Me Bad At ++October 2, 2009 9:08 AM   Subscribe

Not Homework Filter! Paypal Filter: Paypal charges me 2.9% plus \$0.30 for every transaction. Someone needs to pay me X. What is the formula to determine how much they need to send with paypal so I get X and not X - (X * 0.029) - 0.30?

This has frustrated me... I do favors for friends and they want to pay with the convenience of Paypal... but I can't figure out the formula to quickly determine how much they need to pay me. I end up spreadsheeting it and plugging in numbers until they match...

Say they owe me \$100, I can't say \$102.90 (which is 2.9% added to the \$100) because 2.9% of \$102.90 is higher than 2.9% of \$100...

I guess I FAIL at Algebra today...

Bonus points if you show me HOW to calculate this so I'm learning something as well as the formula for how to do it. I mean, I have

X + (X * 0.029) + 0.3 = y

where X is what they owe me and Y is how much they have to pay Paypal so I get paid in full... But then I do all those algebra tricks, divide by X, etc. but haven't gotten it yet
posted by arniec to Work & Money (16 answers total) 6 users marked this as a favorite

X * 1.029 + 0.30
posted by tksh at 9:11 AM on October 2, 2009

y=(x+0.3)/0.971
posted by jon1270 at 9:13 AM on October 2, 2009 [1 favorite]

Jon...great...so how did you get that? .971 is 1 - 0.029...

was my original formula correct and you solved for Y or was my original formula off too?
posted by arniec at 9:16 AM on October 2, 2009

Really, you did all the hard work: you want y, and you know x. So add the two terms involving x: (x + 0.029x = 1x + 0.029x = x(1 + 0.029) = 1.029x ) and you're good to go!

(Do you understand why the formula you've got in the more inside makes sense?)
posted by leahwrenn at 9:16 AM on October 2, 2009

Oh wait, I'm sorry that's wrong.

Here, let me write this out, assuming they charge you the 2.6% then the 30 cents:
• Someone pays you y dollars
• PayPal takes a 2.6% surcharge, so y is reduced to ( 1 - 0.026 ) * y, or 0.974y
• PayPal then charges a \$0.30 transaction fee, so 0.974y - 0.30
So given y dollars, you actually end up with 0.974y - 0.30 dollars in the end or x = 0.974y - 0.30. Rearrange that and you get y = (x + 0.30)/0.974.

Checking the formula with \$100, you would get (\$100 + 0.30)/0.974 = \$102.98. 2.6% off \$102.98 is around \$100.30, and a further \$0.30 off gives you the \$100 you wanted.
posted by tksh at 9:19 AM on October 2, 2009

And I actually got the surcharge wrong on my second try. But yeah, like everyone said, you had it wrong. Nevermind what I wrote.
posted by tksh at 9:21 AM on October 2, 2009

Your other mistake was in not applying the 2.9% to the \$0.30 fee.
posted by jon1270 at 9:22 AM on October 2, 2009

We're sure that paypal charges the %off before the \$0.30 transaction fee? If they charged it afterwards, then the original formula would be fine:

y = x + 0.029x + 0.30
posted by leahwrenn at 9:24 AM on October 2, 2009

We're sure that paypal charges the %off before the \$0.30 transaction fee?

Yeah, we're sure.
posted by jon1270 at 9:28 AM on October 2, 2009

When you send money via Paypal as a personal payment, they show you how much the fee will be and then ask if you want to pay it as the sender or you want the receiver to pay for it. Could you just ask people to send the money as a personal payment and to pay the fee themselves?
posted by ssg at 9:28 AM on October 2, 2009

PayPal calculator
posted by Mwongozi at 9:44 AM on October 2, 2009

Keep in mind that it is against the PayPal rules to charge your fees to the buyer. In fact, and this may be an acceptable risk for you since you say you're working with friends, but you lose your Seller's Protection coverage if you do. This makes it a one-step process for someone to dispute the charge and get their money back, no questions asked and no recourse for you.
posted by rhizome at 9:58 AM on October 2, 2009

Algebra aside, isn't this what same-day free bank transfers are for?
posted by turkeyphant at 10:35 AM on October 2, 2009

The Paypal fee is for Paypal's convenience to you, the seller, not a penalty for the purchaser. You shouldn't pass those fees on to your clients, but accept them as a service charge in exchange for not having to effect a physical monetary transaction with your client.

Just as food sellers can't charge you the price of a pack of gum AND the credit card fee as well.

However, there's nothing stopping you from raising your base fees by 3%, I guess, if you care that much about the pennies.
posted by Aquaman at 11:13 AM on October 2, 2009

Algebra aside, isn't this what same-day free bank transfers are for?

It works that way in the rest of the world, but it sure doesn't work that way in the US, for the most part. I think it would be possible for the person's friend to do an online billpay if their bank supports that, but that still results in a paper check being cut. Bank Transfers in the US, especially between banks, are really only for the same person holding two accounts in different banks. If you want to do a wire transfer in the US, except in some rare cases, it will cost you.
posted by Geckwoistmeinauto at 11:37 AM on October 2, 2009

Just to clarify...this is not me doing it for business. I went to an event and bought some exclusive items for friends. They asked me to do this for them. I am not making a penny off of this, just asking them to pay me what I spent buying them the item and shipping it. No eBay, just personal favors.

Now for payment I have said they can mail me a check, or if it's convenient for them they can use Paypal but paypal charges me a fee and I don't think it's right that I lose money for doing favors so I've said if they choose that option then it's a few dollars more (unfortunately the amounts we're talking, it's a few bucks not a few cents)...

So...it's off topic but that's what is going on. And in fact both of them decided to send me a check rather than spend the extra dollars, but this formula bugged me because I aced Algebra years ago but couldn't figure this out..

Thank you all for the help!
posted by arniec at 12:30 PM on October 2, 2009

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