PayPal fees could be a pain, especially if you are a freelancer or have an online business on eBay. You lose part of your hard-earned money. However, PayPal is a business, and it needs to profit and services to survive. However, that does not mean that you will have to be burdened by huge dollar fees forever.
There are some ways to avoid or at least reduce these rates. It would not be as easy as refunding your money, but it is still possible. Before we go into that, make sure that you check out our other PayPal guides on Money Brighter.
On this page, you’ll learn about the following:
- Types of Fees
- When do fees apply?
- What transaction is free of charge?
- What are the risks of using the family and friends option?
- What is ‘Buyer Protection’ and why is it important?
Types of Fees
PayPal fees vary based on several factors. Among these factors would be the type of PayPal account you have, the purpose of sale transactions you make (whether it is personal or business services), and the dollar or currency conversions you use.
For the PayPal Business Account, you have several merchant dollar rates or monthly costs associated that could be incurred. These dollar fees are part of the Standard and Pro plans. On the other hand, the PayPal Personal Account is most sought by side hustlers who wish to receive dollar payments from their services.
1. Let customers shoulder the fees
Asking customers to cover the dollars imposed by PayPal would be one way to avoid deduction on amounts you should receive. However, be sure to clarify this with your customer. They should acknowledge shouldering the rates to avoid future complaints. PayPal usually takes up 2 – 3 dollars, so set the additional sale within that range.
You should reconsider removing your linked bank accounts because you can save 1.50 dollars on every sale if you opt to make bank transfers. However, take note that banks have clearing days, so confirm the clearing days of your connected bank so you can plan when to withdraw funds.
3. Use the friend or family option
Whenever you receive money from clients, you will be charged a fee of 0.30 dollars. However, there will be no dollar fees if money is sent using the friend or family option and if done locally. Thus, this option would be an effective way to avoid fees.
Meanwhile, if you want to use payment via friends or family option, make sure to change the way you send your invoices to your clients. Instead of sending PayPal invoices, create and send invoices using another program.
4. Consider lower merchant fees
Reducing merchant fees is possible. An online business on eBay, for example, should have transactions of at least 3000 dollars to qualify for this option. PayPal merchant fees can cut into your profits, so if you want to use this, you must fill out an application form first and then wait for approval.
5. Add PayPal fees as a business expense in your tax declarations
For an online business, these dollar fees are inevitable expenses, and it is valid to include them in your tax returns. Just make sure to document the dollar fees properly so that you can keep track of it and not miss out on anything important when filing your tax.
When do fees apply?
There are some charges that PayPal would apply to your account. Learn about these dollar fees on the list below:
- Receiving money from customers for any purchase
- Receiving and sending money through PayPal internationally
- Sending personal payments using debit cards or credit cards
- Transferring money from your PayPal account to your debit card or prepaid card.
Fees would differ among countries, so make sure you are aware of the different percentages charged. Check how much PayPal would charge in your country codes or location and payment currency conversion fees per dollar. Here are a few currencies:
- Canada – 2.9% of transactions amount + $0.30 Canadian Dollars
- United States – 3.7% of transactions amount + $0.30 the United States Dollars
- Other countries – 3.9% of transactions amount + fixed dollar or country rate
What transaction is free of charge?
Sending and receiving money locally to and from friends and family would be free. However, international payments and standard transfers would still require some dollar fees regardless of your connection to the receiver or sender. Of many transactions, this payment method is also a good option to consider when sending and receiving domestic payments. It will just depend on your agreement with your employer.
What are the risks of using the family and friends option?
Free is what we target, and we can indeed get that through payment transactions under the friends and family option. However, when things go wrong, PayPal will not be able to secure your money under their Buyer Protection program.
What is ‘Buyer Protection’ and why is it important?
The buyer protection program protects online money transfers if something wrong happens with their purchases. This program covers you as a buyer if:
- You did not get any items.
- The item is different from what you should receive.
- You did not receive the right quantity of goods.
- The article has a defect or damage.
- The goods are incomplete or have missing parts.
- The items are different from what the advertisement or product description says. (authentic, looks different, and there is a misrepresentation of goods)
If you experience any of the details above, you must file letters of complaint at PayPal within 25 weeks from the purchase date. PayPal will credit refunds into your account if your case meets the requirement and is verified.
– Choose to be paid not so often
– Change how you withdraw your funds; directly to your bank and not credit or debit card is your best option
– Ask to be paid as a friend or family if it’s okay with your client
– Use FreshBooks Classic
– Include the fee into your pricing
– Input the fee as an expense when you file for a tax return
– Consider alternatives in the payment method
How PayPal eans is by charging a 2.9% fee from every type of payment’s aggregate sum. Likewise, there is additional money; 0.30 dollar flat fee on payments.
The fee for debit or credit card payments received through PayPal is 2.9% plus 0.30 US dollars if sales are within the US. If the money exchange fees are from international services, PayPal will charge 4.4% plus a fixed dollar fee based on conversions from country to country.
PayPal does not charge VAT, so there is no VAT to claim.
PayPal’s refunded payments give you a 2.9% fee when you issue a full refund through the transactions page, but you cannot get your 30-cent dollar payment.
Free is what we target, and we can indeed get that through transactions under the friends and family option. However, when things go wrong, PayPal will not be able to secure your money under their Buyer Protection program.
– Receiving money from customers for any purchase of goods and services
– Receiving and sending money through PayPal internationally
– Sending personal payments using debit cards or credit cards
– Transferring dollar fees from your PayPal account to your debit card or prepaid card.
– You did not get any item
– The item is different from what you should receive
– You did not receive the right quantity of goods
– The article has a defect or a damage
– The goods are incomplete or have missing parts
– The items are different from what the advertisement or product description says. (authentic, looks different, and there is a misrepresentation of products)
It is necessary to take a granular look at your personal balance and your general month-to-month tracking. That said, we hope that this article has provided enough details and an insight or two regarding the ins and outs of PayPal fees and services. If the transaction requires a change in currency, a currency exchange fee will be applied too. You an also opt for other alternative payment platforms if your PayPal fees are getting too big, you can always consider alternatives and drop the platform altogether.
Once it is approved by PayPal, the rates will apply to all commercial transaction payments received in your PayPal account. There is also a different rate for business accounts.Micropayment rates can be ideal as an alternative to standard commercial transaction rates for businesses. Recipients can check balance process and requests. There is a charge of fee to sellers called paypal seller fees.This is extremely problematic for an online sellers who is keeping close tabs on income and expenditures.
PayPal is only a payment service provider We act as a payment service provider only. Restrictions on transfers or withdrawals from PayPal accounts To protect us and our users from loss, we may delay a withdrawal, in certain situations, including if we need to confirm that you have authorized the withdrawal or if other payments to your PayPal account have been subject to a reversal if you have a pending transaction or an open dispute or claim. Have you got queries digital payments, digital payment transaction, online payments, payment protection, sellers processing payments, merchant interchange fees,
PayPal Business Payments, checkout services, or other suggestions? Feel free to share them in the comments section below. We will provide answers as soon as possible. You can also check out other blog post from our site.