Our operators often ask, why are we using multiple payment processors, and why can’t they just use PayPal to accept payments in their hotspots.

When we started HotspotSystem, it worked with PayPal only. We thought it was easy, no hassle with wire transfers, multiple currencies, etc, seemed to be perfect. Then we started to get complaints from our operators who got lots of complaints from their customers. There were lots of cases when they just couldn’t pay. We started to investigate the reasons and after a few months we realized that HotspotSystem cannot operate without a native credit card solution.

THE FACT:
After we implemented the direct credit card gateway, we noticed a 30% increase in hotspot sales.

Here’s what we found about PayPal:

1. PayPal is relatively slow. Users may have to wait for a minimum of  5-10 seconds until they’re transferred to PayPal’s payment page.
2. PayPal is often doing maintenances in every month (sometimes 2 times a month). During those times, the IPN (Instant Payment Notification) is not working and Paypal is calling back our servers with a long delay (up to 12 hours). What happens is that the customer pays for the service successfully, but the access is not granted because Paypal is not reporting the successful transaction. This means problems for the user, and also for the operator and makes a hotspot service unreliable.
3. PayPal is using their own security system which can be a hassle for end users. Based on the customers country, the credit card history and the purchase amount, PayPal may require users to register a PayPal account before their purchases. 
4. Sometimes PayPal is reviewing payments before it gets completed. Here is a sample email from PayPal which describes the process:
   

Hello HotSpot System,

********* just sent you money with PayPal. To help protect you, we’re reviewing this payment.

The Payment Review may take up to 24 hours. When we’ve completed the review, we’ll either clear or cancel the payment. If the payment clears: You may proceed to process the order. To know if your item is covered, check the ‘Seller Protection’ section of the ‘Transaction Details’ page and ensure that it states ‘Eligible’.

You shouldn’t provide the item or service purchased until we let you know that the payment has cleared. We’ll send you an email when we complete the review or you can check the Transaction History tab of your PayPal account.

The user was a verified user of PayPal which makes the process completely incomprehensible.

You can read more about this Paypal behavior here. 

5. PayPal may ask users to VERIFY their accont BEFORE they are able to pay. Users have to wait for their bank statement to complete the verification process which prevents them to buy a HotSpot access at your location at the moment they wanted to. This means they cannot use your HotSpot and you may loose money.

In 2004, PayPal announced the ‘Account Optional’ feature. Using this feature, buyers can pay for a product or service without having to sign up for a PayPal account. Unfortunately PayPal account optional doesn’t work in every country. What worse is that verification IS required in certain cases, even though account optional is turned on.

Here’s the official statement about this from PayPal: 

1. In which cases the user have to verify the account before he can pay with credit card?

Depends on the transaction, the amount, the number of times the card has been used, the amount of the transaction, on what is being purchased, this is to name the most common. There are others that we do not know about for security reasons.

2. What countries are affected? (all or is there any country in which you don’t force users to verify their accounts at all?)

All countries are affected.

3. What is the amount that they can pay without verifying? 

Again, this depends on the transaction type across all transactions of that type. I don’t have an answer since the system determines what it will accept at the time of the transaction after looking at what has gone on with all transactions.

Frank I.
PayPal Certified Developer
PayPal Merchant Technical Support
http://www.paypaldeveloper.com
PayPal, an eBay Company

Using PayPal only in a hotspot environment would cause hotspot operators to loose money, decrease customer satisfaction, increase the support needed to handle certain payments. So if you are using HotspotSystem’s Hotspot PRO service, you will have to use the built-in credit card solution and you can use PayPal as an optional payment method.