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Paypal and Credit Card
Thread poster: Ivana de Sousa Santos

Ivana de Sousa Santos  Identity Verified
Portugal
Local time: 03:17
French to Portuguese
+ ...
Sep 6, 2006

Hello,

I've got some doubts concerning Paypal and the upgrade to a credit card.

I think this is basically because I've never owned a credit card.

I've got a Premier Account and am about to reach my withdraw limit (I've got 375€ left to withdraw).

I am also about to receive a considerable sum at Paypal and won't be able to withdraw that money unless I raise the limit by adding a credit card.

I went to my bank today and asked for a credit card, explaining the lady why I wanted one. She had never heard about Paypal and it was very confusing. I also couldn't explain better than I did because I don't remember reading that I had a 2.225€ limit and had to add a credit card to continue using Paypal. However, I am not saying that I didn't read that part; I just don't remember.

I've searched at the Paypal site for the information I need and couldn't find it, so I decided to post it here before asking them how to do it because maybe someone can advise me straight away.

My doubts are:
- First of all, why do they need a credit card? How is the credit card going to be used at PayPal, by Paypal itself? I mean, from the moment I have the credit card and give them my credit card number and 3 last digits, if I want to withdraw funds to my Portuguese bank account does it represent a purchase of something? "Service" perhaps?

Also, if I buy a washing machine with my credit card (I've got already one... It's just a simple silly example) and pay it with the credit card, my bank will come at a certain date and take me the money of that purchase (and will apply interests if I choose to pay a part of the amount at the end of the month and the rest afterwards).

What about in the case of PayPal? Will I pay anything for it?

I already pay 3 and something per cent of a certain amount when a client pays by credit card. Will I also have to pay to withdraw those funds to my Portuguese bank account?

I am totally confused with the whole process and don't understand anything about it.

I thought PayPal was a great service but am coming to the conclusion it actually isn't. Am I wrong?

Thank you in advance for elucidating me.

Best,
Ivana


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Heinrich Pesch  Identity Verified
Finland
Local time: 05:17
Member (2003)
Finnish to German
+ ...
Can't you let them pay you by wire transfer? Sep 6, 2006

Paypal is ok for small sums or if the payer lives in a country with underdeveloped banking system.
I have a credit card since 20 years, and it used to be the only method that allowed one to purchase items from abroad. My credit card has never been abused, though I used it a lot also in the net.
For Paypal the credit card increases your credibility, that you have a functional relation to one sound bank. Of course the membership costs something on a yearly basis.
Of course the lady at the counter didn't know Paypal. Just go again and fill in the application form for Visa or whatever.
Or let them pay you in small amounts or rather directly to your bank account.

Regards

Heinrich


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Sophia Hundt  Identity Verified
Local time: 21:17
Russian to English
+ ...
They also have a ATM/debit card option Sep 6, 2006

As I understand, it means that they'll send you a card with which you can pull cash out of ATM machines or purchase things as if it was a credit card (but the money will come out of your PayPal account). At first sight this seems like a better deal than a credit card, which is always more complicated, plus you need to be approved. But you'd have to examine what possibilities and limitations come with a debit card and how they compare to the use of PayPal credit card.

You could also have people pay you via MoneyBookers, which is like PayPal but a different company. This way your withdrawal options will be wider.

Good luck!



[Edited at 2006-09-06 04:28]


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Fan Gao
Australia
Local time: 12:17
Member (2006)
English to Chinese
+ ...
Here's my understanding of the process. Sep 6, 2006

Hi Ivana,

I'll tell you what little I know in the hope it may help you. This is my understanding anyway.
Ivana de Sousa Santos wrote:
I went to my bank today and asked for a credit card, explaining the lady why I wanted one. She had never heard about Paypal and it was very confusing.


First of all it's really not necessary to explain to the bank why you want a credit card or even mention Paypal as understandbly it probably would complicate things. You should just go through the normal process of applying for a card and then wait to receive it.

My doubts are:
- First of all, why do they need a credit card? How is the credit card going to be used at PayPal, by Paypal itself?

One of the reasons Paypal requires you to have a credit card is because these days they have to protect themselves more and more from money laundering so having your credit card details helps them to verify your identity and protect themselves from any fraudalent transactions.

Another reason for having a card to use with your Paypal account is if you ever want to buy things for example, on Ebay where you can make the purchase via Paypal and then they automatically take the funds from your credit card.

