Using PayPal for Dropshipping: How to Not Get Banned in 2023

This is a topic which many dropshippers will experience; getting banned by PayPal. Maybe you are even reading this article because it already happened to you? In that case, don’t worry! In this article, you will find the solution to your problem and read about how you can prevent being banned by PayPal in the future! 

Suppose you want to minimize the chances of being banned by PayPal while dropshipping. In that case, you should always have your business registered, provide real legal documentation, have excellent communication with your customers, and upload real tracking numbers.

To understand how you can prevent getting banned by PayPal if you are dropshipping, we will first take a look at why PayPal often bans dropshippers!

Why does PayPal ban dropshipping stores?

Like every other online payment company, PayPal wants to keep a reputation of being the safest and easiest payment method on the internet.

When PayPal is available as a payment option, people should be very comfortable with using it and shouldn’t have to be worried that the store they are buying a product from is fraudulent.

Many dropshippers however, don’t really care about the product they are selling, the delivery time, or their customer communication.

They only think about receiving money. Customers that are treated like that will, of course, experience an awful customer experience and start a dispute on PayPal!

Many times, the main topic of their dispute is:

• The product did not arrive or is still in transit
• Broken product
• Poor quality product
• No tracking information
• Product is not as described
• No customer communication/no replies on contact attempts

No wonder that PayPal often bans dropshipping stores if they treat their customers like this! 

What makes it even worse, is that on average, dropshipping stores make themselves guilty of the above topics more often than other ecommerce stores. Because they hate disputes, PayPal is extra careful with dropshipping stores in particular.

Need more information on how to treat your customers? We have made a complete guide about customer service for dropshipping stores here.

Setting up PayPal, business or personal account?

If you are still setting up your PayPal account, you will have to choose between a business or personal account.

Some people aren’t sure which one to choose, but let me tell you, always choose a business account!

Not only is choosing a business account required by PayPal if you are planning to sell online frequently, but it will also decrease your chances of being banned by PayPal when dropshipping.

With a business account, you can submit your business's legal documents to PayPal, which shows them that you’re a serious seller. Also, they will expect you to have more transactions and eventually disputes than a personal account.

If you're interested in learning how to set up your PayPal business account, then I suggest going to this article from PayPal here. They also included an easy to follow video there.

And if you're interested in learning more about the legal side of dropshipping, then check out these six tips to avoid getting sued when dropshipping.

Now that you have set up your account correctly, let’s discuss some methods to prevent being banned by PayPal!

The 4 things you should be doing, to prevent getting banned by PayPal

To help the whole dropship community, I have written this article, which includes everything you should be doing to prevent being banned by PayPal if you are dropshipping!

Hopefully, you will be able to apply these tactics and never get banned by PayPal when dropshipping again.

Let’s start!

Set up a real company and provide legitimate documentation

In most cases, when you set up your PayPal account for the first time, you will only need your business name and address and you’re ready to go.

But what happens if you suddenly make lots of sales or, even worse, receive a dispute?

PayPal will then ask you to submit more documentation regarding your business, such as proof of registration or proof of address.

Since anyone can start dropshipping without submitting their legal business documents, most people won’t be able to provide these when PayPal asks them to.

Related article: Is Dropshipping Legal in 2023? (Take a Look Here First)

Other people will even try to submit fake documentation!

Guess what happens next…

Yup, their PayPal account gets banned, and their funds will be withheld for up to 180 days!

Thus, the first step to prevent getting banned from PayPal when dropshipping is to set up your business in the country you’re from! This way, you will be able to provide all legal documentation PayPal asks you for.

You can learn more about setting up your business in this article here. That article will also cover what to do with taxes when you're dropshipping.

Another great tip is to create a professional email address instead of using Gmail or Outlook. If you don't have one yet, then you can click here to learn how to set one up for free.

Provide real tracking numbers for your order

You now have your legal documentation sorted and can start making sales!

When picking a shipping method for your products, I highly recommend picking one which includes Track-and-Trace and therefore a tracking number.

In PayPal, you can then add each tracking number to its corresponding order. 

This will help you prevent getting banned by PayPal in the following ways:

• Provide proof of shipment: With a tracking number, you essentially give PayPal proof that you have shipped out the package for your customer. Therefore, PayPal will know that you are trying to be a legitimate business and get your orders to your customers.
• Reassure your customers: Having access to a tracking number is so relieving for your customers. Imagine waiting 2 to 3 weeks for your package without knowing where it is in the shipping process or if it will even arrive at your house.
  
