Paypal fees, paid by buyer or seller?
Thread poster: Simon Bruni

Simon Bruni  Identity Verified
United Kingdom
Local time: 18:43
Member (2009)
Spanish to English
Apr 1, 2011

Dear Colleagues

A translator friend has been charged Paypal fees of 3.4 % to receive payment for a project he did. Is this correct? Personally I have never been charged this fee on any of the five occasions I have taken payment via Paypal. When asked about this, the buyer responded that when there are no fees this means the transactions are done by "friends" rathers than buyers, which, he says, is illegal.

I see from the Paypal site that this fee can be paid either by the buyer or the seller, so which should it be in our case? The upshot of it is that my friend has received less than the amount agreed for the job.

Thanks for your help!

Simon


 

Katalin Horváth McClure  Identity Verified
United States
Local time: 13:43
Member (2002)
English to Hungarian
+ ...
Yes, it is correct Apr 1, 2011

It was a credit card payment, right?
See the fee schedule here:
https://www.paypal.com/cgi-bin/webscr?cmd=_display-fees-outside

If you are logged in, you can also see this, a bit more detailed, I think:
https://www.paypal.com/us/cgi-bin/webscr?cmd=_display-receiving-fees

For larger amounts, it is cheaper to use e-checks, because than the max. fee is $5.00.
(You have to wait longer for the money to clear.)

Katalin


 

Jean Lachaud  Identity Verified
United States
Local time: 13:43
English to French
+ ...
Paypal is costly Apr 1, 2011

Paypal does charge a hefty fee from the receiving party (3.4 % sounds about right) when the money transferred is indicated as a payment. Indeed also, the payer can accept to pay the fee (I assume it is the same percentage).
I don't see where the "legality" issue is coming from. Legal issues are about reporting income, unless there is something in PayPal fine print making it a legal issue to claim that a payment is not a payment but a mere transfer.
Quite possible, after all, but since I have used PayPal exactly once (because of said fees), I am not going to bother reading PayPal's fine print.


 

Teressa  Identity Verified
Local time: 12:43
English to Spanish
+ ...
Seller pays fees Apr 1, 2011

In all my dealings with PayPal the seller pays the fees. Same as with accepting credit card payments, seller pays the credit card fees.

That's why I did not list PayPal as one of the ways that I will accept payment. If a client asks me to accept payment via PayPal, then I can ask for a surcharge to cover the fees.


 

Louisa Berry
United Kingdom
Local time: 18:43
Member (2009)
German to English
+ ...
Depends on what you agree on/negotiate Apr 1, 2011

With all such things, it depends on what you agree as the terms of your business relationship with the other party.

What is standard practice to one person is not to another. So it's always best to check these things before you do the work in case your assumptions on the matter are not held by the client.


 

LEXpert  Identity Verified
United States
Local time: 12:43
Member (2008)
Croatian to English
+ ...
Recipient pays - in practice Apr 2, 2011

PayPal has tweaked their system so that in nearly all cases you will be charged for receiving a PayPal payment. Technically and theoretically, if the payment is from a "friend", and funded by bank account or PayPal balance, there should be no fee. In practice, if PayPal detects ANY indication that the transfer is business-related (from or to a business account, in response to an invoice via PP or money request, etc.) the fee will be triggered. Then there is also a 1% cross-border transaction fee for international transactions, etc. In general, trying to arrange everything with a customer to be "just so" in order to avoid the fee (which you will likely get changed anyway) takes up more of your time than the fee is worth. Simply accept it as a cost of doing business and/or build it into your rate for PayPal jobs.


[Edited at 2011-04-02 01:02 GMT]


 

Simon Bruni  Identity Verified
United Kingdom
Local time: 18:43
Member (2009)
Spanish to English
TOPIC STARTER
Thanks everyone Apr 2, 2011

Thanks for clearing that up. I shall be avoiding Paypal if possible from now on! Their exchange rates are awful too.

Simon


 

Margherita Facchini  Identity Verified
Italy
Local time: 19:43
English to Italian
+ ...
eChecks are sometimes not an option.. Apr 2, 2011

I just wanted to add an info I received from a US-client of mine concerning the eCheck option. The client writes:

"I've been trying to see how we can use eChecks as a payment option and in fact, I just got off the phone with PayPal's customer service department, and unfortunately we cannot. Because XX has a bank account linked to Paypal for "instant" transfers and uses a credit card as a backup, PayPal says a third option of an eCheck is not possible."

The client previously refused to cover the almost 4% fee imposed to me by PayPal...

I am still on the lookout for a new way to be paid from USA (I am based in Italy).

Margherita


 

José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 14:43
English to Portuguese
+ ...
Xoom Apr 2, 2011

Margherita Facchini wrote:
I am still on the lookout for a new way to be paid from USA (I am based in Italy).
Margherita


Try to sell your clients on the idea of using Xoom.

It's much cheaper and faster than any other payment method I know.

Advantages are:
  • It is much faster, depending on the country, I guess. Brazil has by far the fastest banking system in the world (due to a 3-digit inflation a few decades ago), so it may take less than an hour for the money to be available in the payee's account.
  • It is a lot cheaper, some countries the fee being flat USD 4.99 from bank acct. to bank acct. for any amount up to USD 3K at a time.
  • Documentation is better auditable, as funds are sent to a fully identified individual, and not to an e-mail address (like PayPal).


