Show me the most money possible?
October 30, 2013 5:05 PM   Subscribe

I have a small freelance business, and for convenience's sake many of my clients choose to pay me via PayPal. What are the best practices I can implement to reduce the fees I pay? Or just general best practices where this is concerned? Or...other ways to accept payments?

20% of my clients are old friends -- they're good for the money and I could ask them to mail me a check. The other 80% are strangers, so I do want some semi-foolproof way to receive payments. They're not physically with me at any time, and so far all of them live in the US.

There is a slight possibility of me having clients from the rest of North American and possibly the UK in the future...but it's a very slight possibility.

I'm looking to maximize convenience and security for all parties, and minimize fees.

posted by BlahLaLa to Work & Money (17 answers total) 3 users marked this as a favorite
What are the best practices I can implement to reduce the fees I pay?

Have you clients pay you for fees you are incurring. It's not acceptable to be paid 2.9% less just for your clients's convenience.


Your phrasing of "many of my clients choose to pay me" (emphasis mine) is odd. Clients do not choose how to pay you; payment terms should be defined in the contract you have with your client. It's not unreasonable to simply require payment by check, which eliminates all the hassle of dealing with PayPal, the concern of fraud, and having to charge your clients 2.9% more for no obvious benefit to either party.
posted by saeculorum at 5:18 PM on October 30, 2013 [1 favorite]

Response by poster: I guess I should say: I would like to offer my clients an easy way to pay me without the hassle of me mailing a check. I would also like to relieve myself of the chore of dealing with said check, making sure it clears, etc. Thus, credit cards are the way to go...but what is the best way to implement that?
posted by BlahLaLa at 5:24 PM on October 30, 2013

I don't know what kind of protection they provide, but I had a positive experience with Square cash recently. As far as I can tell they are not charging any fees. My guess is that they keep costs low by requiring the use of debit cards - which are durbin regulated.
posted by phil at 5:25 PM on October 30, 2013

I'm a freelancer, and I just have my clients mail me a check. I've taken PayPal and Elance, but the fees aren't worth it. I have had one production pay me with an AmEx gift card, but that was a one-off.
And taking credit cards means fees. You have to set yourself up with a merchant account, usually through your bank.
posted by Ideefixe at 5:51 PM on October 30, 2013

Offer a discount for payment by cash or check.
posted by COD at 5:58 PM on October 30, 2013 [1 favorite]

Square takes a cut. 2.75% for swipes/wallet and 3.5+$0.15 for manually entered.

If you're doing enough business you can also do $275 for the month and then get free swipes. But you'd have to be doing $10,000 in sales to break even.

Better than PayPal since you can get it to go straight to your bank account. But you know they're not running this for free.
posted by theichibun at 6:05 PM on October 30, 2013

What about treating paypal fees as a cost of doing business and upping your rates to take that expense into account?

I'll also nth just having people mail you a check. That's how everyone did everything before paypal. The only way I'd really worry about this is if a lot of your clients are the type of person who'd be likely to bounce a check. If your clients are other companies, or well-off individuals, that seems rather unlikely.
posted by Sara C. at 6:08 PM on October 30, 2013 [3 favorites]

I invoice via Freshbooks, which allows me to use Paypal Business Payments, which is a 50 cent flat fee per transaction. Yeah, no aggressive PayPal vig.

There are some limitations (client has to be on PayPal, US only, the money doesn't get to you instantly), but it's pretty decent. Plus, Freshbooks is good.

It does not appear to be available via vanilla PayPal.
posted by notyou at 6:12 PM on October 30, 2013 [1 favorite]

I guess I should say: I would like to offer my clients an easy way to pay me without the hassle of me mailing a check. I would also like to relieve myself of the chore of dealing with said check, making sure it clears, etc.

Have you set up a business bank account yet? Because this solution is already available for many consumers. Basically, several banks now have an app (if you also have a smart phone) so you can scan the paper check and it goes into your account. Several articles report that this feature is free.You can do the research to find out which banks offer this feature. With electronic banking, you can check online as to when it is available.

I have had some business clients in the UK. They prefer to have bank info (for my business acct) and send it from their bank to my bank. Now this is for businesses, not individual consumers, so your comfort level may vary with this. But I have done it for years and for a few UK clients, and it has not been a problem. YMMV.
posted by Wolfster at 6:15 PM on October 30, 2013 [1 favorite]

Square Cash (a new service separate from their credit card service) indeed has no fees but senders are limited to sending $2500/week (or just $250/week if they don't go through extra authentication).
posted by zsazsa at 6:19 PM on October 30, 2013

As a point of clarification. Square cash is a new offering and I do not believe is subject to their core product's price structure. The bigger problem I see is that they limit the amount of money you can transfer per week.
posted by phil at 6:19 PM on October 30, 2013

Just build it into your price so you can maintain your margin. No need to jump through hoops. Look at the numbers, get an average charge over all transactions and tack it on to your price. That way you can accept all forms of payment because they're already paid for...
posted by jim in austin at 6:34 PM on October 30, 2013 [3 favorites]

The cheapest equivalent I know of is Dwolla--it uses ACH, so it will be a longer time for you to get your payment (a few days transfer on their end; a few days transferring it to your account) but the fee is a flat 25 cents a transfer. It's only available for US bank accounts, however.
posted by foxfirefey at 9:09 AM on October 31, 2013

It seems like the 2.9% fees might actually be saving you money over the hassle of dealing with checks, particularly if you ever run into a bounced one. Even without a bounced check, you say that you have to deal with the checks, which takes time, and your time is money.

Overall, it sounds like a good option might be to raise your prices a bit to cover the cost of taking in money in general.
posted by freezer cake at 9:23 AM on October 31, 2013

I'm a freelancer and everyone pays me through a check. I pay my subcontractors through checks, even though I've never had a physical checkbook in my entire adult life. I would never accept Paypal unless they were paying to cover the cost of the fee. I would also not bother with all this merchant account business, way too much hassle on your end unless you are doing a large volume of sales or something.

Your bank has online bill pay right? You can use it to pay anyone, not just your electric bill. This is what myself and everyone I work with does. You enter their address and name in the bill pay, click send, and the bank will mail a check for you. No fees, no stamps, no walking to the mail box. Click and done.
posted by bradbane at 9:38 AM on October 31, 2013

if you work with big companies, ask to get set up with direct deposit/ach/ebt if they offer it for freelancers. if it's just a person, check or paypal is the way to go.

but getting checks sucks balls. it sucks a little less now with mobile deposit (FINALLY td....). anyway. you know you can declare that 2.9% fee on your taxes, right?
posted by misanthropicsarah at 11:58 AM on October 31, 2013

Response by poster: Okay, thanks for all the opinions. Guess I have to stick with PayPal, given my circumstances.
posted by BlahLaLa at 2:22 PM on November 30, 2013

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