I mean, from the moment I have the credit card and give them my credit card number and 3 last digits, if I want to withdraw funds to my Portuguese bank account does it represent a purchase of something? "Service" perhaps?


No. As I undertstand it registering your credit card with Paypal and withdrawing funds to your bank account are two completely different things.

Giving them your credit card details will, I believe, help them verify you and increase your limit for making purchases via Paypal but in order to increase the limit for withdrawals to your bank account then you will have to verify your bank account with them in a seperate process.

I remember when I did mine they make a small deposit or withdrawal to your bank account and then when you see the entry appear on your bank statement there will be a code alongside it which you then have to enter on your Paypal account. Once you do this your bank account is verified with them and then you can withdraw large amounts from your Paypal account to your bank account.

Also, if I buy a washing machine with my credit card (I've got already one... It's just a simple silly example) and pay it with the credit card, my bank will come at a certain date and take me the money of that purchase (and will apply interests if I choose to pay a part of the amount at the end of the month and the rest afterwards).

We can use this example if for instance, you bought a washing machine from Ebay. You would pay the seller via Paypal and then Paypal would take the funds from your credit card and then you would settle your credit card bill in the usual manner at the end of the month or whenever.

What about in the case of PayPal? Will I pay anything for it?

I already pay 3 and something per cent of a certain amount when a client pays by credit card. Will I also have to pay to withdraw those funds to my Portuguese bank account?

No, just the percentage you already pay when you withdraw small amounts to your bank account. I believe the percentage goes down with the more payments you receive into your Paypal account. I think it's something like over GBP 50,000.00 per month and then the rate is a lot lower.

I hope this helps:)

Best wishes and good luck,
Mark


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Cecilia Falk  Identity Verified
Local time: 04:17
English to Swedish
Using the money in the account for purchases Sep 6, 2006

Hello,
I agree with Ivana that it is not easy to understand the ins och outs of PayPal.
I have registered my credit card and made purchases through PayPal, paying the credit card bill at the end of the month as usual, just like Mark described.

So far I have only bought things, but I am wondering what happens if I should get a payment through PayPal.
If I then buy something, is the money lodged in the account used to pay for the item or will the amount be taken from my credit card anyway? Or is the only way to get the money to transfer it to my bank account?

Sophia also mentioned a ATM/debit card option. Does anybody have more information about this, and I wonder if it could it be used outside of USA?

Best regards,
Cecilia


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Hester Eymers  Identity Verified
Netherlands
Local time: 04:17
Member (2005)
English to Dutch
+ ...
Buying stuff with PayPal Sep 6, 2006

Mark already explained most of the PayPal practice. Some extra information:

If you buy something with PayPal, they will use the money on your PayPal account first. When the amount to be paid is higher than what you have stacked on your PayPal account, they will charge the rest of the amount on your credit card. Very convenient, I think.

If you don't want to buy anything using PayPal, you can transfer your money from PayPal to your bank account.


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Armin Prediger  Identity Verified
Local time: 03:17
German to English
Using Paypal to buy sthg / ATM/debit card option Sep 6, 2006

1. if money comes into your Paypal account, you can either use it to buy something (say on eBay) or you can withdraw it to your bank account, which takes 5-7 business days. You can not, unfortunately, transfer money from your Paypal account directly to your credit card - would have been nice, used to be possible, but Paypal made some deal with Mastercard/VISA, and now it's no longer possible.

2. The ATM/debit card looks like a great option to me, and the best way all around. Someone pays you by Paypal (instant), you go to your nearest ATM and get the money (also instant), or use the card to buy something in a shop (again, instant). Unfortunately, this is only available to US Paypal accounts at the moment. I live in Ireland and they said it might be available here at some point, but it may be a while.

I'm assuming that once one has a Paypal ATM/debit card, one can use this in different countries, say when you're traveling. You just have to have a US Paypal account to begin with.


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Xavier Gonzalez-Alonso  Identity Verified
Local time: 03:17
English to Spanish
+ ...
Taxes and Money laundry regulations matter too Sep 6, 2006

Please let me add a few word regarding an important side of serious translating.

As Heinrich points out, Paypal (and debit cards) are ok for small sums. However, if someone is taking translation as a serious business option, receiving larger sums may become an issue with regard to income taxes and money laundry regulations.