  Customers that have access to a tracking number can check the status of their order everyday! They often won’t contact you any more about where their order is and won’t open disputes on PayPal about not receiving their package.
• Insanely helpful for winning disputes: When you have a good quality product, chances are most of your disputes will be about the customers claiming not receiving their package. PayPal will only ask you to respond to your customers’ dispute with a message.
  
  However, you can actually insert the corresponding tracking number into the dispute by clicking “Add tracking number”. This way, PayPal can see that the package is still in transit, and you will always win the dispute if the package gets delivered a few days later!

To summarize, a tracking number provides PayPal with your proof of shipment, gets you fewer disputes by more reassured customers, and is insanely helpful for winning disputes!

PayPal tracking number apps

To minimize the risk of being banned by PayPal when dropshipping, you should upload tracking numbers to PayPal for all your orders. If you are getting lots of orders per day, then this can be very time-consuming!

To automate this process, you can install so-called PayPal auto-upload tracking apps. These are services that will automatically upload your tracking numbers into PayPal for the corresponding orders so that you don’t have to do it manually.

I do advise you to be careful with these apps though. These are third-party apps, which means they are not on the official Shopify app store. Also, some apps will hire guys from Fiverr to upload tracking numbers into your PayPal manually, which means that a stranger will have access to your PayPal account!

If you do want to use an app like this, the most popular ones are UpTrack and Simple Seller Protection. These apps use the Shopify and PayPal secured API environment, which means they can automatically source the tracking code from Shopify and upload it to PayPal.

Keep in close contact with your customers

One of the main advantages of dropshipping is that you don’t need to keep your own inventory. However, this comes with a price if you're dropshipping from China: long delivery times. 

It’s your job to set realistic expectations for your customer and update them on every step of the shipping process.

Often, customers do not mind that they will have to wait 2-3 weeks for their order, as long as they are given timely updates!

With an app like Aftership, you can design your own branded tracking page and send your customers delivery updates.

If you are not sure what delivery updates you should send to your customers, here is a template for it. The most important delivery updates will be in bold.

• Day 0: Send an order confirmation mail. This will include a summary of their purchase, their receipt, and an overview of events they can expect later.
• Day 1: Packaging confirmation mail. Tell your customer that their order has been processed and that you’re currently working on packaging their order.
• Day 2: Order packed mail. The customers’ order is packaged and ready to leave the warehouse!
• Day 3: Shipping confirmation mail. This is one of the most important mail to send. It will include their tracking number with a link to your tracking page, which they will be able to reference, and an expected overview of the shipping process. 
• Day 7: Package left the country of origin mail. Here, you will tell your customer that their package has cleared customs in its country of origin and is on its way to the destination country (ideally by plane).
• Day 10: Arrival in the destination country. Inform your customer that their package has now arrived in their country. It will still need to pass the customs and will be delivered by the last-mile courier afterward.
• Day 14: Out for delivery by last-mile courier. Ideally, you will want to send this email 1 day before the package gets delivered. Tell your customer that their package has almost reached them and is scheduled to be delivered tomorrow!
• Day 15: Delivery confirmation mail. Send a confirmation of the package delivery with a title like: “Your package has been delivered!”.

By utilizing this template and keeping in contact with your customers, you can greatly reduce your chances of getting a dispute and therefore have less chance of being banned by PayPal!

Here’s an example of how an email sequence looks like on Aftership:

Respond to disputes correctly

By utilizing the 3 strategies above, you will already have a much lower chance of getting a lot of disputes and being banned by PayPal!

With this last strategy, I want to discuss the steps you should take when you do eventually get a dispute.

What is a dispute?

If you don’t know already, a dispute is a process facilitated by PayPal in which a customer can open a dialogue with you about a complaint they have of your service or product.

Within PayPal, a dispute can be opened for one of the following two reasons: 

1. Item Not Received (INR): Here, the buyer claims that they have not received their order yet.
2. Significantly Not As Described (SNAD): Here, the buyer claims that the item they have received is significantly different than expected based on the seller's (your) pictures/description.

Assuming your product is of good quality and you have an excellent product page, the most disputes you will get will be of the Item Not Received type. Also, the fact that you’re dropshipping and often will have longer delivery times increase the chance of getting an INR dispute.

How to respond to and win disputes?

To prevent your funds from being withheld, losing money, and being banned from PayPal, winning the disputes you get is crucial!

