How many times have you shopped with a small biz, only to receive an invoice including a line item for “PayPal,” which actually reflects a transaction fee that the business owner is charged for accepting payments through the PayPal platform?

*slowly raises hand*

I know that I don’t stand alone in this issue.

The question here is, “Can a business owner rightfully charge clients a PayPal service fee?”

The short answer is….NO.

PayPal specifically states the following policy:

4.6 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions

Keep in mind that you aren’t at a total loss. First, PayPal as with any other banking fee is tax-deductible. Second, you can roll PayPal into your total rates charged to clients. For example, you may charge $125 for a particular project; consider charging $130 instead, to account for PayPal and other administrative fees. The key is that “PayPal clients” cannot be charged a higher fee than “non-PayPal clients.”

Here is a handy tool to help you reach the bottom line that you want, after PayPal fees. Remember, you cannot charge a surcharge to the PayPal clients but you can use this to set fees, across the board, for your small biz. For instance, say you want to make $50 after fees? Input that amount into the reverse paypal calculator and it will tell you the fee to charge clients.


Reverse Paypal Calculator


Lastly, you are probably wondering, “So how the heck do I deal with a business owner who tries to wrongfully charge me a PayPal fee?” The answer is simple. You don’t pay it. Give them the link to PayPal’s policy prohibiting the surcharge, and ask them to adjust your invoice accordingly.

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