About Paypal fees? Seeking Advice EDIT: Thank you! :)

[pigeon-maiden.livejournal.com]

EDIT: Haha, I almost forgot that I posted this! I actually got some advice before this actually appeared on A_B, but I think everyone gave really great answers! Thank you! I'm sure you guys know that I would never charge such things maliciously. I just was not fully aware of how the fees worked (I originally thought it was standard to charge the fees (no matter what you call it). But now I think I know what to do! Thanks again! :)

I reeeaaally should have posted here before I posted on my art sites (because I think I got people unnerved).

Anyway, so I've discovered recently that if too many "gifts" are sent through Paypal, my account can lock down. That's how I've done my commissions for the longest time, but now since I get a lot more than usual, I feel the need to implement the fees.

I kinda announced it on my sites, but I don't think I'm getting that much of a good response out of it. Some are suggesting that I figure it into my prices, but I have too many prices to list (like...I have my base prices, but the price differs depending on what each individual wants). I mean, the best I can do is figure it after I find the total for that individual client.

Did I change my policy too quickly? Again, I'm not doing this just to get more money out of the client (and that fee money doesn't go to me anyway), I just don't wanna get in trouble. HALP.

Comments

[insane-kangaroo.livejournal.com]

Paypal transactions performed as gifts don't have the capability of performing disputes.

If I'm not mistaken, Paypal is like Visa/MC where the contract you signed with Paypal states you can't include a "Paypal fee."

People get around this type of statement by offering a "cash discount," however in your case just mark up prices accordingly. You'll have to state a higher price according to your items.

[insane-kangaroo.livejournal.com]

I looked up Paypal's User Policy

https://cms.paypal.com/us/cgi-bin/?cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US#7.%20Closing%20Your%20Account.

"For PayPal Business Payments, the PayPal Business Payment fee is paid by the recipient unless it is disclosed to you before you send the payment that you, the sender, must pay this fee."

I'm really liking Paypal if there are no further rules regarding who pays fees. For any new commissions, you can simply state, "The price is XX + the PayPal fee."

[poprock-grey.livejournal.com]

For the future, saying it is a paypal fee can also get your account banned/locked up. :<
Always stick with calling it a handling fee.

[dazen-cobalt.livejournal.com]

Add the paypal fees to the price of your commissions. Basically the cost of doing business. if paypal gets wind that you're using gifts to avoid fees or making customers pay the fee then you can get in trouble. I know what you're thinking "but you just said add the paypal fees to the price of your commissions" No their apart of the commission price. if I had of went "Well make em pay 25 then the service fee" then there would be a problem. and even if the price differs there is always a paypal calculator.

[lurkerwisp.livejournal.com]

Since what you're doing (re: the gifts) is against PayPal's policy, then yes, your customers are right to complain. You really should factor it in to your base commission prices as a cost of using PayPal instead of tacking it on after. The fees are the only cost to you for using PayPal's service. Apparently I was wrong! No I wasn't. That was silly.

[allykat.livejournal.com]

I run Teenycom, and I have to tell you that I got the BIGGEST headache trying to figure out the ins and outs of Paypal's policy involving marking payments as gifts AND charging paypal fees. Eventually I actually talked to a real life paypal employee, which took about a million years to pull off. If you're interested, you can check it out here: http://community.livejournal.com/teenycom/440419.html

Someone already covered that marking as gifts is really only an issue because of the ability to dispute a payment, but since you are using it as a business that's a pretty big issue.

The long and the short of it regarding fees is that it's probably safest not to CALL them paypal fees. Just tack it on, or call it a convenience fee, or figure it into shipping.

Here is an official email reply I got once upon a memory.

[eveshka.livejournal.com]

Thanks for contacting PayPal. I appreciate the opportunity to assist you with your questions.

PayPal offers our members access to the world's leading online payment service. As our network of members has grown, an increasing number of sellers of goods and services are accepting payments through PayPal.

Under Visa, MasterCard, Discover, and American Express regulations and the laws of several states, including California, merchants may not charge a fee to the buyer for accepting credit card payments (often called a 'surcharge').