Disadvantages, as seen by translation agencies, are:
  • They only serve some 30 destination countries.
  • Transfers from bank accounts (cheaper) require the sending account to be in the USA.
  • No possibility of leaving funds there, transfers are made directly from a bank account or a credit card.
  • Not reversible. Dishonest agencies cannot pay, get the job done, say you didn't deliver the goods, and then have e.g. PayPal backdraft that payment, either from your PP account or your credit card, if you have withdrawn the funds already. One such dishonest agency paid me via Xoom just to get evidence of payment to show me, and managed to cancel the transaction immediately thereafter, however it was very easy for me to discover their trick.
  • Overly cautious agencies tend to associate them with online gambling, however it's not the case.
  • Fees are charged to the sender, so they have to deduct them from the amount they send you. This makes it obvious that they are charging the payee for the fees, so there is no way to say they didn't know PayPal makes such hefty deductions.


 

Lidia Morejudo  Identity Verified
United Kingdom
Local time: 18:43
English to Spanish
+ ...
banks charge as well Apr 2, 2011

I use paypal only with clients from abroad. In the UK there is no charge for bank transfers or cheques, so that's fine. However, international transfers are very expensive. So, unless somebody is going to transfer you a lot of money paypal is probably still going to work better. But then it really depends on your bank and the bank of your customer.
As somebody said before, the main thing is that you agree with the customer beforehand who is liable for bank charges. If you agree a payment method first you can't then turn around and say you changed your mind.
Another reason why I use paypal is because I am able to keep the currency in its original form and not have to exchange it into my local currency, which would then be more expensive. Then with paypal people can also pay me using their credit card... etc


 

Katalin Horváth McClure  Identity Verified
United States
Local time: 13:43
Member (2002)
English to Hungarian
+ ...
If the Paypal account is linked to a bank account, eCheck IS an option Apr 3, 2011

Margherita Facchini wrote:

I just wanted to add an info I received from a US-client of mine concerning the eCheck option. The client writes:

"I've been trying to see how we can use eChecks as a payment option and in fact, I just got off the phone with PayPal's customer service department, and unfortunately we cannot. Because XX has a bank account linked to Paypal for "instant" transfers and uses a credit card as a backup, PayPal says a third option of an eCheck is not possible."

The client previously refused to cover the almost 4% fee imposed to me by PayPal...

I am still on the lookout for a new way to be paid from USA (I am based in Italy).

Margherita



I don't think this is actually true. I have a client that regularly pays with eChecks, however, once they made a mistake and paid by the backup credit card, and once by instant transfer. So, they had the ability to use any of these three methods. They are in the UK, but I don't think it matters.
Here is a quote from PayPal's website about eChecks:

What is an eCheck?

Question :
Answer :
An eCheck is a payment that you make directly from your bank account.

Just like a regular check, it usually takes between 3 and 5 business days for an eCheck to clear and the money to appear in the recipient’s PayPal account.

Both eChecks and Instant Transfers are ways to pay with your bank account. With an eCheck, the recipient receives the money in a few days. With an Instant Transfer, the recipient receives the money right away.

To send an eCheck, just link your bank account to your PayPal account.

Linking your bank account is easy and fast. If you do online banking, you can usually link your bank account in just a few minutes. Once you’ve linked your bank, using it to pay for things is secure. Merchants get paid but they never see your bank account details. They won’t even know what bank you use.


 

Ronnie Halpern  Identity Verified
Local time: 18:43
Member (2003)
French to English
+ ...
Currency restrictions with Paypal Apr 3, 2011

Because of the fees charged by Paypal and their poor exchange rates I opened a USD account in my UK bank so US clients could pay me by bank transfer. This is a much better option as the bank's exchange rate and charges are much more attractive. However, some clients either can't or won't pay by this method. I asked Paypal to change from the GBP bank account which currently receives transfers from my Paypal account to my new USD account. They replied that they cannot do this. They can only transfer money into the currency of the country in which the account holder is located. So it seems that I have to accept their rates and charges and have the money converted by them into Sterling even though I don't want them to.
For this reason I now only accept Paypal payments for small amounts and when all else fails, and adjust my rates accordingly to take account of these additional charges imposed on me.
My impression was that this is a world-wide restriction imposed by Paypal, but I don't know if this is the case. It would be interesting to hear other people's experiences in other countries.


 

José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 14:43
English to Portuguese
+ ...
Currency restrictions Apr 3, 2011

Ronnie Halpern wrote:
My impression was that this is a world-wide restriction imposed by Paypal, but I don't know if this is the case. It would be interesting to hear other people's experiences in other countries.


I'm in Brazil, and my PayPal account is in USD. Every time I receive payments in a "strange" currency, e.g. AUD, CAD, EUR, GBP, they ask me whether I want to open an account in that currency, or have the funds converted into USD. I keep my account in USD because it has always been culturally the major foreign currency in Brazil. I prefer not to spread my balance thin by distributing the funds into sundry currencies, as this might require multiple transfer transactions, and lead to additional fees. Now that PayPal has set up operations in Brazil, transfers to a BR bank account are 'free' (in spite of their lower exchange rates) if involving a minimum amount.

However maybe they restrict that option to countries having other than leading currencies, e.g. USD/EUR + others I wouldn't know, to safeguard themselves from sudden exchange rate hiccups.


 


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