Paypal premier to Paypal business - what happens next?

August 7, 2012 12:53 AM

I currently have a PayPal Premier account I use for payments to my business (which is permitted under their terms and conditions). But it has a limit on funds that can be received, so I will need to "upgrade" to a business account. Has anyone done this and are you able to tell me what, in essence, happened to the fees? I have calculated that at the moment, they apply fees of c. 5% on average, so I add a percentage to my clients' invoices (with their permission) to share the loss incurred. But it's not clear at all from the various fees and charges in PayPal's tables what actually happens to the average fees. Surely someone on the Green has been through this and can share their experiences (feel free to memail me if you want to keep it private).

Notes: (1) I am in the UK. Clients paying me in this way are mainly from the US, China and India. (2) I try to get clients to pay by bank transfer but some of them aren't happy with the fees, esp on smaller totals. (3) I have looked at Moneybookers and use that sometimes, but my client base is more familiar with Paypal. (4) I will not want the fancy stuff Paypal Business offers like shopping carts (I believe) and taking credit card payments, as far as I know. But if you've had a great experience with suddenly being able to take c card payments, feel free to let me know!
Thanks!

posted by LyzzyBee to work & money (4 answers total)

I have a PayPal business account, and I'm charged 2.9% per transaction. The fee schedule also says I'd be charged 2.9% for non-US transactions, but I'm not sure if that's *on top* of the original 2.9%, or instead of it.
posted by croutonsupafreak at 12:12 PM on August 7, 2012

If anything, your fees will go down. As a Business account, you will be eligible for volume-based discounts.

In the UK, you presumably currently pay 3.4% +20p, which is the UK base rate, plus 0.5% on cross-border transactions, plus foreign exchange costs. All of this would stay the same, except that if you process more than GBP1.5k a month, your base rate goes down to 2.9% +20p. Cross-border and foreign exchange costs don't change.

There are also accounts with more features where there's a monthly fee, but doesn't sound like that would apply to you.

Info on UK rates here, and the various types of business accounts here.
posted by CruiseSavvy at 4:44 PM on August 7, 2012

That's brilliant, thanks both. I've managed to do some form of witchcraft to raise my limits (including doing something that looked like it was trying to make me change to a business account, then didn't!) but will keep this all in mind. Many thanks!
posted by LyzzyBee at 3:08 AM on August 8, 2012

FYI, my Paypal business account just received a payment from the UK for the first time today. Paypal gave me the choice of keeping the £175 payment in pounds by setting up a British currency account (which might have involved fees -- dunno as I did not go down that path), or of transferring it to dollars for a £7.03 fee. Converting to U.S. dollars cost exactly what CruiseSavvy suggested it should -- a base 3.4%+20p, plus a 0.5% cross-border cost.

Paypal's exchange rate is slightly worse than Google's estimate of the current exchange rate, which does not surprise me -- I've never gotten the official published exchange rate in any currency. The £167.97 remaining after fees translated to $256.26 in Paypal-land, whereas Google says it should have been $262.49. Over all, I lost about $11 due to fees and imperfect exchange rate costs, or 4% of the total invoice amount.

I have another client who prefers to pay via international wire transfer, and says it costs him £40 per international payment regardless of amount. Maybe he's just using that as an excuse to postpone payments -- because of the fee, I've told him he can bundle multiple payments and send a single wire transfer every few months instead of reimbursing me immediately for each job. But if he's really paying that much to send money, Paypal sounds like a pretty good deal.

If I had more than two clients from the UK and was dealing in larger sums I'd look in to whether other payment options might carry lower transaction fees or offer better exchange rates, but I'm pretty happy with the ease of this situation at present.
posted by croutonsupafreak at 8:52 AM on August 9, 2012