Setting up Pay Pay to Conduct Business

[annr]

Some of you may have read of my consternation with the student who "forgets her checkbook". Short of firing her I thought that I could take the checkbook out of the equation and accept Pay Pal. I have a personal account and limited experience using Pay Pal. I've started studying the fees and the two types of accounts: personal and business; and am wondering if any of you seasoned Pay Pal'ers have any advice on the types of account to use, the type of payments to accept and how to handle the fees and billing.

The idea behind this is to make my life easier dealing with this person. I thought that I might benefit learning about any hidden pitfalls or tricks to make this as smooth as possible, avoid those beginners' mistakes and any unpleasant surprises.

 

[Sid Post]

Do you run a retail business that needs multiple transactions a week or, are you looking for a limited use account? Pay Pal has some weird rules so, a lot of transaction types need to be disguised (firearms related stuff mainly). You don't get instant gratification with USPS Money Orders but, the process is reliable and safe.

 

[annr]

I'm collecting for a service, music lessons; it would be for about 10 payments/year for this one student. I'm trying to circumvent the "I forgot" excuse and see proof of pre-payment.
If she can't 'remember her checkbook' I predict that a money order would be 'impossible' for her to figure out! She can't seem to do ATMs either.

 

[JatMat]

Setting up the account is not hard, the real limitation to the personal one is size of money transaction, you need to check the limit of the personal, I "think" it is 500.00, but could be less. Other than that it is not much different. I do not know either if there is a monthly limit on incoming funds as personal. The 500 might be one time or an accumulation of transactions. PayPal can bite you though if the "student" disputes the charge later, she could say she never finished the lesson because you kicked her out. PayPal usually sides with the payer, not the payee.

Good Luck,
Jim

BTW: you can not add to the lesson charges for use of PP, but you are allowed to collect cash with a discount. Semantics, I know, but true never the less.

 

[fracmeister]

Paypal is probably no more "buyer friendly" in that regard than the credit card companies... I used to accept credit cards for pretty large amounts. Never a problem with pp or cc in my business. And when I got shafted by a nondelivery on ebay I got the dough back from pp. If you deal only with people you trust the odds are good that nothing goes awry. But there are no guarantees in life.

 

[JatMat]

Paypal is probably no more "buyer friendly" in that regard than the credit card companies... I used to accept credit cards for pretty large amounts. Never a problem with pp or cc in my business. And when I got shafted by a nondelivery on ebay I got the dough back from pp. If you deal only with people you trust the odds are good that nothing goes awry. But there are no guarantees in life.

There in lies the problem, Annr has already said in another thread that the woman lies to cover up not paying her. "I forgot my checkbook"
I'll pay Next week. The woman has already proven she can not be trusted.

Jim

 

[butchesforge]

I'm collecting for a service, music lessons; it would be for about 10 payments/year for this one student. I'm trying to circumvent the "I forgot" excuse and see proof of pre-payment.
If she can't 'remember her checkbook' I predict that a money order would be 'impossible' for her to figure out! She can't seem to do ATMs either.

Sounds like she needs more than music lessons,send her back home when she dosen't have the means to pay.You're providing a service and deserve to be paid up front,no more excuses!!Regards Butch

 

[annr]

Setting up the account is not hard, the real limitation to the personal one is size of money transaction, you need to check the limit of the personal, I "think" it is 500.00, but could be less. Other than that it is not much different. I do not know either if there is a monthly limit on incoming funds as personal. The 500 might be one time or an accumulation of transactions. PayPal can bite you though if the "student" disputes the charge later, she could say she never finished the lesson because you kicked her out. PayPal usually sides with the payer, not the payee.

Good Luck,
Jim

BTW: you can not add to the lesson charges for use of PP, but you are allowed to collect cash with a discount. Semantics, I know, but true never the less.

I've spent quite a bit of time clicking around on the PP site and it looks as though you are correct: $500/mo. limit on incoming funds which would only be sufficient for one person's check. Also, it sounds like there is an annual limit but good luck to me finding the account limits.:grumpy:

This means that one would need to upgrade the account and incur a 3% fee/transaction. I'm not sure that I understood your point about PP fees v.s. cash., why I can't just raise my rates 3% to cover the cost of the fees.

 

[Chiro75]

Annr, keep in mind that Paypal works like a CC company. You CAN raise your fees a little to offset the Paypal fee, but you CANNOT offer a surchage for using it. For example, if you charge $250/lesson, let's say, you can't charge a student who pays cash or check $250 and then a Paypal person $258. It's illegal. Even all the BFC people you see here who charge an extra 3% for Paypal are engaging in illegal behavior. You MAY be able to get away with saying "Lessons are $258, but if you pay with cash or check you get a discount and it's $250/lesson". My background is in healthcare, and I am allowed to give a TOS (Time of Service) discount for "cash" patients but I can't charge insurance patients more. It's a matter of semantics.