The first thing you should remember is to answer the dispute as fast as possible. This shows PayPal that you’re a serious seller who knows the importance of a happy customer.

If you get an INR dispute, follow these steps to resolve it:

The most important thing is to submit the tracking number to PayPal if you haven’t done it already.

You can do this by clicking on the dispute, and then you will see a button “Add Tracking Info” at the bottom of the page.

By clicking on this button, you will be able to paste the corresponding tracking number, select which shipping company you use, and add a message. 

You are also required to respond to your customers’ disputes with a message. To make your life a bit easier, here is a template you can use to indicate that the package is still in transit or already delivered:

Dear Sir/Madam,

Order #[ORDER NUMBER] placed on [STORE NAME] on [ORDER DATE] is currently [IN TRANSIT/DELIVERED].

We have shipped out your order to the following address: [SHIPPING ADDRESS]

The order was shipped out on [SHIPPING DATE].

We expect the order to be delivered on [EXPECTED DELIVERY DATE]/The order was delivered on [DELIVERY DATE].

These dates fall within our shipping policy, which can be viewed here: [SHIPPING POLICY URL]

The order was shipped with [CARRIER] and has the tracking number: [TRACKING NUMBER]

The package can be track-and-traced using the following URL: [TRACKING PAGE URL]

We hope to have provided all relevant information and that the dispute can be settled.

If you have any further questions, you can contact us at [SUPPORT EMAIL].

Kind regards,

[NAME] from [COMPANY NAME]

That’s it! Hopefully, you will win the dispute and get your money back!

If you receive a “Significantly Not As Described” dispute, it’s important to listen to your customer. Try to understand why your customer isn’t happy with the product and try to figure out a solution together.

Also, while this manual approach works, it can be time-consuming, especially if you have multiple disputes.

This is where Chargeflow comes in handy:

Chargeflow is an automated solution that manages and fights chargebacks for you, utilizing AI and millions of data points to maximize your chargeback dispute win rate.

The best part is that with Chargeflow, you only pay when they successfully recover chargebacks in your favor!

By using a tool like Chargeflow, you can focus more on your business while ensuring that your disputes are handled professionally and efficiently.

Lastly, if you don't have a Shipping Policy yet or if you're not sure what it means, then check out this article:

How to Create a Dropshipping Shipping Policy? (+ Template)

Conclusion

Many people think PayPal only wants to ban dropshipping stores, however, it’s perfectly possible to have a successful dropshipping store and never be banned by PayPal!

The most important thing to have is excellent customer service and a product of good quality. 

Make sure that your shipping method is reliable and includes a tracking number so that customers can track their orders at any time. Additionally, set up a mail sequence to keep your customers updated on the shipment status.

All this will lower the chance of getting a dispute and therefore getting banned by PayPal when dropshipping.

After reading this article, I hope you will be able to apply these methods and never get banned by PayPal again!

If you experience any other problems with PayPal, such as account limitations or want more information about topics such as disputes, then check out the official PayPal problems FAQ.

And don't forget to check out our other article here, which goes over how to use Stripe correctly when dropshipping. (Stripe is another popular payment gateway for ecommerce stores)

And check out this article here to learn more about the best payment gateway combinations when dropshipping.

If you have any questions or have any suggestions for this article, then let me know by commenting below or contacting me directly by pressing the “Contact Us” button at the top!

Thanks for reading, and I wish you great luck with your dropshipping journey!

Getting Started with Dropshipping in 2023

So, are you ready to get started with dropshipping? Or maybe you have already started, but you’re looking to get some inspiration?

If so, then I suggest reading this complete Shopify dropshipping guide.

It’s a huge article, but it contains everything that you need to know to create your own Shopify dropshipping store in 2023. It’s like a dropshipping course, but then for free!

Reading this article will surely help you to get started and to stay motivated while beginning and continuing your dropshipping journey.

Just don’t forget that success takes time. Keep improving each and every day!

Shopify Dropshipping: A 20-Step Guide to Starting Your Store

And here are the articles I suggest you read next:

• 23 Awesome Shopify Dropshipping Store Examples
• Unique Dropshipping Store: 11 Amazing Tips to Create One
• 6 Things That Dropshipping Gurus Do Not Tell You As Beginner
• How to Find Winning Dropshipping Products? (Product Research Methods)

And also, if you didn’t create a Shopify account yet (to get your dropshipping store online), then you can click here to get a free 3-day trial + pay $1/month for the first 3 months!