Paypal Payments

I’ve come across Paypal on three occasions in a short space of time which raised a question I wanted opinions on

If someone offers PayPal as a payment option, who should pick up the payment charges?

The first time I got thinking about this is because AMITPRO now offers PayPal as a payment option for our subscriptions

Guy and I figured it was a quick and easy way of providing the ability for members to make credit card payments and if it encouraged just one person to pay quicker i would be worth more than the potential time and effort trying to chase payment later down the line

I then had to pay for two sets of services, both of them gave me the option to pay by cheque or PayPal

One of them swallowed the costs, one of them added the charge on top of what I was paying for

I asked the question on Twitter and got the following responses

@AndyParkes – how we see it is that the PayPal charges covers the wages of the credit control / money chaser person we don’t have to employ!

@AndyParkes depends
@AndyParkes if its the only method given – then the seller should.

The first quote there is actually from the person who swallowed the costs so it was interesting to see the thinking behind their policy
I guess there isn’t a right or wrong answer, each business does things differently which is of course their prerogative and the person actually making the payment still ultimately has the choice to proceed or not
As the final quote above says, if it was the only method available I’d have been a bit miffed
As always any thoughts and opinions gratefully received!
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Andy Parkes is Technical Director at Coventry based IT support company IBIT Solutions. Formerly, coordinator of AMITPRO and Microsoft Partner Area Lead for 2012-2013. He also isn't a fan of describing himself in the third person.

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8 thoughts on “Paypal Payments

  • By using PayPal (or by taking a credit card; it’s actually much the same thing) one avoids huge costs incurred in either employing extra credit control staff to chase often very small sums or – worse – senior staff who could be / should be fee-earning doing the same thing. This has a value to MY business (where my business is the payee); it does not have a value to my clients’ buisinesses. Therefore my business should pay for this service, and is happy to do so. Most credit card companies insist (as I recall) that merchants NOT attempt to pass on the card company’s fees, but treat credit cards as CASH, charge the same price as if dealing in paper money, and bear the % charge themselves.

  • If I’m buying goods or services from a major retailer, I don’t expect them to apply their bank charges to my transaction; however, if it’s a low value transaction for a small business, I don’t mind them putting in a minimum transaction value below which they will pass on a nominal charge to cover their banking costs.

    For example, my local butcher charges me £1 if I use a credit/debit card for less than £10. Net result is that I either buy more (i.e. spend over a tenner) or I’m happy to pay the surcharge because I’d rather have a local butcher than see him go out of business as a result of credit card charges wiping out his profit.

    On the other hand, if Tesco, who are a multi-billion pound business, start charging me for their bank charges, I’ll shop elsewhere – to be honest, their bank charges are a cost of doing business (which is why major retailers set up their own financial services businesses to reduce the costs), and I’ll happily buy a 50p chocolate bar on plastic from them!

    As far as I’m concerned, the same goes for PayPal – it’s probably not a big deal for small businesses to pass on the charges; however major retailers should swallow the cost.

    Incidentally, my standard invoice template for my business includes surcharges for PayPal or non-sterling transactions… so far I’ve never had to charge because people find another way to pay me!

  • Thanks both, really good comments 🙂

    Mark (Checkley) welcome to the blog!

    Mark (Wilson) have you ever been here it’s in Drayton Parslow just outside MK – sorry for the random offshoot! We stayed there at the weekend and it was one of the most “interesting” overnight stays i’ve ever had!

  • ok maybe not THAT interesting

    It was just the last place I expected to have accommodation!

    When we got there the bar was packed, being a Friday night and we had to squeeze past everyone with all our stuff (in the same way you squeeze through a bar with a pint!)

    After we checked in the lady said she’d take us to our room. I had no idea where this was meant to be as I couldn’t see where we would possibly go. She then opened a wooden panel (I’d just walked passed it, didn’t even realise it was a door!) to reveal the steepest and narrowest staircase leading to three rooms above the restaurant area

    At the end of the corridor was a shower cubicle and toilet, I’ve seen broom cupboards with more space!

    When we got back the bar was still open and we had to squeeze through again and because of where we were in relation to the bar we could hear everything as though we were downstairs!

    After breakfast (which was really good!) we went to check out and chef and the cleaner were arguing about something, we approached and stood there as they carried on. Eventually the cleaner turned to us and said

    “Excuse me, I’ll be one right with you”

    and went back on arguing!

    Then they tried to issue us with a bill when we’d already paid in advance online

    She didn’t even check what we’d said though and just waved us out

    It wasn’t a bad place to stay, the whole experience was just “different”

    Maybe I’ve been spoilt by sterile, cookie cutter Travelodge! 😉

  • Andy,
    Just read this post, and personally I agree with the 3rd Twitter response. If the “only” option is to pay with Paypal, then the seller should pick up the costs (You could always disguise them that no one would know) but should not be added seperately.

    I give the options to my clients where they can either pay by Standing order or Paypal, but say that Paypal comes with an additional cost.. Most choose the option for Standing order.

  • Firstly my apologies for not following your blog! 🙂 That’s corrected now!

    Some nice Points of View… I’m very much undecided on who should swallow the costs, the customer or the provider… I somewhat agree with the small-fry vs global organisation, but on the other hand I am thinking of a growing organisation who may grow into a global organisation…. would they start out charging, then change to swallowing?

    Very good post indeed.

  • Hi Andy,

    Was thinking about this post once more as our CentraStage Online billing system has been up and running for a few months now.

    We have decided to swallow the charges for the Paypal billing system – which works well as it just goes down as an additional operating cost, effectively what we get charged from PayPal is a lot less than what it would cost to employ an additional accounts person.


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