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Advice: Paypal Fees

As a result of PayPal's crackdown on 'gifts and services' being used to pay for goods, an artist I follow had decided to start using 'goods and services' but insists on using a fee calculator to add the fee onto the price of their commissions. In other words, making the buyer pay the fee so they don't lose out on their full pay.

I would like some advice on this please because they're insisting that this is acceptable by PayPal but I'm not entirely sure as other sources suggest that this isn't tolerated, as it could be seen as the seller avoiding covering the fees themselves.

Note: I didn't mention the artist's name because this isn't a beware about them, I'm just a friend who's rather concerned about their practises and I don't want to see them get into trouble with PayPal and I'm hoping that there's someone in the community who may be savvy about this kind of thing.

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Comments

( 39 comments — Leave a comment )
celestinaketzia
Jun. 20th, 2015 07:43 pm (UTC)
Let me be 110% clear on this for all the folks out there.

You may not charge your clients the Paypal Fee.

Observe item 8.1.a of the Paypal ToS:
For Purchase Payments, the recipient of the payment will always pay the Fee.

I have spoken to Paypal numerous times on this issue, and they have come back with the same response more than once.

You can't charge your clients for fees.

Paypal fees are a part of running a business. If you don't want to pay it, then don't use Paypal. It is really that simple. Fees are tax deductible, and you should be filing your taxes if you meet the requirements for filing. Speak with someone in your area about taxes, as the rules and such change from state to state, country to country, etc.

Edit: I should also note that depending on the country, Paypal has removed the fees from a lot of their transactions. So essentially artists are taking money for fees they aren't being charged. I'm in the US and any transaction sent to me via someone's bank (not an echeck) or via their balance is free for me.

Edited at 2015-06-20 07:45 pm (UTC)
snowhawk
Jun. 20th, 2015 07:53 pm (UTC)
I went through the ToS yesterday so while I was looking up something related to that Canadian convention in, and I didn't see it in there, but I probably over looked it: Is it still against PayPal ToS to charge someone one price for paying by PayPal, but another price for paying by another payment method? Since that's seen as charging for the PP fee, I would assume so.

Edited at 2015-06-20 07:53 pm (UTC)
(no subject) - celestinaketzia - Jun. 20th, 2015 07:55 pm (UTC) - Expand
(no subject) - jakejynx - Jun. 21st, 2015 04:36 am (UTC) - Expand
(no subject) - teatimedoodles - Jun. 20th, 2015 08:15 pm (UTC) - Expand
(no subject) - celestinaketzia - Jun. 20th, 2015 08:19 pm (UTC) - Expand
(no subject) - teatimedoodles - Jun. 20th, 2015 08:25 pm (UTC) - Expand
(no subject) - celestinaketzia - Jun. 20th, 2015 08:28 pm (UTC) - Expand
(no subject) - teatimedoodles - Jun. 20th, 2015 08:32 pm (UTC) - Expand
(no subject) - celestinaketzia - Jun. 20th, 2015 08:37 pm (UTC) - Expand
(no subject) - teatimedoodles - Jun. 20th, 2015 08:45 pm (UTC) - Expand
(no subject) - celestinaketzia - Jun. 25th, 2015 09:53 pm (UTC) - Expand
(no subject) - ljmydayaway - Jul. 4th, 2015 05:35 pm (UTC) - Expand
(no subject) - shukivengeance - Jun. 21st, 2015 07:09 am (UTC) - Expand
(no subject) - fiawol - Jun. 20th, 2015 09:24 pm (UTC) - Expand
(no subject) - celestinaketzia - Jun. 20th, 2015 09:43 pm (UTC) - Expand
(no subject) - ljmydayaway - Jul. 4th, 2015 05:43 pm (UTC) - Expand
(no subject) - celestinaketzia - Jul. 4th, 2015 07:23 pm (UTC) - Expand
tylociraptor
Jun. 20th, 2015 07:50 pm (UTC)
They can figure for the fee in their commission prices (for instance, listing 22 instead of 20 on their commission price sheets), and this is what they SHOULD do if it is big enough a deal for them. They cannot specifically include the fee in their price, however.
teatimedoodles
Jun. 20th, 2015 08:17 pm (UTC)
Thank you for your response! I suggested this to them myself but they're insisting on this method, hence the advice request since I really don't know what I can say to convince them otherwise.
(no subject) - tylociraptor - Jun. 20th, 2015 08:18 pm (UTC) - Expand
(no subject) - teatimedoodles - Jun. 20th, 2015 08:23 pm (UTC) - Expand
latiro
Jun. 20th, 2015 07:51 pm (UTC)
Seconding what Celestina pointed out. The seller is not allowed to have buyers pay fees so they (the seller) avoid PayPal fees. That could get the seller banned.

