We just completed a study of all of our Paypal transactions for 2005 and 2006 with one of our online stores. The study included 55,000 transactions. We wanted to see if things like verified accounts, confirmed addresses, funding type or direct credit card payments through Paypal had different fraud rates.
Out of the 55,000 transactions there are 16,800 unique customers. We had 89 customers that had their payments reversed one way or another. We found something that was very amazing when we did the stats. So amazing that I decided to share it with all of you. We found that it does not matter what the status of their account is if you do proper customer verification on their first order.
Since 2005 we decided that it was up to us to keep from getting screwed by a customer. Not Paypal. Based on our stats I can safely say that as long as you do proper verification on your own of a customer it does not matter what status their Paypal account is in. I know that many of you will only take Payments from verified accounts or from accounts with confirmed addresses. Why limit yourself? If you do good verification you can accept more payments and improve your overall sales.
BTW: If you are wondering what the fraud rate is from these number. It's a loss of .529% That's about 1/2 of 1% and I'm damn proud that in this market we have been able to achieve this.
