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Can I charge more for payment by Paypal?
Thread poster: Armorel Young

Armorel Young  Identity Verified
Local time: 18:59
German to English
Aug 8, 2010

I've had an enquiry about payment for a one-off job by Paypal. I don't normally use Paypal for translation work, and my reluctance is because - if I understand Paypal's scale of charges correctly - they will deduct 3.9% from the amount I receive as their commission. When somebody pays me by bank transfer, by contrast, I receive the exact amount that they send, without deduction. From the recipient's point of view, Paypal therefore seems distinctly bad news. Would I be justified in adding a 4% charge to my invoice for payment by Paypal so that I'm not out of pocket at the end of the transaction?

 

Tom in London
United Kingdom
Local time: 18:59
Member (2008)
Italian to English
Worse than you think Aug 8, 2010

Armorel Young wrote:

if I understand Paypal's scale of charges correctly - they will deduct 3.9% from the amount I receive as their commission. When somebody pays me by bank transfer, by contrast, I receive the exact amount that they send, without deduction.



Not exactly. I think it's worse than that!

There have been many useful discussion threads here on Proz.com, about various issues with PayPal.

For all inward payments from outside the UK my UK bank, though apparently not yours, converts the amount into the local currency (GBP) using a specified exchange rate for that day, and deducts a fixed charge depending on whether the amount received is under or over £100. Over £100 it's £7.00 regardless of how much the amount is.

This takes only a couple of days from the time the payer makes the transfer. Then each time my bank sends me a paper document setting out the details of that particular transaction.

Paypal also apply an currency conversion rate, but I don't know if it's a more favourable or a less favourable rate than the one applied by the bank.

The real killer for me is that unlike my UK bank, PayPal then also deduct a *variable* charge (you say it's currently 3.9%) that increases the more you receive. In other words for an amount of £1000 my bank would take £7 but PayPal would take a massive £39 !!

PayPal may also block your account without warning, for no good reason, and may make it very difficult to re-activate. Other Proz.com users have described these processes in painful detail.

Therefore it being advisable (a) not to receive any payments via PayPal (b) to never have any money in my PayPal account in case they block it (c) to always be prepared to suddenly have the account blocked, I stopped using PayPal some time ago and have allowed the account to lapse.

[Edited at 2010-08-08 11:01 GMT]


 

InfoMarex
Ireland
Local time: 18:59
Member (2008)
Spanish to English
+ ...
PayPal rates Aug 8, 2010

Armorel,

As a constant use of PayPal for paying our translators and for receiving payment from clients internationally and nationally, I am perhaps not the best person to give you advice.

I am VERY much in favour our PayPal as it is quick, secure, money in your PayPal account within seconds, and money transferred to your bank account after 2 days.

Yes, any rate which you are charged to get your own money is an annoyance, but alternatives can be off-putting:

1. waiting for the client to transfer to your bank [and if you are in the European Union, you as a recipient of funds must now pay your own bank's charges anywayicon_frown.gif ],

2. waiting for a cheque or even international money/bank draft, which now in Europe is taking up to FIVE MONTHS to clear [our own bank is charging €30 to cash in international cheque].

There is also www.moneybookers.com which is good but not as widely used as PayPal.

In Ireland, we have a saying that "a bird in the hand is worth two in the bush", and personally, we prefer to get 97% of our invoice today, rather than 100% in one to five months time - less worry, less bookkeeping, fewer statements, etc..

My tuppenceworth for the weekend.
Kind regards,

Michael J McCann
InfoMarex


 

Tom in London
United Kingdom
Local time: 18:59
Member (2008)
Italian to English
ProzPay Aug 8, 2010

On several occasions I've suggested that Proz.com should think about setting up a members-only, not-for-profit international money transfer facility offering better T&C than the commercial operators like PayPal, Moneybookers etc. I even invented a name for it: ProzPayicon_smile.gif

[Edited at 2010-08-08 11:04 GMT]


 

Peter Linton  Identity Verified
Local time: 18:59
Member (2002)
Swedish to English
+ ...
Pros and Cons of PayPal Aug 8, 2010

Most of my payments are by bank transfer at no cost to me. Even so, I have a PayPal account because there are times when it is very convenient, such as dealing with one-off payments, or dealing in other currencies.

