Is it Safe to Use PayPal for Domain Purchases?

Do you buy and sell domain names as an investor? Or are you buying a domain for your business from someone who already registered it?

One thing that always comes up in this situation is how to pay for the domain. It’s not as easy as just buying a domain at your registrar; you need to trust the other party and make sure they will transfer the domain after you pay.

The PayPal Question

Millions of people use PayPal to buy and sell both goods and services. If you’ve used it enough, you’ve probably experienced a time when the other party didn’t uphold their end of the bargain. Maybe you paid for something on eBay and didn’t receive it, or the goods they sent you didn’t meet your expectations.

Because of its ubiquity, PayPal is commonly used to pay for domain name transactions. It’s important to understand how PayPal protects buyers and sellers of intangible goods.

Intangible goods—including domain names and software—are covered differently than tangible goods such as books and clothes.

• Using PayPal as a Domain Buyer

PayPal offers protection for domain buyers under its Purchase Protection program. If you pay for a domain name with PayPal and the domain owner doesn’t transfer the domain to you, you can open a claim with PayPal within 180 days of the purchase. (PayPal began covering intangible goods in 2015.)

• Using PayPal as a Domain Seller

PayPal does not offer seller protection for intangible goods. So if you accept payment via PayPal for a domain and then the buyer ends up doing a credit card chargeback or says they didn’t receive the domain, PayPal will not cover this. 

The Escrow Alternative

OK, so it’s safe to buy domains with PayPal but not to sell them? It’s not quite that easy.

Even with buyer protection, domain buyers are at the mercy of PayPal’s dispute process. This isn’t always easy and fast.

That’s why many domain buyers and sellers prefer to use a domain name escrow service.  Services such as Escrow.com will hold the buyer’s funds until it receives proof that the domain name has been transferred.

Other services, such as Sedo, will take control of the domain name before releasing the funds and then transfer the domain to the buyer.

The risk of using PayPal is one reason domain sellers prefer to use an escrow service. Escrow services remove the risk.

Ultimately, it’s a question of comfort level. The decision of PayPal vs. escrow can come down to the amount of money involved and how well you know the buyer.

Selling Domains through Namecheap

Namecheap offers a Domain Marketplace, where you can buy and sell domains. We offer an easy-to-use platform to list domain names for sale. If you see a domain you’d like, you can add it directly to your Namecheap cart.

If you’d like to sell a domain registered through Namecheap, we also make that option available.

Learn more about our domain marketplace.

What Do You Think?

Have you engaged in the process of buying a domain directly from the owner, or have you sold domains using an escrow service or PayPal? Let us know in the comments what your experiences have been.