When you allow buyers to pay with PayPal, you have two transaction settings that determine when you will collect funds:
- Automatic capture (default)—when set to "Automatic capture" funds will be captured from the buyer when the order is completed by the buyer.
- With automatic capture, funds are transferred immediately to your PayPal account so you will not have a problem if the buyer did not have available funds in the case that you were authorizing and then capturing funds.
- With automatic capture though, you cannot increase the amount of the transaction if the shipping and tax costs were not accurate or need to be changed. You can account for this by using real-time rates, or building padding into their shipping costs, though padding, if too high, may turn away price-conscious buyers. Merchants can also manually request funds of the buyer through PayPal, but this is not recorded in the Order Manager and can lead to accounting problems for merchants.
- Automatic capture also does not allow you to review PayPal transaction details such as verified account status or confirmed shipping address, which can help to reduce fraudulent transactions. You can choose to set your PayPal account to decline orders that do not have a confirmed shipping address.
- Authorize only—when set to "Authorize only" funds will be captured only when you complete the sale in the Order Manager by pressing the "Capture Sale" button in the Transaction Control panel. When a buyer completes the order, the amount of the order will be authorized by PayPal and reserved (for the honor period) in their account for you to capture later.
- With authorize only, you must view each order and manually process the capture funds. This can be time-consuming for stores receiving a large number of orders using PayPal as the payment method.
- With authorize only, you can increase the amount of the transaction (up to 115% or a total increase of $75, whichever is less) to cover changes in shipping costs. You should still try to provide the most accurate shipping rates so buyers are not surprised by increases, and always explain any increases to buyers.
- With authorize only, you have the chance to review PayPal transaction details (verified account, confirmed shipping address) so you can make an informed decision to process the order, follow up with the buyer for more information, or cancel the order.
Note: Only merchants with a confirmed PayPal email address can use the default transaction setting of "automatic capture" to accept PayPal orders. Merchants that have not confirmed their email address with PayPal should either login and do so before publishing their order settings, or set their PayPal transaction settings to "authorize only". Failure to do so will mean buyers will not be able to use PayPal as a payment method.
To set your PayPal transaction settings:
- From the Store Manager, click the "Pay Center" link appearing in the Order Settings column.
- Click the PayPal Express Checkout link to expand the listing.
- Click Edit.
- Select an option:
- Automatic capture (default): captures funds from the buyer when the order is completed.
- Authorize only: authorizes funds to determine availability and reserves funds for the honor period (3 days) for later capture. You capture funds in the PayPal Transaction Control Panel on the Order Review page.
- Click OK.
- Return to the Store Manager and publish your order settings.