PayPal Fees | Should You Charge Your Clients?Posted on 13
To charge or not to charge, that is the question. I personally do not.
When accepting payments via PayPal, PayPal takes a percentage of what ever you are paid and this fee usually ranges between 1.9% to 3.9% – think of this fee based over a year – if you are earning $50,000 a year, you are losing $1750 worth of your hard earned cash. Times that by 5 years… well you get the point.
I have listed some reasons for both sides below.
Reasons To Charge Your Clients
- More profit – The most obvious reason to charge your clients PayPal fees would be to keep your cash rather than PayPal take it which in turn, improves your cash flow, profits, etc.
- It may be an acceptable practice – many small businesses charge a fee to use their credit card services and for a good reason… it really does add up. As freelancers, we generally work as sole traders so we also classify as small business, thus making it acceptable.
- It is a small price to pay for a client – 1.9% – 3.5% is a very low fee to charge for a client in comparison to your earnings.
Reasons NOT To Charge Your Clients
- Higher fees for the client - Your services become more expensive which may lead to your clients going elsewhere. Generally, these small fees are not a huge problem unless you have large or repetitive projects.
- Poor cash flow – When clients pay by cheque it can take longer to receive your payment which decreases cash flow. You also have to take into consideration the 3-4 days it takes to withdraw your money from PayPal.
- Loss of clients – If you have recurring clients, the fees can add up over time and they may go elsewhere to find someone who does not charge PayPal fees.
- PayPal is risky – There has been instances where the client has claimed a dispute with PayPal saying that they never received what they paid for. This means your money can get held up for weeks on end.
- Can be seen as unprofessional – Some clients may consider charging fees unprofessional and possibly unethical.
- Against PayPal Terms Of Service - Someone mentioned that charging your clients PayPal fees is against PayPal’s terms of service however I have not seen any confirmation of this. Confirmed – it is against PayPal’s TOS.
Update: Steven also did a great write up about PayPal fees here.
- What is your opinion?
- Have you got any more reasons for or against charging clients PayPal fees?
- Do you show that you have incorporated the PayPal fee into your price or not?