My experience in this regard has been very interesting because I leave in Mexico, where these regulations are becoming stricter each day (and I think this might be the case in many other countries). To give you an idea, nowadays the upper limit to receive (or send) a cash amount at any bank from abroad, without fully registering your tax info, is just US$3,000 within a given month. On the other hand, if you receive (or send) more than US$5,000 within a month, this must be reported to the Internal Revenue Service (and the bank reports this to other authorities who investigate money laundering practices). In addition, the largest amount one can withdraw from a foreign account (should you decide to have a debit card from another country) is just US$300 a day.

I know this information can be scary and might seem as an inconvenience, but it is necessary for serious translations business, which ultimately should be the aim of most people who gather here.

Finally, the good news is that there are very interesting fiscal schemes that can be applied to exporting translation services. I am very happy to have learned, in combination with my accountant, efficient ways of handling my income tax when the money being received for my translations surpassed the above limits. Being able to sleep well without worrying for your taxes is worth the effort.


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Marina Oliveira  Identity Verified
Portugal
Local time: 03:17
English to Portuguese
+ ...
Why is it so difficult/expensive for a US clients to wire their payments? Sep 7, 2006

First off, thanks Ivana for this thread. I am about to face the same problem this month or the next.

I have a US client from whom I asked to be payed by wire transfer. As they replied that it would cost me $50, deducted from the invoiced amount, I preferred to receive by Paypal, where I payed a little less. Next payment will go over the withdrawal limit set by Paypal and though I have a credit card, I am not willing to use it with Paypal. I guess I will have to pay for the wire charges, then. Most unfair too, as they seem not to support any part of it.


Paypal is ok for small sums or if the payer lives in a country with underdeveloped banking system.


Apparently, US clients prefer to use Paypal or bank checks (which I find extremelly inconvenient these days, when electronic communication is so easy), or else wire payments are too expensive.

Of course they do not have an underdeveloped banking system, but I wonder why they are so relunctant to use wire transfers and why are those so expensive. Is it just my experience?

Best,
Marina


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Ivana de Sousa Santos  Identity Verified
Portugal
Local time: 03:17
French to Portuguese
+ ...
TOPIC STARTER
Thank you for your answers / One more doubt Sep 8, 2006

I apologise for only answering today but I've been in bed the last 2 days with a twisted anckle.

As for Paypal and credit cards, this process is now more clear to me, although I still have a doubt that I will ask further on.

Heinrich Pesch wrote: Can't you let them pay you by wire transfer?


There is at least one agency I work to that only pays through Paypal. I've asked another agency to pay me through Paypal because I thought it was easier for both of us, but now I don't think so because the client pays by credit card and I have to pay a fee for it (didn't know about it yet when I proposed it to him...)

TO MARK:
Thank you for your good exhaustive explanation. I can now understand it a bit better. However...

Hester Eymers wrote: If you buy something with PayPal, they will use the money on your PayPal account first. When the amount to be paid is higher than what you have stacked on your PayPal account, they will charge the rest of the amount on your credit card. Very convenient, I think.


What about an eBay bill? I am having a little trouble at the moment with Ebay and Paypal because I put things to sell and now I've got a $1.08 bill to pay. Once again, they mention in their rules that you can pay through Paypal but don't mention you can only do it if you've got a credit card. Now there is no way I can pay them because I don't own one, and although I've got money at Paypal at the moment I can't pay my Ebay bill. (It would be silly to be banned because of a $1.08 bill). I can't do it because they denominatd my account in dollars and not euros, for a reason beyond my understanding. I've wrote them an e-mail explaining the problem and "efficient" as they always are in answering to us they wrote "If you live in Switzerland the best way to make the payment is through credit card". Switzerland??? They've got my Portuguese address in their records not my Swiss one, since I don't live there anymore (and never mention to them I did, actually)... Then, they pasted the billing rules in their e-mail and that's it.

I can't also make a wire transfer because I am not allowed to do it in dollars and I am also not allowed to make a wire transfer to some countries as Switzerland and their account is a Swiss one.

Is just me or this billing/payments processes are not well explained once you open an account at PayPal or when you sign in Ebay with a seller's account?

So, my question is: if I've got money at Paypal and they should use the money I've got in there first, why having a credit card? It doesn't make any sense to me. If I pay through credit card it will be credited in my Portuguese account. Why then a credit card through Paypal to make the payment?

Xavier Gonzalez-Alonso wrote: As Heinrich points out, Paypal (and debit cards) are ok for small sums. However, if someone is taking translation as a serious business option, receiving larger sums may become an issue with regard to income taxes and money laundry regulations.


