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Paypal fees way too high
Thread poster: Anne Savaris

Anne Savaris
Brazil
Local time: 11:23
Member (2016)
Italian to Portuguese
+ ...
Dec 3, 2016

Hi,

what do you guys do to avoid/diminish payment fees? I really don't believe I am the only one thinking that U$ 90 fees on U$ 1230 payment is too much!! What do you use, instead? I'm in Brazil and receive payments from USA and Europe from most clients... Thanks a lot!!


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Lianne van de Ven  Identity Verified
United States
Local time: 08:23
Member (2008)
English to Dutch
+ ...
I agree Dec 3, 2016

I avoid Paypal or have clients pay the fees (split them at best).

Have you looked into options with TransferWise?
"TransferWise is a (peer to peer - inserted by me) currency conversion service, so does not receive and send out the same currency in a single transfer. The only exception for this is our 'Request Money' feature, where GBP-GBP and EUR-EUR payments are possible."
https://transferwise.com/help/article/1569835/basic-information/supported-currencies

This means that requesting dollars from clients in other countries would not work.

More info:
https://transferwise.com/help/article/1922918/basic-information/5-things-to-know-before-transferring

Also search for:
transferwise site:proz.com


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Samuel Murray  Identity Verified
Netherlands
Local time: 14:23
Member (2006)
English to Afrikaans
+ ...
TransferWise is not peer-to-peer Dec 3, 2016

Lianne van de Ven wrote:
Have you looked into options with TransferWise?
"TransferWise is a (peer to peer - inserted by me) currency conversion service...


No, TransferWise is not peer-to-peer (despite what they say in their commercials). The money that you send via TransferWise goes from your account to the TransferWise account in your own country. The TransferWise account in the recipient's country then pays the corresponding amount into the recipient's account. The money does not go directly from your account to the recipient's account.

But yes, if I understand correctly, TransferWise does support USA/EU to Brazil payments, for a fee of 1% (not the 4.5% charged by PayPal). [1] However, TransferWise does not appear to support payment by cheque of even e-cheque. [2] What's more, payment via TransferWise from the USA is not free for the sender (US banks charge $25-35 for each transfer via TransferWise). And some US banks require the sender to visit the branch in person to authorise the payment. So if you request payment via TransferWise from US clients, be prepared to offer that they reduce the invoice amount by $25-35 plus maybe a little extra for the effort.

FWIW, I compared the currency exchanges rates of my own bank to that of TransferWise and PayPal. PayPal shaves $21-27 off of a EUR 1000 payment. This $21-27 is a "hidden" fee because you don't see it as a separate item on your account information.

TransferWise: EUR 1000 = USD 1066
My bank: EUR 1000 = USD 1060
PayPal: EUR 1000 = USD 1039


[Edited at 2016-12-03 10:02 GMT]


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Annamaria Amik  Identity Verified
Local time: 15:23
Romanian to English
+ ...
Transferwise exhange rates? Dec 3, 2016

Samuel Murray wrote:
The money that you send via TransferWise goes from your account to the TransferWise account in your own country, and there it stops. No money is actually "transferred" to the recipient's country. Instead, the TransferWise account in the recipient's country then pays the corresponding amount into the recipient's account. The money does not go directly from your account to the recipient's account.


I only used it once for making a payment, and although I didn't check, I'm pretty sure their exchange rate was way higher than would have been at my bank.


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EvaVer  Identity Verified
Local time: 14:23
Member (2012)
Czech to English
+ ...
PayPal is only for small payments Dec 3, 2016

The amount you stated is well worth a wire transfer or a cheque. I don't know what the banks in Brazil charge, but it should be possible to do much better than that.

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Anne Savaris
Brazil
Local time: 11:23
Member (2016)
Italian to Portuguese
+ ...
TOPIC STARTER
Fees are 9%! Dec 3, 2016

Thank you all! I may check for TransferWise, then. But Samuel, Paypal recently changed their conditions and I believe it affected their fees: they are around 9%!! Or I may be using it in an improper way? I see no reason to charge that much!!

What about Skrill or Payoneer in Brasil? Does someone use them?

Thanks!


