal protection mechanisms that help you secure transactions against fraud and allows you to conduct online business confidently.

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