Pay Pal Usage & Fees - A Guide

mrmopar

Active member
621
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I stumbled upon a handy PayPal calculator that tells you how much in fees you will receive when expecting payments or a certain amount. It also shows you how much to build into your price to ensure you receive the desired amount after fees are taken out.

http://www.rolbe.com/paypal.htm

Generally speaking, PayPal fees are 2.9% of the price + $0.30 for all purchase transaction, regardless of money source. These fees are levied on the receiver in all cases except gift payments (no fee), when the money is sent via a personal transfer and the source is an existing balance or a bank account (no fee) or via a personal transfer with credit card funding (seller decides who pays the fee).

This link explains the fee schedule very well.

https://www.paypal.com/cgi-bin/webscr?cmd=_display-fees-outside

Remember that PayPal was created to facilitate the ease of electronic payments for those who were otherwise incapable of receiving them (the small guy). Without this service, you'd probably need to have a credit card machine to expand your business outside of cash, personal checks and money orders. All of those payment types expose the recipient to risk due to theft, NSF and forgeries. This is considered a cost of doing business and being able to accept credit cards, further expanding your customer base. Outside of Ebay is where things have gotten somewhat hazy.

In order to offer this service, PayPal needs to make money. Hence the fees. You may think they are unreasonable and to that, I would suggest researching the cost involved in setting yourself up as a vendor to receive credit card payments through the conventional means. I don't know, but I bet that method may be more costly. These tools should help you decide how you want to conduct your business. Absorb the fee as a cost of doing business, sharing the fee or passing the fee along to your customers. In the end, you the seller make the call and any choice you make will influence your results one way or the other.

Some key common points for ALL to consider:

Sending gift payments when you are really making a purchase, especially given you are avoiding a fee, is basically fraud.

Limiting payment source types, charging customers your fees to buy an item from you or asking them to split it may drive some away.

Specifically adding a fee into a purchase price on ebay to cover a PayPal fee is a violation. There are more subtle ways to accomplish this, although many are viewed as deceptive as well, such as padding shipping charges and offering "discounts" for other than PayPal payments or charging an excessive handling fee to cover "expenses".

Keep all of these factors in mind when you are accepting or sending PayPal payments and your decisions as to what type of payment you are making/receiving, who pays the fees involved, etc. In the end, it is up to the seller as to what types of payments they are willing to deal with. Cash is risky due to theft. Checks are risky and slow (they need to be mailed and can bounce!). Money orders offer a little better protection, but are also slow and often cost the sender money to obtain. PayPal and other electronic pay sites offer instant payment, but do carry some risks as well, such as charge backs.

Hope this helps.
 

Loyalty32

Active member
2,724
5.00 star(s)
Good info. Paypal/Ebay made a nice piece of coin off me in the past 4 months. I went from basically just a buyer to a Silver Power Seller in that short time. I can't imagine what they pocket off of people who do it for a living. Ya gotta pay to play though!

Thanks
Craig
 

stephj24

Active member
392
4.90 star(s)
Staff member
I've been using Ryan's fee calculator for quite some time now. Easily, one of the most useful links I've seen in a long time. Hopefully people take advantage of this good advice.

Steph
 
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