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Samuel Murray  Identity Verified
Netherlands
Local time: 14:23
Member (2006)
English to Afrikaans
+ ...
PayPal's fees for USA to Brazil Dec 3, 2016

Anne Savaris wrote:
Paypal recently changed their conditions and I believe it affected their fees: they are around 9%!!


Much googling has left be baffled about PayPal's fees for transfers from the US to Brazil, but it appears that in 2013 it was around 7.4%. If you paid USD 90 on a USD 1230 payment, then that's just over 7.3%.


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Samuel Murray  Identity Verified
Netherlands
Local time: 14:23
Member (2006)
English to Afrikaans
+ ...
@EvaVer Dec 3, 2016

EvaVer wrote:
The amount you stated is well worth a wire transfer or a cheque.


I'm not sure what's the fee for wire transfer from the Czech Republic to Brazil, but from my own bank (Netherlands) to Brazil it's EUR 7 per transfer for the sender. Wire payment from the USA to Brazil costs USD 25-35 for the sender. So although "wire" may be a cheap option in some countries, it's not a cheap option for clients from the USA.

As for cheques, it may be free for the US client to pay by cheque, but the recipient has to pay a fee at his own bank. Whether it's cheaper than PayPal would depend on the Brazilian bank. I don't know what that is, but I can tell you what my own bank's fee is, per cheque: EUR 60. (sixty, not six) I mention this only for comparison. Perhaps Anna can tell us how much does her bank would charge her for cashing a foreign cheque.



[Edited at 2016-12-03 10:40 GMT]


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 11:23
English to Portuguese
+ ...
The break-even point Dec 3, 2016

The problem with PayPal is that fees there are always proportional to the amount involved, the sky is the limit. It is as if they had to physically move gold bars from source to destination. Most other payment methods charge a fixed per-transaction fee within specified limits.

The current PayPal fee for receiving money in Brazil (just checked them) from overseas is 7.4% on the amount, plus a few cents that should make no difference. So if you get paid 1,000 USD or EUR, you'll have 926 of them credited to your account to spend online. However if you want to have them credited in BRL to your bank account in Brazil, they'll overtly adopt a 3.5% lower-than-market exchange rate, so you'll receive the BRL equivalent to 893.59 USD or EUR.

Okay, round it to 900 USD or EUR to make things simpler, and your cost of receiving via PayPal is 10%, period.

P2P systems like Western Union and Moneygram charge a fixed USD ~5.00 fee for transfers up to USD 3,000. However few clients like it, because technically it involves some individual there receiving your payment in cash on your behalf, and then personally (P2P) sending you the money. The larger the company, the less they like it.

It all boils down to ACME Translations paying your fees to Jim Smith, and Jim sending you the money via P2P. Now Jim may be either an ACME employee, or an external accountant. This leaves a rather sketchy paper trail, and the door open for embezzlement. If Jim is the owner and factotum at ACME, he'll have no objection to that.

The other formal option to PayPal is a bank/wire transfer. It costs the sender something in the range of USD 20-65, depending on the bank they use, and it also costs you - in Brazil - something in the range of BRL 100 (~ USD 30 - Itaú) to BRL 350 (~ USD 105 - HSBC, as I was told by colleagues) to receive.

So your cost to receive payment via a bank transfer to your account in Brazil, depending on the setup on both sides, will be in the USD 50-170 range. You'll have to figure out how much it actually is.

Since the PayPal cost is 10% of the entire amount, your break-even point is about 10x your specific total bank transfer fee. Assuming the best case, if the latter is USD 50, the break-even is x 10 = USD 500. For lesser payments, it's better to use PayPal; for higher amounts, wire transfers are a more affordable choice.

Three additional points to consider...

1. Speed - Bank transfers take from 0 to 5 calendar days to clear to your account, however they often clear on the same day. PayPal transfers to your bank account in Brazil take from 2 to 5 business days, and they usually clear on the 4th business day.

2. Waiver/Discount - As P2P systems have NO such costs, I give a 10% discount to my clients who use them. These 10% were built in my translation rates, if they were stated for payment via PayPal.

