PayPal provides an amazing service for those who want to send or receive money online. It’s been the standard method of payment for EBay for many years. It’s become almost assumed that if you’re going to receive money from someone online that they can just send it to your PayPal account. The biggest downside for merchants who accept payments using their service are the transaction fees. They offer 4 ways you may not know about to reduce your PayPal fees.
1. Reduce your PayPal fees by signing up for the PayPal Debit Card
They offer you a 1% kickback for all transactions that you use your PayPal Debit Card for if they are run as credit and not debit. Sign on the line don’t type in your PIN. They can easily afford to do this because all credit cards as you know charge you between 1-5% of the transaction as a processing fee. A lot of credit cards offer you air miles, cash back, discounts at certain stores, and many other things with their cut of the merchant fees. PayPal is just cutting you in directly on the fees they collect on the use of your money. 1% might not seem like much but every penny counts. For more information check out their FAQ
2. Reduce your PayPal fees by calculating if the Micropayment Merchant Schedule will save you money.
Micropayment Merchant Schedule allows you to opt into paying 5% + 5 cents per transaction instead of their standard 2.9% + 30 cents per transaction.
Most website owners know exactly how much their average transaction is. And for most people getting started unless you’re selling LCD TV’s or something that average transaction likely isn’t very big. For this very reason PayPal has created the Micropayment Merchant Schedule. They advertise that it is for people whose average transaction is less than $10. Our friends over at Guru Consulting Service took the time to calculate the exact amount at which the formula tips toward picking one method or the other. If your average transaction is under $11.90 the Micropayment Merchant Schedule works in your favor if not then keep your current schedule.
3. Reduce your PayPal fees by signing up for a Merchant Account if your monthly sales are over $3,000
Your business is growing and you’re sales are up but you’re still using that personal account that you signed up for using your personal e-mail address. Once you volume crosses over $3,000 per month they reduce your transaction fee from 2.9% to 2.5%. They are discounted once if you volume reaches over $10,000 per month from 2.5% to 2.2%
Savings over standard 2.9%:
at $3,000 per month = $12
at $10,000 per month = $70
4. Reduce your PayPal fees by signing up for a PayPal Money Market Account
Once again PayPal is offering a service that will actually pay you for using your money. You have money flowing into and out of your standard PayPal account try to think of this like a checking account. You use it for daily purchases and depositing your paychecks as they come in. A money market account is like opening a savings account at your local bank. If you know you’ll have even $1 sitting in your PayPal unused even for a few days it should be transferred to your money market account. Right now the interest rate isn’t that fabulous at 3.64% APY but it’s much better than the nothing you would get by leaving it just sitting in your account. According to their published prospectus they have averaged a better return than the U.S. Treasury Bills over the past few years. Unlike most money market accounts that you will find at most local banks PayPal doesn’t charge you a monthly fee or require a certain balance to keep your account open.
Not all of the methods above will apply to everyone but hopefully you found at least one that will apply to you. Post a comment and share this with others if you found it to be beneficial.
Sources:
http://www.paypal.com
Guru Consulting Service
