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Paypals new 3% fee
This was probably announced in some (tos compatible) way however I've only just become aware. Forgive me if it's been posted here before.
Paypal have now introduced a new fee applicable to Australia (and “three dozen different countries”) of 3% on all US bank withdrawals. This is in addition to Point of Sale fees and Cross Border transaction fees.
No doubt this is in response to companies (like us) using FX services like Transferwise to skip their 4% lower than market currency conversion rates. Withdrawals with Transferwise typically worked out as between 1.5% ($100) and 0.8% ($1k+) - much better.
Has anyone here worked out what they are going to do in response? I'm not sure what the other 36 countries are that are also affected, but there has to be a few people here.
Comments
is it this change https://www.paypal.com/au/webapps/mpp/ua/upcoming-policies-full?locale.x=en_AU ?
So you're accepting US$ via Paypal and then withdrawing to Transferwise in US dollar account and that is where you're getting hit the increased fee from 2.5 to 3.0% ? That would mean it's not a new fee but an increase to an existing fee ?
Not that change @eva2000 previously USD transfers to a USD bank account were free.
Paypal is unable to support USD to transfers to USD banks here in Australia (i.e Citibank) however you could make withdrawals to US domociled banks (such as those issued by transferwise in your name).
It's been relatively unmentioned (I can't find any email from Paypal).
This covers it fairly well however - https://www.businessinsider.com.au/paypal-fee-transferwise-alternative-fx-australia-2020-11
I see. Didn't see that email/policy change
I haven't noticed the difference much as only my client work is in US$ and subscriptions are in AUD$ dollars. So I'm just doing straight AUD$ to AUD$ or US$ to Aussie bank withdrawals - yeah paying the FX paypal tax which on my latest Paypal payment received was equal to 3.6% fee with exchange rate at AUD$1 = US$0.76 which is ~5.8% less than if via Transferwise. But folks find paypal more convenient.
Guess you could charge a Paypal surchage fee on your retail asking price to cover it? Or change to charging in AUD$ dollars? I don't see how you're going beat the convenient folks have/require by using Paypal as a payment option.
DYK you can have PayPal accounts in multiple regions?
If I want to withdraw to US bank, I receive payments into my US account.
If I want to withdraw to Chinese bank, I receive payments into my Chinese account.
Or you can develop your own payment integration with Transferwise's API https://transferwise.com/gb/business/api
Looks like Transferwise also raised US transfer fees citing increased costs too https://transferwise.com/gb/blog/good-news-on-multicurrency-account-fees
@yoursunny I'm fairly certain that's a violation of Paypal ToS and possibly of US law (accurate residential address KYC requirements).
@eva2000 TW is not really suitable for Point of Sale. Their fees are more than reasonable for what they are intended to do. NOTE: You don't need a wire transfer in the normal Paypal withdrawal process.
US bank transfer in, AU out. Fees calculate as less than 1% to your AU bank account normally ($1k+).
Paypal introduced the fee as 2.5% in July by the way if I am reading their "Combined Financial Services Guide and Product Disclosure Statement" correctly. I've only just become aware of it (it seems). It's now as of 6th Nov (on paper) 3%.
My last USD -> AUD transfer was May so I missed that fee being introduced.
Edit: corrected mistake
I have residential address and credit cards in both China and USA. I physically lived in both countries.
You can rent a mailbox in a UPS store to have a US street address, but it's uncertain whether PayPal would accept such address.
Yeah it isn't right now. But with Paypal's changes, there is probably a market opportunity for other players including Transferwise? On their page at https://transferwise.com/gb/business/api they have a link to contact them for custom API solutions https://transferwise.com/gb/business/contact?utm_source=Landing page&utm_medium=Landing page&utm_campaign=contact so I guess they're already working in that direction too
Just one more reason why PayPal might possibly be one of the worst things on the internet.
Have you guys looked into the Direct Debit system? I know it's available in the USA, no idea about other countries. Here in the UK it is very popular although I understand it's not so widely used elsewhere.
It is ideal for accepting regular payments, so monthly hosting and email services fees, annual domain renewals and much more. It is very cheap to operate, but you'd have to look into local provider's details to see how they handle international transfers.
Typically fees are 1 to 2 %, with a maximum of £2 here, so anything above £200 collected in a single payment is £2 for the first £200 and anything above that is no fee payable.
If you need a name to see how it all works, the most popular one here in the UK is GoCardless. I have worked with them before. If they do operate in your country I can recommend them for their standards of service here.
I do not currently have an account (nor am I affiliated in any way) but will be opening a new one shortly as I am about to get back into the hosting business for the first time in a decade or so.
A large part of why PayPal is liked is because people don't need to expose their credit card information. They simply cancel any PayPal subscription and the provider has no more ability to charge surprise fees.
In the US, exposing bank account details is far worse (and consequently less acceptable).
People would provide their credit card number before bank details.