· In order to comply with these laws and regulations, sellers may not charge a fee for accepting PayPal

· This limitation does not prevent sellers from imposing a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge (in other words, the handling fee for transactions paid through PayPal may not be higher than the handling fee for transactions paid through other payment methods)

· Sellers residing in the United Kingdom and listing items for sale on a UK-based website may impose a surcharge, but only under the following conditions:

1. Both the buyer and seller reside in the United Kingdom;

2. The purchase price is paid in pounds sterling;

3. The surcharge imposed by the seller is no greater than is necessary to recover the receiving fees incurred by the seller;

4. The seller clearly indicates to the buyer prior to the buyer's submission of a bid or (in non-auction transactions) prior to completion of the purchase that a surcharge will be incurred and the amount of the surcharge

Thank you for being part of the PayPal community.
Sincerely,
David
PayPal Global Services
PayPal, an eBay Company

Here is the TOS on 'Personal Payments'

[eveshka.livejournal.com]

https://cms.paypal.com/us/cgi-bin/?&cmd=_render-content&content_ID=ua/UserAgreement_full&locale.x=en_US

(To find this yourself, click “Legal Agreements” at the bottom of any PayPal page.)

4. Receiving Money.

4.1 Receiving Personal Payments.

If you are selling goods or services, you may not ask the buyer to send you a Personal Payment for the purchase. If you do so, PayPal may remove your ability to accept Personal Payments.


--

There is a monitoring team that watches accounts for this type of activity, and clear repeated use of the personal payments option for payment of goods can get you suspended.

[mandyseley.livejournal.com]

Basically, I would suggest the following:

Offer price ranges for your commission lists. For example, instead of charging "sketches $20", just say "sketches start around $20-25." Make it obvious that the prices listed are only estimates, and people will have to contact you for an exact quote. This gives you a little leeway.

You can use this calculator (http://www.rolbe.com/paypal.htm) or another similar calculator to figure out paypal fees and factor that into your final cost. Alternatively, you can use the calculator to "adjust" static prices if you'd really like to stick with them (so instead of listing sketches for $25, calculate the fees and round it off to charging $26 for sketches instead).

Most importantly, do not call them PayPal fees and equally as important, if you accept other payment methods from your online commissions you MUST charge the same amount. The rule is against fees for using PayPal specifically, so don't specifically CALL them PayPal fees and don't treat them as being specific to PayPal, either. If you charge that aforementioned $26 for sketches, you charge that $26 to people paying with PayPal, with a money order, or with any other payment methods you accept. No discounts or adjustments based on payment methods.

[sovy.livejournal.com]

Just knock prices up by a dollar to cover the Paypal fee.

Also you get dinged 3.9% + C instead of 2.9% + C when an international customer sends money to you.

[temrin.livejournal.com]

No one who posts they are adding the fee's to their prices gets good response. I've seen many artists do it. To be honest, TECHNICALLY, your are not allowed to make your customers pay for the Fees, you are responsible for those fee's and its against paypal policy to ask your clients to pay it. The way around that, is to figure in a few extra dollars into your commission prices and NOT say that they are for paypal. Then, it just looks like your raising prices and not trying to get away with things against paypals policy's~

[mekania.livejournal.com]

Since your specific problem is that you have a ton of different prices for what you do I think just adding $2 to your base prices should cover the fee (and say that it's just a price increase). Don't make it more complicated than it needs to be!

[matrices.livejournal.com]

If an artist decides to charge a "PayPal Fee" I typically choose not to commission them. Its terrible behavior I do not want to encourage.

I highly recommend you stop considering charging a "paypal fee", and getting around it as a "gift" is something I will never do when I send payment, no matter what. I am buying goods, i will mark it as goods so I get my tiny shred of buyer protection. Just price your pieces appropriately, don't undercharge yourself, and you won't be worrying about "fees" which scare off buyers like me.