3. Fairness and feasibility - Many translation agencies pay their vendors the full amount via PayPal, however they'll deduct wire transfer fees - if such method is chosen by payee - from the total due.
Is this fair? Usually no, because the payee cannot influence the payer's chosen bank, i.e. if it charges a $20 or $65 fee for sending a wire transfer.
Is any other option feasible? No, because if the Accounts Payable person in the payer's firm has a USD 1,000 invoice to pay, they can only take that amount from their cash drawer or bank account to make the payment. NO company will have a budget allocated for "bank fees to pay vendors". It is standard business practice that the vendor should cover the costs incurred in getting paid. If unsure or skeptic about this, check how credit cards work.

As a result of this last point, you should embed the cost of getting paid into your fees.

Of course, as a marketing trick, you may give a discount to clients paying via P2P. In order to drive the idea home, in Brazil it's illegal to charge a higher price if the customer chooses to use a credit card to pay. However many stores - if the CSR helping you is empowered to do that - will give you an ad-lib discount for paying in cold hard cash.

Years ago I separated translation costs from financial costs, and opted for full transparency. My clients know exactly how much they are paying me, and how much they are leaving with banks, PayPal, etc., so they can choose as they like.

This includes payment term. Brazilian interest rates are outrageously high, around 18% per month (sic!) for overdraft or card revolving credit. I operate as if I were using these specific resources to fund my clients cash flow to pay me. Smart clients overseas immediately notice that it would take them years to accrue so much interest, if they borrowed it from a local bank to pay me COD.

The idea of every client bringing cash to your door is long gone. You must include all your operating costs in your price/rate.


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Samuel Murray  Identity Verified
Netherlands
Local time: 14:23
Member (2006)
English to Afrikaans
+ ...
Yes, but what about cheques, José? Dec 3, 2016

José Henrique Lamensdorf wrote:
* Okay, round it to 900 USD or EUR to make things simpler, and your cost of receiving via PayPal is 10%, period.
* The other formal option to PayPal is a bank/wire transfer. It costs the sender something in the range of USD 20-65, depending on the bank they use, and it also costs you - in Brazil - something in the range of BRL 100 (~ USD 30 - Itaú) to BRL 350 (~ USD 105 - HSBC, as I was told by colleagues) to receive.


Okay, but can you tell us what is the cost of cashing a US cheque?

Do you pay a fee to withdraw money from your PayPal balance into your bank account? I would assume the fee is the same as a wire recipient fee (since that is essentially what a PayPal withdrawal is), but can you confirm that for us?

Since the PayPal cost is 10% of the entire amount, your break-even point is about 10x your specific total bank transfer fee. Assuming the best case, if the latter is USD 50, the break-even is x 10 = USD 500. For lesser payments, it's better to use PayPal; for higher amounts, wire transfers are a more affordable choice.


Yes, well, unfortunately many clients prefer that you indicate just one payment option, so you'll have to decide whether each client is typically a high invoice payer or a low invoice payer. (-:


Speed - Bank transfers take from 0 to 5 calendar days to clear to your account, however they often clear on the same day. PayPal transfers to your bank account in Brazil take from 2 to 5 business days, and they usually clear on the 4th business day.


About half of my PayPal clients pay by e-cheque, which takes about 2 weeks to clear. This means that from the moment that the client considers an invoice "paid", it takes 15-20 days before the money arrives in my bank account.

If the Accounts Payable person in the payer's firm has a USD 1,000 invoice to pay, they can only take that amount from their cash drawer or bank account to make the payment. NO company will have a budget allocated for "bank fees to pay vendors". It is standard business practice that the vendor should cover the costs incurred in getting paid.


I'm not convinced. It makes perfect sense to me that a payer would send the full invoiced amount, and if there are extra banking fees involved in sending the money, then the payer would pay for those costs out of his own pocket, which would form part of his "business expenses".

If unsure or skeptic about this, check how credit cards work.


Credit cards are an exception, in the same way that PayPal is an exception. With PayPal, the sender pays nothing, and the recipient pays both the sender's and his own fees. This is not "normal". It is a special arrangement meant to encourage buyers/senders to use that facility, and recipients accept these extra fees because theoretically it means that more people would be willing to use that facility and hence provide an income for the seller.

Brazilian interest rates are outrageously high, around 18% per month (sic!)...


Are you sure it's not "18% per year, calculated monthly, on a daily balance"? If so, then the interest would actually be 1,5% per month.