 

[annr]

Annr, keep in mind that Paypal works like a CC company. You CAN raise your fees a little to offset the Paypal fee, but you CANNOT offer a surchage for using it. For example, if you charge $250/lesson, let's say, you can't charge a student who pays cash or check $250 and then a Paypal person $258. It's illegal. Even all the BFC people you see here who charge an extra 3% for Paypal are engaging in illegal behavior. You MAY be able to get away with saying "Lessons are $258, but if you pay with cash or check you get a discount and it's $250/lesson". My background is in healthcare, and I am allowed to give a TOS (Time of Service) discount for "cash" patients but I can't charge insurance patients more. It's a matter of semantics.

Thanks for laying it out for me, good examples. I had no idea it was illegal to have a 2-tier system and wouldn't have come to that conclusion. Looks like they have me over the barrel;they want their cut or I have to raise my rates.

Nevertheless, I can't understand how it is legal for them to take 3% on a cash transfer to me. I understand the CC and Debit Card, just like in a store, but cash and PP balances, that simply seems illegal to me. I wonder if this has been challenged in court. And cash at the same percentage as CC or Debit card. Rip off.

I have received a TOS discount and didn't understand it's meaning. I thought I was being compensated for their not have to send me a bill, and maybe that is partially true. Collecting money isn't as easy as as I thought!! Seems easier to earn....

 

[Chiro75]

Keep in mind, the rules that dictate healthcare are different from other business but I DO know you cannot charge a surcharge for those using Paypal. Just make your fee and give people a discount who DON'T use Paypal and that should be fine. Realistically, no one is going to "catch" you, so you probably don't have to worry about it, but Paypal does express that you can't charge your customers/clients to use their service, just like CC's do.

FYI, TOS discounts in healthcare are allowed because there is an expense on a practice for billing insurance and accepting assignment (where the check goes to the doctor). Studies have shown it to be around $10 per claim, so you'll frequently see $10-$15 discounts in some offices when you pay same day for the services. For most doctors, the discount is well worth not having to wait 30-60 days for payment from the insurance company and/or, as is usually the case, hassles from them, denied payments, etc.

Also, from a business perspective, would you rather collect 97% of what a client owes you, or 0%? That's the price of doing business with Paypal or CC companies. Paypal's 3% charge is a hell of a lot better than the way CC processing companies rape their clients, so it's not too much to swallow when you look at it that way. Or, like I said, up your fees 3% and then offer a discount of 3% to cash/check clients.

 

[annr]

Chrio,
You make perfect sense and I'm most grateful to be informed. I'm a pretty straight arrow and don't take the temptation to earn an extra buck if it's not on the up and up. Yet, a part of me resists the notion of the 'middlemen', who IMO get their fingers in the pot, taking a cut of health care, business, etc. and I assume, raise the rates for everyone.

OTOH, I can agree these middlemen do provide a service both to the person who can't afford what they are buying and the person who can't collect without doing cartwheels, if at all. Take the good with the bad, I get it.

 

[annr]

Setting up the account is not hard, the real limitation to the personal one is size of money transaction, you need to check the limit of the personal, I "think" it is 500.00, but could be less. Other than that it is not much different. I do not know either if there is a monthly limit on incoming funds as personal. The 500 might be one time or an accumulation of transactions. PayPal can bite you though if the "student" disputes the charge later, she could say she never finished the lesson because you kicked her out. PayPal usually sides with the payer, not the payee.

BTW: you can not add to the lesson charges for use of PP, but you are allowed to collect cash with a discount. Semantics, I know, but true never the less.

This has been an interesting battle of its own, but it sounds like what you say is true. The good news seems to be that with the 'Personal account' PayPal Balances, PayPal Instant Transfers and PayPal eChecks are all free and there is no limit on the amount one can receive.

The fees apply to Credit/Debit/Buyer credit. The receiving limits only apply to eBay items, Auction Goods (non-eBay) and other Goods.

Evidently PayPal agrees with me that there are not (should not) be fees or limits on cash transactions for services.

The only thing that I haven't been able to find on their site are the rules on not charging extra for fees. I spoke with my spouse whose business accepts credit cards and he knows that they can not charge "MORE" for those who use credit cards but he was unclear on PayPal rules and authority to require the same of PayPal users.

This is largely curiosity at this point: does anyone know where the PayPal rules are regarding fees and credit cards are located? or how you came to know that the fees are not "added" to the customary fees or price?

 

[Chiro75]

http://img.skitch.com/20090111-p6gi43x2338j7a26jssikq1j9q.jpg

It's deep inside the Paypal agreement you agree to when you get an account:

 

[annr]

Thanks Chiro,
I don't think that I would have seen that with even another 1,000 clicks! I'm not even sure that I would have come to the correct interpretation at first blush.

BTW this process is screening a whole different set of 'deadbeats".