As far as I am concerned, I declare all sums to the IRS, big or small. When I say "big" I'm talking about 1000€.

In Portugal they are not so strict, although you have to declare everything you earn, and I know some colleagues who don't declare sums coming from abroad to the IRS. I am not condemning them, sometimes I actually think I should do the same, since I am penalized for declaring my revenues abroad when I hand in my income declaration. The IRS simulator indicates I will receive a certain sum (it doesn't make a simulation with the revenues coming from abroad but only with the total amount) and then I received 1/3 of what was simulated.

Marina Oliveira wrote: Of course they do not have an underdeveloped banking system, but I wonder why they are so relunctant to use wire transfers and why are those so expensive. Is it just my experience?


I also wonder why, Marina... The reason why I opened a Paypal account was because my client didn't want to make a wire transfer, since it would cost them a lot. At the time I thought it was great and didn't know anything about the limits. That's also why I proposed another client to pay me by Paypal.

I am also reluctant to pay for my client's wire expenses since I had a bad experience early this year (you can see threads http://www.proz.com/topic/43266 and http://www.proz.com/topic/42171). I still don't know what amount to write in the receipt, so I haven't done it yet. I guess I will end by writing the 198€, though.

I also don't understand why must I pay a fee when someone makes me a payment through Paypal with a credit card. It's the person who's supposed to pay for his/her credit card, isn't it? Or am I wrong?

Regards to everyone and than k you for explaining my doubts.
Ivana

[Edited at 2006-09-08 10:38]


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Fan Gao
Australia
Local time: 12:17
Member (2006)
English to Chinese
+ ...
Get well soon Sep 8, 2006

Ivana de Sousa Santos wrote:

I apologise for only answering today but I've been in bed the last 2 days with a twisted ankle.


Hi Ivana,

First of all I hope your ankle is better soon:)


TO MARK:
Thank you for your good exhaustive explanation. I can now understand it a bit better. However...

Hester Eymers wrote: If you buy something with PayPal, they will use the money on your PayPal account first. When the amount to be paid is higher than what you have stacked on your PayPal account, they will charge the rest of the amount on your credit card. Very convenient, I think.


What about an eBay bill? I am having a little trouble at the moment with Ebay and Paypal because I put things to sell and now I've got a $1.08 bill to pay. Once again, they mention in their rules that you can pay through Paypal but don't mention you can only do it if you've got a credit card. Now there is no way I can pay them because I don't own one, and although I've got money at Paypal at the moment I can't pay my Ebay bill. (It would be silly to be banned because of a $1.08 bill). I can't do it because they denominatd my account in dollars and not euros, for a reason beyond my understanding. I've wrote them an e-mail explaining the problem and "efficient" as they always are in answering to us they wrote "If you live in Switzerland the best way to make the payment is through credit card". Switzerland??? They've got my Portuguese address in their records not my Swiss one, since I don't live there anymore (and never mention to them I did, actually)... Then, they pasted the billing rules in their e-mail and that's it.

I can't also make a wire transfer because I am not allowed to do it in dollars and I am also not allowed to make a wire transfer to some countries as Switzerland and their account is a Swiss one.

Is just me or this billing/payments processes are not well explained once you open an account at PayPal or when you sign in Ebay with a seller's account?

So, my question is: if I've got money at Paypal and they should use the money I've got in there first, why having a credit card? It doesn't make any sense to me. If I pay through credit card it will be credited in my Portuguese account. Why then a credit card through Paypal to make the payment?


OK, so first I had a look at their rules for paying Ebay fees via Paypal and their website says:


PayPal: PayPal is a safe, convenient way to automatically pay your eBay fees. When you sign up for monthly PayPal payments, your invoice amount will automatically be deducted from your PayPal account each month. Or you can make a one-time payment using your PayPal account.


So that part is fine, which you already know.

Your problem is that they have your Ebay account set up in US Dollars and not Euros so I found this:


To pay your fees in a different billing currency, go to the Switch Billing Currency page and select the appropriate currency from the drop-down menu.

What will happen
When you change your billing currency, eBay opens a new currency account under your current User ID.

After the change, all fees for new listings will be billed to your new currency account. Additional fees for active listings (for example, if the item is revised, or ends with a winner and is charged a Final Value Fee) are charged to the original currency account. Your old account will be considered "pending" and needs to be kept current or it will become delinquent if it is not paid in full within two billing cycles.

You will receive separate invoices for the two accounts until the old account is paid in full.

