I read the TechCrunch article  yesterday about Paypal limiting payments to merchants in India to $500 beginning March 1st, and I think it will make an impact on the domain business. If merchants need to accept a higher payment amount, they need to look elsewhere. The restrictions have been put in place by the Reserve Bank of India rather than Paypal, and it was announced on the official Paypal blog yesterday.

In my opinion, this news could be very bad news for  Indian domain investors and could also be a big annoyance to others who live outside of India but who do business with Indian companies.

For just about all transactions that are under a few thousand dollars, I use Paypal. From my perspective, this limitation would pose a problem for me if I am buying a relatively low value domain name for a domain investor in India. The cost of using a service like Escrow.com might be prohibitive on a low value deal (but above $500), yet the seller wouldn’t be able to accept a Paypal payment.

Similarly, for web development projects, it doesn’t appear to be possible to pay Indian merchants more than $500 via Paypal. I’ve worked with companies in India (found on Elance), and this would impact them, and consequently, it would impact my business.

Unless I was buying a domain name or working on a significant project that was critical to my business, it would be highly unlikely that I would opt to use another payment service like Western Union or something else.

Last night, I spoke  about the Paypal situation with Andrew Allemann, who works for Indian-based Directi, the company that operates Skenzo, Big Jumbo, DomainAdvertising.com, and others. According to Andrew, his companies “use a payment processor for all of our payments, and this payment processor won’t be affected by any of the changes.” That’s a bit of good news.

If you are doing business with merchants or domain investors in India, you need to be aware of these Paypal restrictions that are coming soon and make sure you and they are covered.

In the past month, I’ve been going through the first round of dog walker advertising renewals on DogWalker.com, and I want to share a few things I’ve learned that might be helpful to you if you have web directories.

Paypal is great, and Paypal subscriptions are fantastic. Every day, I am getting payments from dog walkers whose listings are expiring but automatically renew via Paypal. These renewals take the trouble out of collecting payments after the first year, saving me significant time and effort re-contacting dog walkers and re-billing.

I am thankfully getting FAR fewer cancelations and/or refund requests than I anticipated.  I would say it’s probably less than 10% including subscriptions where the payment failed (may be due to expired credit card or cancelled Paypal account).  There have been over 50 renewals so far.

If you do use Paypal, here’s a tip for you.  If your Paypal account is used for multiple websites, you will want to realize that the receipt people receive will have your company name. In my case, it’s Top Notch Domains, LLC, which has confused a couple of businesses who didn’t remember the DogWalker.com website.

Since I am billing for a few pet websites, I should probably change the receipt to “Pet Website.” Actually, a better solution would be to open separate Paypal accounts for each website. That’s probably the next step, although it could prove to be a hassle, but it’s something for you to consider if you accept Paypal.

I’ve found that some people (like myself with many subscriptions) cancel their subscription prior to billing so they have the option to pay the next year if they want and not automatically. One thing that works for me is emailing these people a week in advance to remind them of their pending expiration date and giving them a link to pay using Paypal.

If they still don’t respond or aren’t amenable to renewing, I let them know exactly how much traffic their listing has seen as well as the traffic to the city searches. I then compare it to the cost of Internet advertising to show the deal they get on the site.

Finally, if the company says advertising hasn’t worked for them, I ask them how they are tracking results. Since most don’t, I ask them if they mention the Yellow Pages when they call a local business, and they typically say “no.” I tell them that similarly, most dog owners wouldn’t mention their DogWalker.com listing unless they had a special DogWalker.com offer where they had to mention the listing. I recommend that they try it out for another year with a special offer to track all business from the listing.

Finally, I’ve been taking checks from some people who don’t want to use Paypal.  Checks are a pain in the neck because they can take a week to receive and a week to clear. One bad check fee can cost 50% of the actual listing!  I don’t like taking checks, but if it’s a check or nothing, I’ve accepted checks.

Hopefully some of these lessons are helpful to you as you build out your websites and take advertising.

I’ve had a good amount of success with DogWalker.com, and there are around 250 paying advertisers on the site right now (maybe more). Nearly all of them pay annually using a Paypal subscription, which is connected to my company. As every business owner knows, recurring payments can be an important revenue stream (just ask Domaintools, Apple, and every other company that employs auto-renewal subscriptions).

Perhaps due to the website’s success or the fact that it’s a very good domain name, DogWalker.com has been my most inquired about asset. Offers from entities ranging from dog walkers to large companies outside of the domain space have inquired about buying the domain name and website. As with everything I own, there’s probably a price for which I would part with it, so I’ve thought about the feasibility of selling the website.

The Paypal account I use to collect payments is associated with my company, and it is attached to bank accounts, email addresses, and websites that aren’t related to the DogWalker.com website. I’ve searched, and there doesn’t appear to be a way for me to automatically change the billing/subscription email account for the current advertisers without having to get them to re-subscribe.

Herein lies a big problem. If I were to sell the website, the buyer would have to contact all of the advertisers with auto-renewing subscriptions and have them sign up again on a different system. It’s not the end of the world, but as my experience tells me, the cancellation rate could be significant, and it would wipe a considerable amount of recurring revenue from the books in the future.

If you build a website and use Paypal or any payment collection service, make sure it’s independent of your other websites, email addresses, and separate entities. If I end up selling the website, it will be a process to convert the current advertisers.

I am fairly certain that I am going to spin off this website into its own entity in the near future, and it will have a separate bank account, payment account, and be completely independent of my other businesses. Had I known that I would have this many advertisers in less than a year, I would have done this from the start. I have also learned that there are tax advantages to selling a business rather than selling an asset of a business, although that’s not something I am entirely familiar with yet.