The power to take online and mobile payments are rapidly evolving, an essential part of running your business.
Since PayPal has evolved the world’s largest online transaction service company, you are assumably wondering if you should open a PayPal Business Account for your company. There is no charge to set up a PayPal business account, but there are fees associated with many business account features. Arranging up a PayPal business account lets you take advantage of several features not available with a PayPal personal account.
Your company can accept payments for goods and services via PayPal. Using a PayPal business account, you can take online amounts via PayPal and in your store or business office through a portable card reader and by phone. Many people, especially those shopping online, prefer to pay using PayPal.
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PayPal can also process amounts produced with significant credit and debit cards. There are no monthly setup or cancellation fees, and there are no minimum processing requirements. You can take credit card payments through PayPal even if you don’t accept PayPal itself as a charge option for your customers. For PayPal online payment, your website can have a checkout button for PayPal.
As with any charge processing company, there are fees for processing business transactions through PayPal:
- For online transactions, PayPal seizes 2.9% of the transaction amount, plus a flat fee of 30 cents, if the funds come from within the United States.
- The fee goes up to 4.4% for funds coming from other countries, plus a flat fee that varies based on the currency used.
- For transactions at your store, the expense is 2.7% for funds from the U.S. and 4.2% for funds from another country, plus the flat fee. Additional fees are charged for accepting payments in other currencies.
If you process at least $3,000 per month, you may apply for a PayPal merchant rate, reducing your processing fees. Also, PayPal offers various premium accounts that come with monthly payments, different features, and different transaction fees.
PayPal’s fees may be better or worse than what you can get from other credit card processing companies. Also, as with any processing company, the prices are subject to change. It is always good to shop around periodically for the best rates and terms available at the time.
PayPal Credit offers its credit and terms for your customers, which may be more favorable than terms provided by their other credit cards. For example, they will pay no interest if the transaction is paid in full within six months on purchases of $99+. This may function as an incentive for customers to buy from you rather than a competitor that does not offer PayPal Credit.
A PayPal business account makes your company eligible to apply for two types of business loans.
- PayPal Business Loan. You may apply to borrow from $5,000 to $500,000. PayPal says such a loan is best for a business with more than $42,000 in annual revenue and has been in business for at least nine months.
- PayPal Working Capital. You may borrow from $1,000 to $125,000. To be eligible for this type of loan, you must:
- I own had a PayPal business account for at least 90 days, and
- Have processed at least $15,000 through PayPal within the past 12 months. So, if you desire the loan 90 days after opening your business account, you must have processed at least $15,000 during those 90 days.
If you want to shop around for other income processing options, you might want to see what the numerous other processors offer, such as Amazon Pay, Apple Pay, Dwolla, Google Wallet, WePay, Stripe, and TransferWise. The latter two are especially popular with businesses with many customers in other countries.
Other companies that offer invoicing programs, such as FreshBooks, QuickBooks, and Wave, may allow you to accept eChecks and ACH bank transfers from your customers, often at no charge.
PayPal is not a bank, so it is not subject to banking rules, and the funds that PayPal holds are not protected by FDIC insurance.
To determine whether a PayPal business account is correct for you, you will need to weigh the convenience versus the fees, decide if accepting payments through PayPal will increase your business, and evaluate other available payment processing options.
As with just about any company you do company with today, there is always the risk that your information might get hacked. Also, PayPal seeks to have you link your bank account to your PayPal account. To do this, PayPal asks you to provide it with your user ID and password for your online banking. This could allow a dishonest PayPal employee or someone who successfully hacks PayPal to access (or wipe out) your bank account.
PayPal has been known to freeze accounts with no warning and without explanation. This ties up the money in your PayPal account until you resolve whatever issue PayPal has identified.
This portion of the site is for informative purposes only. The content is not legal advice.
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