[Edited at 2016-12-03 13:02 GMT]


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José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 11:23
English to Portuguese
+ ...
Answers to Samuel Murray's questions Dec 3, 2016

Samuel Murray wrote:
Okay, but can you tell us what is the cost of cashing a US cheque?


Varies from one bank to another, usually the same as for receiving a wire transfer, i.e. USD 30~105. The problem is that the check takes 1-2 weeks to arrive by regular mail, or it may cost some $200+ for express courier service. Then it may take about one month (see interest rates below) to clear. Depending on your relationship with the bank, they may ante that amount, under the provision that if the check bounces, the amount plus fees & interest will be automatically charged to your checking account, without advance notice.

Samuel Murray wrote:
Do you pay a fee to withdraw money from your PayPal balance into your bank account? I would assume the fee is the same as a wire recipient fee (since that is essentially what a PayPal withdrawal is), but can you confirm that for us?


No, no charge to withdraw funds from PayPal to a bank account in Brazil if the amount exceeds BRL 250,00 (~USD 80 - not sure whether this is still in effect), however they delay the transfer by 2-5 business days, in spite of our entire banking system operating in real time.

Samuel Murray wrote:
Yes, well, unfortunately many clients prefer that you indicate just one payment option, so you'll have to decide whether each client is typically a high invoice payer or a low invoice payer. (-:


Yes, most do, because there are not so many countries like Brazil and Argentina where interest rates are so absurdly high. Extended payment terms mean that they are getting a loan in their vendor's country, which may not be such a good choice, if they have it cheaper at home.

Samuel Murray wrote:
About half of my PayPal clients pay by e-cheque, which takes about 2 weeks to clear. This means that from the moment that the client considers an invoice "paid", it takes 15-20 days before the money arrives in my bank account.


This is correct. Very few of my clients use e-checks on PayPal... beyond the first time, because I advise them on this after it has occurred, and that I will charge them accordingly if they do it again.

The point here (and I make it quite clear) is that while I am a professional translator, I'd be an eternal amateur in the money lending business. As banks - professional financial services providers - compete against each other on who offers the LOWEST interest rates, I - as an amateur in this trade - should adopt interest rates high beyond belief. I always offer them the option to get a better deal elsewhere for financial services, which I am not at all interested to offer, unless they force me to.

Conversely, I've checked with my bank, and they were positive in stating that they DO NOT offer translation services. If they ever do, I'll rethink my proposition.

Samuel Murray wrote:
I'm not convinced. It makes perfect sense to me that a payer would send the full invoiced amount, and if there are extra banking fees involved in sending the money, then the payer would pay for those costs out of his own pocket, which would form part of his "business expenses".


That applies only to sworn translations in Brazil, as a 1943 law, still in effect, stipulates that statutory rates are net, and it expressly and clearly forbids granting discounts on these rates to anyone, for any reason whatsoever.

P2P services offer the option to the sender on whether the fee should be added to the amount sent, or deducted from the amount delivered.

Samuel Murray wrote:
Credit cards are an exception, in the same way that PayPal is an exception. With PayPal, the sender pays nothing, and the recipient pays both the sender's and his own fees. This is not "normal". It is a special arrangement meant to encourage buyers/senders to use that facility, and recipients accept these extra fees because theoretically it means that more people would be willing to use that facility and hence provide an income for the seller.


Credit cards are no longer an exception, but the most widespread way of doing business in many places worldwide. Their model embodies the payee having 5~10% (?) deducted from their receivables. In Brazil it is illegal to surcharge payments via credit card. PayPal has a policy ruling that it is forbidden to surcharge payers for using it; possible penalties including freezing the payee's account and seizing their balance.

It is worth noting that surcharging for the use of PayPal involving payment of sworn translations in Brazil is mandatory by Brazilian law. As PayPal is established in Brazil, the legal surcharge to ensure the net payment overrules their internal policies, if they want to stay in business here.

Before PayPal set up operations in Brazil, the best way to transfer funds from a PayPal account to a Brazilian bank account was Xoom. It cost USD 5 per transfer up to USD 3K, and took 1-24 hours (usually one hour) for the funds to be credited on the account.

