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The PayPal Alternative: Selling Products with Gumroad

When I launched my Ultimate Blueprint, The Guide To Start Your Own Web Agency, I planned on using PayPal with the new warrior payments option created by Freelancer who acquired Warrior Forum last year. The only problem is, I know how awful PayPal really is, and I’ve had numerous problems with them in the past.

I had problems with paypal and their 180 day holds back in 2010 and 2011 with my company. I ended up not getting any money released, ever, and eventually they terminated my account. To be fair though, PayPal has an internal processing limit placed on accounts and they manage risk by determining how much you can process, what chargeback ratio is acceptable, and what your credit score is!

Of course, I’ve tried creating new paypal accounts but they always get terminated, so this time, I just filed and setup a quick LLC using an EIN to sign up to paypal. I called, spoke with a few people at PayPal and they said it would be no problem since it is a separate entity. I said, “okay, cool” and went on my merry way.

Then PayPal Screwed Me Again

I launched my product, and everything was going smoothly, then the day before Thanksgiving I get the dreaded email that says they’re placing funds on hold and will be terminating my account since the account was linked to me personally and I’m a prohibited user.

Probably my fault for making the stupid mistake of verifying their little debit card, because that’s how they tied me to the account.

3 Letters to the Attorney General’s office in Nebraska and California, along with 3 complaints to the BBB, I ended up getting my account unfrozen and access to the funds. I still have that PayPal account by the way and haven’t had any problems since, but if you’ve gone through what I’ve gone through, do you ever really have much trust in PayPal?

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So It Brought Me To Gumroad

Going through all that, I temporarily suspended the sale of my blueprint, and started researching other platforms. I found quite a few available but the problem was that many of them required PayPal as the method to pay you. That obviously wasn’t going to work.

What I was looking for is this:

  • A platform that handles file delivery
  • A platform that can pay by check or direct deposit, leaving paypal out of the process
  • Easy Checkout system
  • Ties into an autoresponder

Those were the things that were most important to me. One thing I didn’t like about Gumroad though, was the fee structure, they have higher fees than paypal.

The Good and The Bad of Gumroad

There are a lot of good things and a few bad things I’ve discovered about gumroad since using them for about 6 and a half months now.

Like I said in the above section, one thing I didn’t like was the fees they charge. I think it’s just 5%, but that’s a lot in comparison to paypal and regular merchant processors. Although, with processors you still have batch fees, gateway fees, and a lot of other issues that Gumroad doesn’t make you deal with.

The fees are just a minor issue, as one of the biggest benefits of using gumroad is the higher conversion rate of the checkout process, meaning lower shopping cart abandonment. Using JVzoo, Warrior+ or warriorpayments, or anything that ties into paypal, has a pretty high abandonment rate. With Gumroad, their checkout process is as simple as can be. My conversion rate of those clicking through literally doubled, so yes you’re paying more in fees but you’re also making more sales.

Gumroad does pay people via PayPal but they also have an option for direct deposit which is what I use. The only thing I don’t like about it, is that you have to wait every 2 weeks to get paid. For example, I’ll get a deposit in my account this Friday, on the 5th, but then I have to wait until the 19th to get a deposit again. My hope is that they’ll eventually be able to allow you to request your own withdrawals as long as you have a certain threshold.

One issue I had, which was a more serious one, is autoresponder integration. I of course wanted to collect emails from those that bought and have it tie into aweber. While Gumroad does collect the email addresses, they don’t really have any kind of tie into an autoresponder API. So, I ended up signing up with zapier, and created a “ZAP” that adds the email from gumroad to aweber pretty seemlessly.

Zapier, is basically like an “If This Than That” type of service, I’ve been using the free version, and it has solved my major dilemma with Gumroad.

A Cool Upgrade To Gumroad

One thing people kept on asking me, and continue to ask me is “can I pay with paypal?”. And I just say hell no. Now I don’t have to.

Recently… very recently, as in Monday, as in 2 days ago, Gumroad announced that they are now accepting PayPal as a Payment method. This is actually very good news because my Ultimate Blueprint has been sold in 50+ countries now and some people in certain countries have been having problems getting their credit or debit cards to go through with Gumroad. The Paypal option opens a lot of doors.

The only thing I wish they could add or change at this point, is let us be in charge of withdrawal requests instead of doing it every other week. Other than that, maybe an affiliate system would be cool but overall it’s been a great experience with Gumroad.

I’ve been selling with Gumroad since last December with my Ultimate Guide To Start Your Own Web Agency, also along with the pre launch of my Ice Cold Email Gold course.

What You and Anyone Else In Business Can Learn From This

Sure, Gumroad is for products, digital and physical, this seems like a review and recommendation, right? It is, and I’m not an affiliate, but the takeaway here isn’t about Gumroad, and it’s not about PayPal either. The takeaway is that if you’re using any kind of payment processor, you should have a backup.

Things happen, holds happen, account freezing and termination happens. Don’t be caught with your pants down, always have a back up plan when it comes to payment processors, and everything else for that matter. Then once you have a back up plan, have a back up for your back up!


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