I usually add on a small extra amount to cover when I choose to, I prefer it to be choice under my own power and not under the influence of the seller. Seriously this is an issue that makes me so frustrated when artists flat out require it. I simply just don't commission them, and I am POSITIVE that there are others out there who feel this way.

Bottom line, Just figure it into your prices, round up so it doesn't look like you're trying to be shady. And accept that being a seller using PayPal involves an Overhead to be able to process those convenience payments. It is YOUR fee, not MY fee if I am the buyer.

*frustrated with how common this issue is*

[circlingfreedom.livejournal.com]

*nods* I am exactly the same. I will not commission someone who flat out asks for me to pay the fee. Sometimes I'll throw an extra dollar in to cover it but less than I used to.

I get so annoyed when I see someone asking me to pay it. We're lucky to have such a service. There was once a world without internet or paypal. *shrug* to me paying the paypal fee is just a part of being a seller. You need to suck it up and just deal with it.

Raise your prices by a dollar if you have to. If I see someone charging $5.36 I'm also unlikely to commission them as it's obvious they want *me* who's already paying you to pay for their fees as well. If they charge $6? Not a problem. If they're doing what I want then I'll pay it.

It's just a pet peeve of mine. I know it doesn't bother some people but it does bug the hell out of me.

[kiriska.livejournal.com]

"the best I can do is figure it after I find the total for that individual client."

Er, that's what you're supposed to do? Price charts are for reference. They are guidelines. Just make that clear. Then, depending on what the client wants, you grant them a personalized quote. Up all your base prices to factor in fees. If an individual wants a more or less complex piece depending on their situation, charge them more or less based on that.

[skirtandzy.livejournal.com]

I have actually wondered about something with this, because besides gifts, you can send money as 'payment owed' which will not charge you any fees.

And from what I have gathered, there are no repercussions to doing so.

[stormslegacy.livejournal.com]

Bad advice, it's the same as sending something a gift. Personal payment owed is for things like, me paying my roomate for the electric bill. It's NOT for business.

There are repercussions, someone running a business could get their account shut down.

[oceandezignz.livejournal.com]

I told this to someone a long time ago on here with a similar idea to yours. If you are paying someone for a business transaction, like getting a commission or a fursuit, or whatever... then you should not be touching the tab I've highlighted in red. The personal tab is not to be used for anything that would be regarded as a 'retail transaction'.

[komickrazi.livejournal.com]

I just eat the cost. It's a fact of business... retail stores have to pay a fee to the credit card companies for their debit/credit machines, so how is paypal charging a fee any different?
If you are charging so low that a paypal fee is too much, it's time to raise prices.

[stormslegacy.livejournal.com]

Short answer; YOU are responsible for the fees, NOT your clients.

Long answer: Businesses have overall expenses that should factor into their prices beyond the time+materials that should be in each individual product. These expenses are called overhead, and include everything from the wear on the pencil sharpener you use between commissions, electricity, heat/AC, website costs, advertising, basically all those materials that are not inherent to a single commission. This also includes transaction fees (IE Paypal and/or a credit card merchant account.) It's the cost of doing business, and a good business model will try to include it as part of the pricing. For example, if roughly 3/4ths of your customers use paypal, then calculate your prices as though each were being charged 3/4ths of a paypal fee.

If you cannot cover the fees yourself, then you need to relook at how you price your commissions. You cannot charge a separate fee for paypal usage, just as you won't be given a surcharge if you walk into your local grocery store and used a card.

Paypal fees may seem annoying to someone just starting out in business, but consider the fact that it's
A. convenient
B. more customers will use you because you take it
It's really a luxury that you pay for as a business owner that's well-worth the money. It's also MUCH less than a typical merchant account would cost you.

[amarafox.livejournal.com]

Either up your commission prices a tiny bit, or claim the fees as a business expense when you do your taxes (I do the latter, I love business expenses!).

As has already been said, gifts as payment for goods is kind of bad juju.

[jurann.livejournal.com]

Heh, you can't write the fees off as business expenses without reporting your income from the work you've done, though... ;) And I bet this artist and most other furry artists don't report their art income as wages earned. ;)

[insane-kangaroo.livejournal.com]

Funny you mention that, if a person gets audited guess what? The federal government has access to the bank(Paypal) records.

