The Agony of PayPal Fees
Let me start off by saying that I think the world of PayPal. If it were not for this service, my freelance writing career would never have taken off. But with that being said, PayPal frustrates the heck out of me each and everyday. How so, you may ask? Simply put, I am tired of getting hit with fees each time that I receive a payment. While I know that this is there way of making money, it costs me hundreds of dollars each month.
PayPal charges several levels of fees, but most of us fall into the “PayPal Standard Rate” category. If this is the type of account that you have, you will be charged 2.9% plus $.30 on each transaction. For example, if you receive a $100 payment you will net $96.80; assuming that there are no cross border fees.
My biggest problem is when I receive large payments such as those close to $1,000. For these, I am docked with a fee of nearly $30! Sure, this is still better than waiting for a check, but that is a lot of money for a transaction that is done the same way as a lesser one.
Just as my freelance writing income fluctuates, so do the amount of PayPal fees that I incur monthly. But for the most part, I lose approximately $200/month. When looked at on a yearly basis, these fees total $2,400 or so; which is not a small chunk of change by any means.
It would be nice to have an online service similar to PayPal that buyers and sellers could use free of charge. But when it comes down to it, PayPal has always been the top dog in this industry, and probably always will be. Unless you want to wait around for checks to arrive in the mail, PayPal is your best option. It is no fun to find out that they are taking hundreds of dollars from you each month, but in the end, it is a service that online entrepreneurs have come to use on a regular basis.
August 26th, 2007 at 1:51 pm
If you get your own merchant account, you may be able to get it down to 1.9%. But, then a lot of them add monthly fees, statement fees, etc. I don’t know if American Express and Discover will go that low; it may just be for VISA and MasterCard. But, you probably also won’t be able to accept eChecks.
A lot of times, it works out that PayPal is still the better deal, as it gives the buyer more payment options, which means you can accept a wider variety of payment methods.
It would be nice to have a tiered payment system, something where the percentage decreased as the amount increased.
Of course, even better would be if the transaction fee on all transactions, no matter the size, would be no more than the cost of a postage stamp. That way, it is comparable to mailing a check. It would hurt for micro-payments, but for most other payments, it would be relatively painless. And, it would be good for the consumer, as the merchant would pay for the “stamp” rather than the consumer.
August 26th, 2007 at 2:44 pm
I count it up to just the cost of doing business, frustrating but few options. Just be sure your rates account for the transaction fees.
August 26th, 2007 at 3:26 pm
I feel your pain. Many of my clients pay me by credit card through PayPal, and those fees really do add up.
August 27th, 2007 at 8:33 am
Why don’t you try asking for your clients to pay by eChecks instead? So far, all I have no such problem with being charged for the work done through sponsored post network. For advertisers who work directly with me, I normally try to ask them to use eCheck. But then again, what I earn are peanuts compared to what your clients pay you
August 28th, 2007 at 8:16 am
if it wasn’t for paypal, non North American or European bloggers like me would stand little chance of making much money online
August 28th, 2007 at 3:54 pm
I totally agree that PayPal is a great service. It can just be disheartening when you lose a few hundred dollars each month to them. But that is the cost of doing business I suppose!
April 5th, 2008 at 5:34 pm
I’m not sure if you know about this but there is a recent alternative to PayPal, a new competitor, and they do not charge fees for receiving money. As a matter of fact, they’re giving out $25 just for signing up for a free account — this offer is ending 4/15/2008 — and if you know people who want or need either the account or the $25, you can refer them and get a $10 referral bonus.
If you would like the info, please email me with YOUR EMAIL ADDRESS so I can email you a referral email. Then please look out for an email with the subject:
“You have been invited to join…”
If you have any questions, please don’t hesitate to ask. My email address is:
elisterling@peoplepc.com
May 26th, 2008 at 11:49 am
Electronic payments are something everyone pays for, using PayPal or with a merchant account. The fees can be painful but it’s the cost of business. I do a lot of business through PayPal and they take thousands from me - but they are providing a valuable service in return (by my current standards anyway).