If PayPal were such an "exception", why - for cryin' out loud - the majority of translation agencies worldwide is using it?

Jose Henrique Lamensdorf wrote:
Brazilian interest rates are outrageously high, around 18% per month (sic!)...

Samuel Murray wrote:
Are you sure it's not "18% per year, calculated monthly, on a daily balance"? If so, then the interest would actually be 1,5% per month.


I just logged in to my bank's onliine system (Itaú Personnalité), and checked.
They state:

Interest rates on overdraft:
Monthly: 13.35%
Yearly: 349.84%

Interest rates on credit card revolving credit:
Monthly: 17.09%
Yearly: 581.80% (aka APR)

As an amateur in this (financial services) trade, if I charge 20% monthly, it's quite cheap.
The reason these rates are high is that the bank doesn't know when the "loan" will be settled, i.e. when they'll have the cash available to invest elsewhere, so they could plan for it.

Of course, I could get a loan at ~6% interest per month from the same bank, however with a preset date to settle it. However in this case I'd be setting up financial transactions far beyond my scope as a professional translator.

If my translation clients want quick credit to pay later, that's the deal. Of course, if they have better options stateside (and I am dead sure they do), why not use them?

I want them to have the best deal with me. While I strive to deliver great value in translation services, I won't mind if I get rated as the worst money lender around.


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Yasutomo Kanazawa  Identity Verified
Local time: 22:23
English to Japanese
+ ...
Asking your client to bear the charges Dec 3, 2016

Anne Savaris wrote:

Hi,

what do you guys do to avoid/diminish payment fees? I really don't believe I am the only one thinking that U$ 90 fees on U$ 1230 payment is too much!! What do you use, instead? I'm in Brazil and receive payments from USA and Europe from most clients... Thanks a lot!!


Like EvaVer wrote, Paypal is useful only for small amounts.
I once got 128 USD deducted from a 2000 USD transfer by Paypal, and that made me decide I would only use Paypal for small amounts.

As to my title to your reply, there is a way that you will not bear the handling charges by Paypal. Two of my clients sent me money via Paypal, one being over 1000 USD, but he bore the whole charge, so I received the full amount. The other client sends me money via Paypal as "honorarium". But the thing is, I don't know how they do it. Maybe you should write to Paypal and ask how this could be done.


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mariealpilles  Identity Verified
France
Local time: 14:23
Member (2014)
English to French
+ ...
PayPal fees Dec 4, 2016

Not only are their fees far too high, but they also oppose the transfer of your money to your personal bank account when they estimate that you have received too much, asking for a six-month wait! When contacted, the Luxembourg bank authorities intervened and then, all of a sudden they releasedmy money. I WILL NEVER DO ANY BUSINESS WITH SUCH PEOPLE AGAIN. If you go to various fora regarding PayPal you will be amazed at what you read.

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Lingua 5B  Identity Verified
Bosnia and Herzegovina
Local time: 14:23
English to Croatian
+ ...
True. Dec 4, 2016

mariealpilles wrote:

Not only are their fees far too high, but they also oppose the transfer of your money to your personal bank account when they estimate that you have received too much, asking for a six-month wait! When contacted, the Luxembourg bank authorities intervened and then, all of a sudden they releasedmy money. I WILL NEVER DO ANY BUSINESS WITH SUCH PEOPLE AGAIN. If you go to various fora regarding PayPal you will be amazed at what you read.


On the fora, their customer satisfaction rate is 1 out of 10 (based on hundreds and thousands of reviews).


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Annamaria Amik  Identity Verified
Local time: 15:23
Romanian to English
+ ...
Only if money is sent as "personal" Dec 5, 2016

Yasutomo Kanazawa wrote:
As to my title to your reply, there is a way that you will not bear the handling charges by Paypal. Two of my clients sent me money via Paypal, one being over 1000 USD, but he bore the whole charge, so I received the full amount. The other client sends me money via Paypal as "honorarium". But the thing is, I don't know how they do it. Maybe you should write to Paypal and ask how this could be done.


Same thing here. As far as I know and Paypal did confirm recently, money will not be deducted for amounts received if they are sent as "personal" payments and not as "payment for services". But that's inconsistent with their rules, so not sure if they won't come after you and deduct them later if they find out.


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