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.
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.