First, lets start off with - I accept Paypal.  I am not afraid of Paypal.  Even if I receive the pending 21 day hold, I can price around the shipping.

However, Paypal is a tool - it can also be your friend or your enemy.  Paypal has user agreements.  If you have a Paypal account, you can also read upcoming Policy Updates.

But you are asking - what does this have to do with me?  Well, if you are a seller, you need to know how best to protect you AND the buyer at the same time.  Ebay has revamped its policies of trading partners to Buyers are King.  Now, lets make some lemonade out of lemons.  Simply put, focus your attention on Customer Service, and shipping via Paypals policies - no matter WHAT kind of payments you accept, and you will find smooth sailing and minimal complaints (trust me, I'm a professional ;-)

First - you will want to familiarize yourself with this document (both buyers and sellers):  Go to Home Page of Paypal, at bottom, click on Legal Agreements, and then User Agreement.  Pay special attention to the Seller Protection Policies, and Buyer protection Policies. 

Shipping

If you ship to certain countries, or worldwide - and advertise Paypal in your listings - then you must now accept Paypal from International Buyers.  On October 31st (so far) - Paypal will update the Seller Protection Policy so that Unconfirmed Addresses will also be protected.

Until then, best practice is to ship only to confirmed addresses (the contact me can be used in case of questions, so you can make exceptions).  And I personally like to restrict shipping to US, UK, Canada, and I do like Australia (even though they really aren't included - simply research your bidders).

Paypal requires tracking.  So - I personally use the following methods.  Retail Delivery Confirmation provides more accurate scanning than the reduced price electronic versions. (That's why it costs more).  However, from acceptance through delivery, enroute notices are more readily available to you.  Paypal requires tracking as a minimum for total purchase price (including shipping) from 1 cent to $249.  I personally have used Signature Confirmation on items $100 and above.

Signature Confirmation is required as specified above. DO NOT let the post office tell you that you don't need it if you use Insurance, because the Insurance Signature is not viewable online.  I personally use USPS for all my shipping.  They deliver to PO boxes, honor their insurance claims, and are the cheapest method for International Shipping (no Brokerage fees).  When to include Signature Confirmation?  Let your comfort level be your guide.

P.S. - let the buyer know in your Auction Listing, what is included with their shipping charge.  This will help alleviate many fears of being overcharged.  Also, state your handling fee.  Gee, if it isn't out of line, their is nothing to hide (and again - when it all totals up - the buyer knows what to expect).

A hidden secret - International Priority with the Customs Number is viewable online.  This is in lieu of DC, not Signature - for that you will need the Expedited Services.  If you can't get Paypal to recognize the Customs Number, if a dispute arises, simply call Paypal, and they can track the package online.

INSURANCE

Insurance is for the Protection of the SELLER.  I cannot be more specific than that.  I've had one item damage in the mail, and Insurance covered it.  There are many ways to insure, depending on your volume of sales. UPS has insurance included, but is much more expensive - and not as flexible as USPS.  There is also Upick and Endicia, large volume sellers may "self-insure."  If self insuring, include a note that states "For damage claims, please call XXX-XXX-XXXX".  Lost packages are a no brainer.

But why should I pay for Insurance (you ask)?  What if the buyer won't cooperate?  Well, either the buyer or the seller can initiate the claim (and here is why I like the USPS better).  Lost mail when it shows delivered?  File a lost mail/rifling report with USPS.  They may even visit the buyer's home.  A lot of times, this produces the package (you will need that DC for this though).

As for Insurance claims - you open the claim on your end (for a lost package, that's a definite must).  If it is a lost package, the PO will investigate.  Its considered lost after 30 days (sooner for some packages).  If after 3 weeks of mailing, your package hasn't shown up - go ahead and refund the buyer.  Specify that you recieve the insurance reimbursement.

If its a damaged item - Insurance is good for both BUYER AND SELLER. Again, open the Insurance claim on your end.  Tell the buyer they will receive their money faster than going through a Paypal Dispute (no kidding here), AND they won't have to pay to send the item back (as is required by Paypal).  Use gentle words here, its not the buyer's fault it got damaged, they expected the widget they saw in the Auction Pictures.  Tell the buyer to take the item to the nearest PO (don't have to bother with scheduled appointments - can be done at buyer's leisure - but usually within 7 days of receiving package) - take all the original packaging with them.  Once the claim is approved by the Post Office, you will refund the buyer.  Then, the insurance reimbursement is mailed to you.  For items under $50, the buyer can usually just go in without you initiating a claim, and pick up the money themselves.

So - with all that going on for the ease of mind - isn't $1.70 worth the cost?  No Paypal disputes, no dings on the seller's record,  money back rather quickly (as opposed to weeks with Paypal).  That is Customer Service.

Auction Terms

"AS-IS", "NO RETURNS, REFUNDS", "I'M NOT RESPONSIBLE FOR LOST PACKAGES", "I'M NOT AN EXPERT, SO BUY AT YOUR OWN RISK."  Followed with "I ONLY TAKE PAYPAL".

AAARRRGGGGGHHHH.

If you accept Paypal - NONE OF THE ABOVE holds water.  You can contact all the attorneys in the world you want, Paypal WILL refund the buyer if something goes wrong.  That's why Insurance and Tracking are a necessity, not a luxury.  I've seen a seller complain (and they are semi large volume) - "Well, the buyer didn't buy DC, so I'm not going to buy it."  Or, "Since they didn't purchase the optional insurance, I'm not rresponsible - my auction says so - and they agreed to that when they bid."

That's why its important to familarize yourself with the Buyer Protection policies as they apply to EBay.  The Buyer WILL get their money back, and you will get dinged.

So - in the shipping section, research and specify the methods of shipping, what's included and the handling charge.  Have a return policy.  Include Lost and Damaged information in your ASQ section FAQ - so the buyer can see it when they go to contact you.

PICTURES, PICTURES, PICTURES.  The most cases of returns is when sellers use Stock Photos (P.S. - that's against EBay policy, even though everyone else does it).  Of course, the pre-filled info does give a picture - BUT NOT OF THE ACTUAL ITEM.  That is what the buyer needs to see - what they are actually getting.  Fuzzy photos are just as bad, so lose the Cell Phone Camera if you can't get a good close up.

A quick, low down description of noticeable flaws can go a LONG way to letting the buyer know what to expect from a used item.  Sure, you may have watched that DVD only once - but as soon as its out of the security protectors - ITS NOT NEW. 

Conclusion

Paypal can be a useful tool, when you sell with Customer Service in mind.  Shipping in compliance with Paypal (okay, so split the cost between the auction shipping price and the item itself if you want to attract more bidders).  Shipping & Handling Costs explained to the buyer (be sure to combine shipping - many buyers are expecting it now, and disclaimers otherwise will definitely ding the ratings).  Use Insurance as a tool, Paypal dispute evader, and for peace of mind.  Realize that your terms of auction should be in compliance with EBay and Paypal policies - treat all buyers equally, and watch your ratings grow.

If you have found this information useful (and I hope you did) - Please feel free to RATE it. ;-)