Edited at 2015-06-20 07:53 pm (UTC)
wuvvumsoc
Jun. 20th, 2015 08:15 pm (UTC)
I'd just raise your prices by $1-3 on your price sheet if the fees concern you, and just not say that the price raise was because of fees.
harkthorn
Jun. 20th, 2015 08:22 pm (UTC)
I was wondering about this recently since in many communities that allow buying/selling items they'll tell you to note in your post whether fees are included in your prices or not, and of course most people will state "PP fees not included". There's the note in Paypal's terms about handling fees, as someone mentioned above, but I'm not entirely clear what specifically would be okay to classify as such. Could digital items (artwork say) have handling fees at all?
teatimedoodles
Jun. 20th, 2015 08:26 pm (UTC)
That's what I'm wondering myself! I'm also wondering if the handling fees count if you only use PayPal for your transactions.
chronidu
Jun. 20th, 2015 08:27 pm (UTC)
Just seconding what others have said, I just raised my price to cover what id be losing in fees a long time back and went with that.
revalie
Jun. 20th, 2015 08:39 pm (UTC)
I had an artist try to pull this on me recently. When I told her it was against ToS to make clients pay the fees, she told me that she would just call it a "processing fee" and I had to pay it anyway. Which was hilarious because I almost ALWAYS tip artists anyway, to help with the fees. So I just didn't work with her and she got none of my money.

You should possibly tell your friend that she'll lose out on quite a few customers this way. Anyone who knows Paypal's rules even the slightest bit is not going to work with someone like this.
teatimedoodles
Jun. 20th, 2015 08:47 pm (UTC)
That's essentially what this person is trying to do, basically calling it a handling fee to justify it.

Another user is going to poke PayPal about this though because we're not certain if that actually counts.

They're being pretty stubborn about this so far, which is really sad since even I have been put off doing any further business with them because I don't want risk my account, nor do I want to be responsible for any damage to theirs.
(no subject) - revalie - Jun. 20th, 2015 08:49 pm (UTC) - Expand
(no subject) - exo_formicidae - Jun. 20th, 2015 09:21 pm (UTC) - Expand
(no subject) - teatimedoodles - Jun. 21st, 2015 02:07 pm (UTC) - Expand
magedragonfire
Jun. 20th, 2015 11:41 pm (UTC)
I do know exactly who you're talking about, and I've had this exact discussion with them before. They're very adamant about not paying the fees as part of the cost of doing business, for some reason.

I think half of it may be that they're unwilling to raise their commission prices - and considering that they're very cheaply priced to begin with, comparatively, it would be a great idea for more than just fee-coverage. I suppose they figure that raising prices may lead to losing business - which is rather silly, considering I'd be more than willing to pay for a commission that was raised by $5 or $10 that is fully covered by Paypal's business agreement, and I'm sure there are others of like mind.

It's a pity, because I really do like the person's art, and would love to commission them! But I'm not willing to, as long as they're not willing to handle their transactions properly.
kjorteo
Jun. 21st, 2015 03:26 am (UTC)
Charging the customers fees to get out of raising prices is especially silly because you're charging the customer more either way, but one way just looks a lot skeevier and is totally against PayPal's TOS.

"Commissions for $10! (Note: Please also include $2 to cover PayPal fees)"
"Commissions for $12!"

Like, both get you to the exact same point, but one is actually legit. It... shouldn't be that hard?
(no subject) - magedragonfire - Jun. 21st, 2015 03:40 am (UTC) - Expand
(no subject) - kjorteo - Jun. 21st, 2015 03:48 am (UTC) - Expand
hbruton
Jun. 21st, 2015 03:27 pm (UTC)
Those fees are part of the business of using Paypal. I don't try to wiggle out of it. I use the service a lot and expect them to make money somehow. It's not a huge amount to my mind. At the end of the year I add up the fees and claim in on my taxes as a business expense. Sometimes my buyers add in a little extra to cover the cost and that's nice of them to do. But I never expect it and certainly never ask for it. I appreciate the service paypal offers and pay my fees and consider it part of doing business.
teekchan
Jun. 21st, 2015 11:47 pm (UTC)
I, and many of my friends, will flat out not work with artists charging the fee, as Paypal can shut down you account too, because by paying it you are breaking the rules.

Paypal fees are a tax deduction too, and as all artists should be paying taxes, you never really 'lose' that money, as its 100% deductible.
roxyfur
Jun. 22nd, 2015 11:06 pm (UTC)
Like teekchan said, paypal fees are tax deductible and they could save a ton of money on their taxes for writing it off as such! That's what I'll be doing this upcoming year. As a digital artist, it can be difficult to find things to write off, but this is one that you can for sure.
( 39 comments — Leave a comment )

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