Times when I use PayPal:
To obtain payment from individuals for small jobs like certificates
To obtain payment from US agencies (in USD)

Having a small stock of USD in your PayPal account is very convenient for paying small sums in USD, for example for software, ProZ membership, ProZ conferences. I have had the account for some years, and never had a problem.

Whether you should add 4% is purely your commercial decision, but worth a try.


 

Armorel Young  Identity Verified
Local time: 18:59
German to English
TOPIC STARTER
Bank charges Aug 8, 2010

I'm puzzled, Tom, as to why your UK bank is charging you to receive foreign payments. My bank makes no charge for receiving payments in euros into my sterling account, and uses a reasonable exchange rate - I thought this was standard practice. Payments arrive quickly and efficiently, and with no deductions, so I find the bank system entirely satisfactory and feel I would just lose out my making more use of Paypal.

 

Tom in London
United Kingdom
Local time: 18:59
Member (2008)
Italian to English
Charges Aug 8, 2010

Armorel Young wrote:

I'm puzzled, Tom


I think you'll find you're paying for it one way or another- probably in the exchange rate. There have been endless discussion threads about this.

But I agree about Paypal. I can see no advantage in using it, and some disadvantages. I would frankly find it impertinent and bad for business, were I to add a very significant 4% to all my invoices because they were going to be paid via PayPal. That would be a great way to lose my clients !

[Edited at 2010-08-08 11:39 GMT]


 

José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 14:59
English to Portuguese
+ ...
Some comments on PayPal & other options Aug 8, 2010

On the brighter side, it's quick and efficient. Now, on the darker side...

1. Sworn translation rates in Brazil are mandatory, set by law. Hence, I'm legally entitled to receive these rates net. As the law (though not the rates!) dates back from 1943, it assumes that my client will bring cash to me, to pick up the translation, always on hardcopy (by the same law), therefore it's a COD payment. I had to set up four payment options for a foreign client yesterday, so I found out that the USD exchange rate is BRL 1.75 at the bank, and BRL 1.70 at PayPal or Xoom. A 2.85% hidden charge.

2. Worse than a PayPal account freeze would be a backdraft. A verified account on PayPal means that they have access to charge any amount to a bank account or credit card they have verified. As PayPal is eBay based/owned, figure this out... You sell something on eBay, and get paid via PayPal. For some reason, either you fail to ship the goods or the mail loses them, and your buyer disallows the payment. If you have already withdrawn the money from your PayPal account, they'll refund the buyer, and charge that amount to either your bank account or your credit card! It has been widely said on Proz forums that nobody can rely on PayPal customer support for anything.

3. This happened to me with Xoom, however it could also happen on PayPal. A translation agency known as a bad payer, under pressure, sent me a payment via Xoom, so they could e-mail me evidence of payment, insisting that I removed my bad comment about them on the Blue Board. However a simple online investigation and one phone call to Xoom gave me the information that the "sender" had cancelled the payment two minutes after having made it. It had been done only to have some fickle evidence of payment to show me. So this is possible. AFAIK this is not possible on, e.g. Western Union, Moneygram, Ikobo.

4. My bank in Brazil charges a fee of about USD 75 per transaction - regardless of the amount involved - for processing international ("wire") bank transfers. So I advise my prospects that I will cover this fee (as the cost of doing business) only for individual payments over USD 1,000. One very large, but messy translation agency that only pays in by bank transfer 'volunteered' to hold all my payments until I had accrued $1K. I told them that I could do the other way around: they should hold the jobs for me until they got something that added up to more than that. In spite of an internal e-mail that inadvertently leaked to me about their extreme satisfaction with my work, I haven't done anything for them since.

So IMHO it's a matter of adding the payment method costs to one's rates, since it will be one of the costs of doing business. Next time you are asked for a discount, you'll know how much you can give if the client will pay you in cash, instead of any money transfer method that embodies a cost on your side.


 

Tom in London
United Kingdom
Local time: 18:59
Member (2008)
Italian to English
Wow Aug 8, 2010

José Henrique Lamensdorf wrote:

My bank in Brazil charges a fee of about USD 75 per transaction - regardless of the amount involved


Wow! $75.00 ??


 

José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 14:59
English to Portuguese
+ ...
Yesss! ... for international wire transfers Aug 8, 2010

Tom in London wrote:

José Henrique Lamensdorf wrote:

My bank in Brazil charges a fee of about USD 75 per transaction - regardless of the amount involved


Wow! $75.00 ??


