Today I logged into PayPal to send money to a friend of mine and noticed that PayPal is promoting its “Send Money” functionality to businesses for paying suppliers and vendors.
As we announced previously, as of mid-June PayPal’s domestic P2P payments are free as long as you fund the payment from your bank account or use your PayPal balance. PayPal transaction fees are summarized here, excerpted as follows:
It’s always free to send money to friends and family when you use your PayPal balance or bank account. Fees apply only if the sender uses a credit or debit card, or if you receive any payment for goods or services.
If you are paying for goods and services, whether you are a business or an individual, the fees for the recipient are as follows:
From a payers perspective, particularly for smaller businesses, paying via PayPal is easy and comfortable; particularly if the business currently receives payment for its goods and/or services via PayPal. But for more traditional (not online) businesses, the A/R department may be alarmed to receive an email from PayPal alerting them to collect their payment!
Many B2B suppliers are reluctant to accept card payments due to interchange fees (among other reasons, see our recent research brief here), and purposefully avoid enabling their customers to pay by card. The PayPal rates above are higher than card rates, particularly for smaller volumes. Unlike a card or ACH payment, the customer only needs their supplier’s email to send a payment via PayPal; the recipient doesn’t have to consent to be paid electronically or provide any payment specifications (e.g. bank account info).
On the receiving side, PayPal enables non-online businesses to accept payment using “Email Payments.” Small businesses can even generate invoices right on the PayPal site (or from QuickBooks, or even Outlook). More on this service from PayPal and other light-weight small business invoicing solutions in an upcoming post.
Interested in PayPal? Visit the Payments News archive for Glenbrook’s PayPal coverage.