Important: You will need to manually end any eBay Store Good Till Cancelled items and relist them in the new currency.


If you log in to your Ebay account and look for the "A-Z Index" there is a section under 'C' called "Change Billing Currency"

It sounds quite straightforward and you'll be able to change your billing currency from USD to EUR and then your Ebay bill will be able to be deducted from your Paypal account.

Hope this helps. Let me know.

Mark


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Ivana de Sousa Santos  Identity Verified
Portugal
Local time: 03:17
French to Portuguese
+ ...
TOPIC STARTER
Thank you Mark Sep 8, 2006

My anckle is getting better, thank you.

Well, I changed the currency into Euros and guess what? With Euros I can only pay with a credit card... That's what I read after having made the conversion.


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Fan Gao
Australia
Local time: 12:17
Member (2006)
English to Chinese
+ ...
Bizarre Sep 8, 2006

Hi Ivana,

I'm at a loss:( You now have a Paypal account in Euros and your Ebay account is now denominated in Euros but they won't let you pay the bill via Paypal.

All I can suggest is, and as tiresome as it is I think you'll have to do it, and that's too write to support at Ebay stressing that both of your accounts in Euros and WHY can't you pay the fees via Paypal.

There's got to be a simple explanation, I hope:)

Good luck,
Mark


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Ivana de Sousa Santos  Identity Verified
Portugal
Local time: 03:17
French to Portuguese
+ ...
TOPIC STARTER
What a mess, indeed! Sep 8, 2006

I've already written for support, but in my opinion they don't have an effective support team. They just paste what they think might help. It has happen to me twice already.

Meanwhile, I discovered that they've got an account in Belgium, so I asked them for an invoice denominated in euros.

I am starting to be a bit suspicious about the whole thing: if I live in Portugal where the currency in use in the Euro and if they are Belgium-based, why invoicing me in dollars, as if I had chosen that currency, and why invoicing in their Swiss branch? This is just a retorical questions, of course...

Thank you for your support, Mark. It's nice from you to care and try to help me out.

Regards,
Ivana


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Andres & Leticia Enjuto  Identity Verified
Argentina
Local time: 23:17
Member (2005)
English to Spanish
+ ...
A quick solution to your 1.08 EUR bill Sep 8, 2006

Hi Ivana,

Reading the thread a simple idea came up to me: while you wait for a solution from Paypal, can you ask a friend/relative to pay your 1.08 eBay bill with their credit card, and you just give them the cash? Just a wild idea.

Marina Oliveira wrote:

Apparently, US clients prefer to use Paypal or bank checks



Yes Marina, you are right. This is because it is cheaper for them.


Of course they do not have an underdeveloped banking system, but I wonder why they are so relunctant to use wire transfers and why are those so expensive. Is it just my experience?


Well, I think their actually developed banking system is sustained by the fees the banks charge: 50 USD for international transfers, 25 USD for domestic ones, and even 15 USD for cash deposits!

A solution to all this is to open a US based bank account. It is possible at certain financial institutions, like www.etrade.com
It is not actually a bank account what you open, but a brokerage account, designed for trading with stocks, etc.

The good news is that it is able for foreign citizens (we actually opened one time ago, and it works very well).

You then can transfer your paypal money to your bank account, and withdraw it with an ATM Visa debit card they send you (you have to check this specifically for your country).

We do this on a regular basis, and have even received checks and transfers from our US clients.

The cost for the account is free the first year, and then 13.50 USD per month.

The advantages I see are:
- No cost for getting your money along the chain into your pocket.
- The process is very quick.
- You'll be able to do more business with US clients.


One final thing, Ivana:


I also don't understand why must I pay a fee when someone makes me a payment through Paypal with a credit card. It's the person who's supposed to pay for his/her credit card, isn't it? Or am I wrong?


You have to pay because it is Paypal's business!
They charge us for giving us the service. They grab us with the "free" account, and then make everything possible to make us upgrade.

Two thoughts on this:
- One solution is trying to raise your price in almost 4% (that is what paypal charges). In my opinion, too complicated with regular clients.
- Another way would be to open a second paypal account, and indicate your client to please pay you there. It might take a while to have them understand it, but it's worth the effort. You can keep the first account for situations where you need it.

In our invoice we have all the possible payment methods, and we have two paypal accounts, one for payments without credit card (with a nice "preferred" note in there), and the other for credit card payments.

Well, I hope this opens new possibilities for you.

Best,

ANDRES


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