For an alternate solution to be appealing, it needs to avoid exposing information to the same extent that PayPal does.
PayPal users only give their bank details to PayPal. If they didn't PP wouldn't deal with them. Direct Debit customers only give their bank details to the Direct Debit company, not to the host or other seller.
Customers have just as much if not more control over payments. They actually get reminders that payments are due to be taken several days in advance, ample time to cancel if they so wish. They have to agree alterations to instructions before any payments will be taken. Those are non-arguments.
I don't even know if there is such a system where you or your customers are. All I'm suggesting is that it is definitely worth your while checking it out. If it is available, how does it work where you are? Is it suitable for your operations? I don't know. I can't know. I'm not there. Any more than you can sensibly make statements about how things work when it is obviously completely new to you.
If it's anything like the UK, traders benefit from low transaction fees, knowing exactly when money is going to arrive in their account, full transaction details as email attachments, etc etc. And far better trader protection than offered in practice by PP.
talking to our accounting, the transaction fees were increased in September 2019 compare to Stripe the fees for PayPal is double. I personally glad that eBay dumping them as they became very greedy.
Happens when you turn into a monopoly.
Paypal is just insanely greedy, not even competitive anymore at all.
Also recently we have discovered that PayPal is failing KYC regulation, we have filed a complain to PayPal, next step will be FCA.
Looks like they've increased the cap to £4. But still it's a low commission compared to PayPal. Also think Direct Debit is a good alternative for the UK clients at least.
I don't know how the company works in your country(es), but in mine - this company has a very bad reputation for a lot of fraud and money holds up to 6months and more, some people never received money at all.
@dominame It's a Local solution however. Not really comparable.
Closest we might get is offering bank deposit for payment in transferwise supported countries.
@desperand I've never heard of anyone having any unresolved issues with them here. Everyone I know was using them for Paypal withdrawals of US bill payment from a business perspective however.
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What I am leaning towards is offering a discount % for customers to pay their bill in $AUD (converted at invoice payment or generation TBD). At-least that way customers can pocket the savings instead of Paypal netting extra fees. I don't feel it's fair to pass the costs directly onto customers (i.e as a fee), realistically it's not their fault Paypal are royal dicks.
For anyone paying their bill with a local non-USD currency there should be no reason to convert to $USD instead of $AUD (at-least not now since Paypal has forced themselves into the FX of even savy users).
This possibly paired with a new merchant gateway or two.
Hey @SplitIce take a look at Stripe if they operate there. I'm about to sign up with them for foreign currencies, i,e. all but GBP, as a cheaper and better alternative to PP. From what I gather their fees are lower than most, you select which payment methods between all those available which include credit and debit cards. But again, only they see the card, not the trader.
Also, I hear about a few card processors not available to us in the UK. Check to see if they are OK with Aus.
I know it's tough. I've been around this block more than once over the years. But it can be done.
Best of luck with the search.
For those who mentioned Stripe. Yes it's available in Australia, while a few companies choose not to operate here most do (mostly those that are US/Canada only i.e Google Checkout).
With Stripe I would however be best to bill in $AUD (2.9% + $0.30 vs 4.9% + $0.30) to get the fees close to what we were paying with Paypal. This is due to (in Australia) Stripe not allowing you to add a US bank account and/or keep US currency with them.
That actually reminds me of some of vendors I use who bill me in their local currency with their card processor. Now I know why they do it that way.
I had a chat with Stripe support, overall a positive experience. I confirmed that they can not do the style of setup ($USD currency account) in Australia. They can in UK so anyone affected by this fee their probably could use Stripe without incurring their 2% fee.
Supposedly I should keep an eye out for future changes but I suspect future direction is not something tier 1 support can know / is sales speak.
Overall Stripe is less than the new Paypal, more than the old. Old Paypal worked out to ~3.7-3.8%, new Paypal 6.8%. Stripe ~5% ($USD billed pos+fx).
I tried to investigate Alipay due it being a requested. Disapointingly many links on their site just don't load. I particularly love that their support link
https://icshall.alipay.com/hall/index.htm?sourceId=ihome
is a NXDOMAIN (and has been for three days)... professional.Yeah had positive end user experience paying with stripe at least with various web hosts I use. If not maybe need a full merchant account instead.
"MSF is based upon assumption that no more than 25% of monthly turnover is from International, Corporate or Commercial Cards. NAB reserves the right to review and reprice the MSF if your aggregate monthly turnover from these cards exceeds 25% of monthly turnover."
Oh NAB you never change.
Anyway I'm looking at Square at the moment. I know someone who recently started using them for Point of Sale in person. I don't know how they are for online purchases yet.
Square have a very good reputation but I haven't used them personally - yet.
Set up a US LLC. You do not need a US office just a mailing address to set up a US bank account.
Square is great but they've just hiked their prices for international payments. Still better than Paypal but probably better options if you shop around.
It's still 2.2% in Australia. As that's significantly less than many of their competition I don't see an issue.