A pre-approved payment on PayPal is an option a business can set up to receive recurring payments. Indeed, when you have a product that requires a monthly or yearly fee, it can be complicated to follow. It is why the solution of PayPal or other gateways is beneficial. This article looks at what it is and how it works. If you are a business, we will explain how to integrate it on your website. We will explain how to manage direct debits better if you are an individual. For an individual, we will talk in particular about activation and deactivation.
What is a pre-approved payment on PayPal or via other payment options?
We discuss Pre-approved payment when you authorize a company to take money from your account automatically. If you have, for example, to pay telephone, internet or electricity bills, you can ask your suppliers to activate the automatic payment option. This can save you from paying your bills late or wasting time each month on payments. However, this can be disadvantageous if you don’t currently have money in your bank account (or PayPal account ).
Some advantages for a consumer.
If you are a consumer, pre-approved payment can benefit you in several ways:
- Slight risk of forgetting to pay your bills. When your suppliers take money automatically, you no longer have to worry about whether you’ve paid your bills.
- Fairly stable credibility. In Western countries, where your credibility depends on your ability to pay your bills, paying your bills on time helps to increase your credibility.
- Less risk of service interruptions. Some suppliers are cautious about payment terms. Therefore, paying late can cause stoppages.
Some disadvantages for a consumer.
The pre-approved payment is sometimes the cause of several problems, among which:
- You keep paying for bills, so you don’t need to. But, for example, we sometimes have to review our consumption to realize that we have been paying specific bills for months because of automatic payments.
- Risk of abuse by the supplier. Some providers may increase their rates without you knowing.
- A loss of opportunity. Some products drop in price with the competition. Pre-approved payment on PayPal or other platforms does not help you realize changes in the market.
A pre-approved payment for a business
Businesses have several advantages to setting up an automatic payment. Indeed, it helps to:
- Receive payments without having to contact customers all the time. For example, at a particular time of the month, or year, you receive payment from your customers without any further action on their part or yours.
- Better plan your entries. With permanent entries, you can better plan the management of your business.
- Save time and money. Following up with clients can be demanding. For a business with hundreds or thousands of customers, it may take one employee to call or email.
How to Set Up Pre-Approved Payment on PayPal (For a Business)
To set up automatic payment on PayPal, you must have a PayPal business account and a management website or application. And follow these steps:
- Log in to your PayPal account, and click “Pay and get paid.”
- From the menu, select the “Subscriptions” option to your right below Accept Payments.
- You must then complete the form by following the steps that PayPal offers.
- After completing the form, PayPal will generate a code that you can then add to your website.
When the plan is activated, you can then add it to your website. Then, when customers visit your webpage, you can click the button, place an order, and accept automatic payments.
How to manage automatic payments (Consumers)
You can opt out anytime if you have accepted automatic (or pre-authorized) payments on your PayPal account. Below are the steps to follow:
- Go to your PayPal Account, Click on your name or company name in the top-right corner of the page
- Then click on account settings
- PayPal will redirect you to a page where you will see several links to your left
- Click on “Payment on Merchant website” and “update” (To the right of “My Pre-approved payments”)
You will see the list of your suppliers. On this page, you can cancel the accounts of companies that you no longer want to take money from your account automatically.