[jurann.livejournal.com]

Uhhh, except that Paypal doesn't file a 1099 for you with the IRS unless you surpass their "200 payments and $2,000" policy... If you don't meet one or both of those rules, then Paypal does not file the 1099 to the US IRS for US customers... Which means it's not reported income.

[insane-kangaroo.livejournal.com]

Okay, you clearly don't understand what happens when someone gets audited. While some audits are random, some are audited over suspicious activity over years of tax returns.

http://www.pcworld.com/article/125368/irs_can_ask_for_paypal_account_info_court_rules.html

Paypal's 1099 policy doesn't matter when the federal government can audit a person, and request documents related for discovery.

[jurann.livejournal.com]

Yeah, clearly I don't understand it since I've been audited TWICE in the last 20 years... and also, not to be xenophobic, but aren't you Australian? I was born and raised in the US and have lived here for over 35 years, I think I know how the tax system that I've been filing in for over 20 years now works - most likely a lot better than most. Further, I've been running businesses for over 15 years now and my sister's a CPA with her own practice. If the IRS has no evidence about you to suspect (unreported income from internet sales, or income from a garage sale, for example) then they clearly can't build a case for suspicious activity and audit you based on that, now can they? I just told you that Paypal does NOT report sales through their system to the IRS (as 1099 Misc Income) unless you cross the 200/$2,000 mark annually. =P But don't take my word for it, go look it up on their site for yourself!

And BTW - the IRS doesn't send out requests to every bank or payment processor like Paypal whenever they audit someone, if they did then these businesses wouldn't even be able to operate on a day to day basis, that's just ludicrous. Not to mention it's an invasion of privacy without Just Cause or a Court Order - an IRS audit doesn't merit that level of legal jurisdiction.

P.S. - Has anyone ever told you that you come off really insulting online?

[amarafox.livejournal.com]

Oh yeah :D

Well, yeah, reporting income is good. I have to because I was self employed for so many years that if I stop the government will be all "WTF?' on my ass.

[fenris-lorsrai.livejournal.com]

Haha, yeah, me too.

[poprock-grey.livejournal.com]

100% never say that the extra is a paypal fee. That can get you locked and banned from PP.
Always say it is a handling fee, which it really is in a sense. It is a fee for handling the payment through a payment service.

Here is the site I always use: http://www.rolbe.com/paypal.htm

[oceandezignz.livejournal.com]

Unless you're going to put the PayPal fee into your S&H, it really is better to not even mention fee period and just insert it into the base cost of operations.

[magusmanx.livejournal.com]

Hey guys, I have a question about paypal.

My husband and I are part of a gaming clan, and one of the things we do with the leader is people donate money to our paypal, and when someone can't afford what ever game we are all playing, we dip into the funds. I also use this as my paypal for commissions. I accept payment normally, with fees and everything, but I was wondering, will the donating get our account shut down?

[feather-dancer.livejournal.com]

Well you've got proof either side what they're for and the donations towards the games will likely be around the same time yes? With the commission money eeing entirely separate (Aka not being gifted around) it's nicely split so doubt you have anything to worry about. Records of course never hurt as a back up!

[magusmanx.livejournal.com]

Well ,the game donations are just when people have extra money :) We have a 'Donate' button on our Clan Site that people use. And I always ask that people who pay me put 'Commission' in one part, so I can keep everything straight, since I keep detailed logs of everything. I just wasn't 100% sure, and I didn't want my account closed off due to the 'Get Games' fund.

[shinigamigirl.livejournal.com]

Everyone is right, making the customer pay the fee is against paypal's TOS and can get you in trouble. There is something wrong with your pricing if a few extra dollars are such a big deal that the customer absolutely has to pay them for you. Just raise your prices in general, make it worth your time!

[pigeon-maiden.livejournal.com]

Great advice from everyone! Thank you very much! I wish I familiarized myself better with the terms for Paypal much earlier, but I guess it's better late than never! :)