However they don't care if the transfer involves $10 (in which case they'll actually charge $65 to your account upon receipt!!!) or $10 million or more. All they require is a signed currency exchange contract (an account holder may go a branch and sign it once-for-all), and faxed/scanned & e-mailed copies of the order and the invoice. Money clears as a cash deposit in 2 banking days.

Foregn checks use exactly the same fee/routine, however they take 30-60 days to clear (after the time spent en route in the snail-mail). That's why I won't accept them under any circunstances.

On the other hand, a funds transfer within Brazil (no charges to the receiver) of up to BRL 5,000 (just under USD 3K) will clear overnight, and if the amount is higher than that, only... 20 minutes during banking hours. If it's within the same bank (all commercial banks are nationwide), regardless of the location of the branches involved, a transfer of any amount will be completely processed in real time, either in a branch office during banking hours (Mon-Fri, 10AM-4PM), or 24/7 over the Internet. Phone and ATM options also available. This is the permanent legacy from a three-digit inflation period that ended a few decades ago.


 

Yossi Rozenman  Identity Verified
Israel
Local time: 20:59
English to Hebrew
+ ...
Wow indeed... Aug 8, 2010

Tom in London wrote:

José Henrique Lamensdorf wrote:

My bank in Brazil charges a fee of about USD 75 per transaction - regardless of the amount involved


Wow! $75.00 ??


And I complain about the $22 the banks in Israel charge...

Personally, I use PayPal only for small sums, up to about $150, and I never convert between currencies. I can receive payments in USD, EUR and NIS (New Israeli Shekel).

Like Peter, I use PayPal to pay online, like for PROZ membership, books in Amazon, Web hosting services etc.


 

Sergei Tumanov  Identity Verified
Local time: 20:59
English to Russian
+ ...
Russian saying Aug 8, 2010

Russians have a saying:

- Can an elephant eat two tons of potatoes a day?
- Yes, it can, but who will give so much to the poor creature?

++
Rephrasing/
- Can I charge more?
- Yes, you can. But who will agree to this?

++
By the way, my bank charges euro 6.00 per incoming remittance to IBAN.


[Edited at 2010-08-08 17:02 GMT]


 

Paula Borges  Identity Verified
Brazil
Local time: 14:59
Member (2010)
English to Portuguese
+ ...
puzzled too Aug 8, 2010

Tom in London wrote:

José Henrique Lamensdorf wrote:

My bank in Brazil charges a fee of about USD 75 per transaction - regardless of the amount involved


Wow! $75.00 ??


Well, yes. In Brazil I have no alternative if I want to keep my European clients.
So far, so good, the only fees are the PayPal ones.
I'm under the impression they cannot block your account if you're verified, is that not true?
They sent me an e-mail saying since I'm verified they've lifted all limits, which made me think I'm not eligible for this mystery blocking thing you hear about.


 

Iza Szczypka  Identity Verified
Spain
Local time: 19:59
English to Polish
+ ...
Which means that I am all that... Aug 8, 2010

Tom in London wrote:
But I agree about Paypal. I can see no advantage in using it, and some disadvantages. I would frankly find it impertinent and bad for business, were I to add a very significant 4% to all my invoices because they were going to be paid via PayPal. That would be a great way to lose my clients !

My invoices to foreign customers specify two accepted payment methods - wire transfer and Paypal, with a note in bold stating that Paypal payments must carry the surcharge to cover Paypal charges. It's been so for 3-4 years, and I haven't lost a single client because of that. Some new clients do enquire why, but upon my explanation that I'll still have to carry my bank's fee for accepting a foreign transfer from Paypal they normally express their full sympathy - and opt for a wire transfer in 99% of cases.icon_smile.gif


 

Soonthon LUPKITARO(Ph.D.)  Identity Verified
Thailand
Local time: 00:59
Member (2004)
English to Thai
+ ...
Proz Wallet service Aug 9, 2010

Tom in London wrote:
On several occasions I've suggested that Proz.com should think about setting up a members-only, not-for-profit international money transfer facility offering better T&C than the commercial operators like PayPal, Moneybookers etc. I even invented a name for it: ProzPayicon_smile.gif

Proz started the Wallet and I transferred and got paid through it in former days. Now Proz says to decline the payment with outsiders due to certain reasons. I guess that Proz will not likely to start this type of transaction again.

Best regards,
Soonthon L.


 
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