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Avoiding PayPal chargebacks as business


Avoiding PayPal chargebacks as business

Hello, everyone!


I am looking to start working with PayPal to receive payments for my service, I've heard very positive information regarding PayPal, and also have some questions on something that I have found hard to understand.


So as far as I know, if the costumer is not satisfied with the product, he open a chargeback and PayPal will start investigate and in the end I will be obliged to pay him back as there's costumer protection, and that's wonderful but what if I sell a code? Lets say I have wrote a code that worth X dollars and would love to sell it to somebody and he pays me through PayPal. Now this person knows what he is buying but eventually he can falsely complain that he received something he is not satisfied. 


How do I protect myself from this kind of uncomfortable situations?

Esteemed Advisor

Re: Avoiding PayPal chargebacks as business



Certain transactions are not covered under PayPal Seller protection, such as digital goods like your "code", and if it is, you'll need adequate proof of delivery that PayPal will accept.


And there will be unsuccessful online transaction from time to time because who you sell to may not be who paid especially on the net so you basically self-insure your sales against it which is taking a percentage of each sale aside to cover the occasional dispute or chargeback/reversal. Keep focusing on your next sale instead, and on doing more successful sales than unsuccessful ones or you'll end up in therapy.


PayPal disputes and chargebacks/reversals are two different things. Chargebacks/Reversals incur a fee in addition to the amount in question and are through the buyer's financial institution (FI) who are the ones that make the final decision and PayPal would have to refund the FI and hold you liable.


PayPal may, on occasion and at their sole discretion cover some digital sales but do not make a habit of it. So say you have 2 or 3 cases at the same time, you'd be lucky if they refunded one or two depending on the circumstances of each case.


If you self insure or refund and don't try to get PayPal involved in resolving transaction problems, the better your account standing will be with PayPal.


Please read seller protection program terms:

Kudos & Solved are greatly appreciated. 🙂

Re: Avoiding PayPal chargebacks as business

Thank you for your answer.


My product will be sold through 3rd party site, they basically store the code file in their databases, and whenever the client it purchasing the code, the 3rd party site let them download the file and transfers the payment to me (I am getting paid directly from the client so if there will be any chargebacks they'll be on me and not on the 3rd party site).


I understand that if the client will chargeback through his financial institution, it's not up to PayPals decision what will happen with my payment, so I am not referring to this kind of situation.


I am talking about a situation, when the client have received the code, he now owns the code and the falsely claims that he isn't satisfied with the code etc, as I am not selling a product which a buyer has to "like" in order to be satisfied with, how will PayPal react in terms of the dispute? How can I protect myself in this kind of situation?


And yeah thanks for the suggestion, I am actually already doing risk management, I am just trying to understand how this thing actually works out as PayPal has a good name for their client protection.


I am just trying to avoided cases when PayPal will refund a client that is now owns and uses my art (code) and succeed in making PayPal think that he deserves a refund..