5 Ways to lower your PayPal fees and maximize income
As digital nomads, we love to take advantage of PayPal for its easy financial transactions. It lets us receive and request payments, and even exchange currency with a few simple steps. But for every transaction we make, we’re charged with a transfer fee that takes a deduction from our total income. It may seem insignificant at first, but since almost all of our work are done virtually, and we’re getting paid virtually as well, you may notice that by the end of the year, when you’re doing your financial breakdown, your PayPal transfer fees have added up to a substantial amount.
This doesn’t have to be the case. There are actually ways to get around PayPal fees and maximize your income. If you’re interested in learning how you can save on your PayPal transaction fees, here are a few tips you can follow.
1. Use PayPal Business Option
Choosing the PayPal Business Option when sending invoices to your clients via accounting software FreshBooks is probably the best PayPal saving tip out there. FreshBooks Classic has a deal with PayPal that sets your fees to a flat 50 cents for every transaction instead of the usual 2 or 3 percent. It doesn’t matter if you’re going to receive $30,000 or $50, your transaction fee still remains at $0.50. Imagine all the money you can save just by tweaking your invoicing method.
Here’s the catch though, as of now, in order to reap off this seemingly too good to be true FreshBooks hack, you have to be located in the United States, charging a United States client, must be using PayPal Business payments, and already have an existing FreshBooks Classic account. You can’t enroll as a new user and set up a FreshBooks Classic account anymore.
2. Find the most convenient payment model or frequency
If you have clients who pay for your recurring services, you can be smart about your PayPal transaction fees by setting up a convenient payment model. For example, if your current client is paying you in bi-weekly basis, you can switch that into a monthly payment schedule instead. That way, you can lessen the number of times you’re charged the $0.30 PayPal transaction fee. For digital nomads that have high numbers of transactions, this scheme can be really helpful in the long run.
3. Request to transfer money from PayPal to bank
When you want to take your money out of your PayPal account, and you do it by requesting a paper check from PayPal, you’re charged with a total of $1.50. To avoid paying for additional fees, you can request to transfer your money from your PayPal account to your bank account. It can be really efficient since it doesn’t require any payment and PayPal has shortened the amount of time it takes before the money is transferred in your bank. It used to take 3-4 business days but now, you can expect it in a day.
4. Make use of PayPal friends and family
Payment to friends and family is not like your normal PayPal transactions. One major difference is that transaction fees are completely free of charge when you’re requesting for payment from friends and family. The buyer’s payment protection of your client is forfeited if they choose to pay you through this option. It’s important that you’ve been doing business with your client for a while now, and you’ve already built trust in your relationship if you’re going to choose this route.
5. Avail of PayPal’s lower merchant fees
Is your PayPal account actively processing more than $3000 every month? If it is, then apply for lower merchant transaction fees to save on PayPal transaction fees. If your application is approved, your normal transaction fee of 2.9% drops to 2.5% or as low as 2.2%.
Key takeaway
We want to hustle hard and earn money so we can sustain our digital nomad lifestyle. Losing a total of maybe a hundred dollars in our PayPal transaction fees per year may seem negligible if business is good, but every cent count in this volatile economy. So minimize your expenses wherever you can. Grow your savings just so you have a backup fund, or you can use that saved money for your next big adventure.