Almost seems like a silly question, but I’m serious.
Do you accept physical checks? Do you use some sort of payment gateway, like paypal or google? Do you have funds electronically transferred to your bank account? Do you accept credit cards? What sort of invoicing system do you use?
Paypal is the most headache free way of accepting payments. You may have to pay a fee but for the sake of removing the worry about whether some can cover cost it is worth it.
yes
No
Did you ask him about set up fees, membership fees, and monthly service fees. PayPal’s only fee is 3% + 30 cents per transactin and if your business goes above a certain level, that fee drops.
No. Why would you need it?
I also accept bank transfers from one long-term client who is out of the country. The fee for that is $15.00 per transaction. My client also pays a transfer fee on his end. Bank transfers aren’t free.
I accept bank transfers, as well as PayPal through my billing software. My billing software also supports many of the most popular payment gateways but PayPal is extremely easy to set up and I use it for other services so I went with that. Almost all clients do bank transfers anyway.
When a client uses PayPal (with credit card or PayPal balance), I pay a transaction fee. Only case where PayPal has been of good use is when I’ve worked with a client from overseas, in which was the transaction fee was worth it.
If I were to receive more frequent payment from overseas, I’d look into other payment gateways such as credit card merchant accounts (to see how the cost would differ) but PayPal has served me pretty well so far.
If you want to know more or discuss it further, just pop me a message.
If you set up online bill pay at your bank it is most likely for recurring transactions within your country of origin. There is a transaction fee for International transfers and I may be wrong, but I don’t believe you can set up online bill pay for them.
The currency exchange rates differ not only from month to month but also from day to day.
Exactly! I also like the security of not having to store my client’s credit card or banking information. PayPal does it for me.
Although I will accept checks occasionally, I won’t start work until a check has cleared. With PayPal there is no delay for my clients.
Plus with PayPal’s debit card I get 1% back on every purchase I make. That along with discounts on partner offers, etc. helps make up for the small fee I pay.
I use PayPal and accept all major credit cards through a PayPal business account. Like accepting checks, PayPal provides full documentation and is very easy for both my clients and for me.
Seems a little expensive. For a $1000 job, wouldn’t $30 go to paypal? That seems like a lot just to deposit a check.
With checks, you always have to worry about whether or not they are good. If a check bounces or a stop-pay is put on one, you may have to pay a returned check fee.
I use PayPal and accept all major credit cards through a PayPal business account. Like accepting checks, PayPal provides full documentation and is very easy for both my clients and for me.
I use PayPal for everything and it does exactly what I need. Yes the fees can be a bit depressing as you’re loosing a block of your income for the transaction (and I notice no-one here mentioned international fees - where on top of the percent and set amount, you’ll also be charged an additional percentage for the conversion from say $ to £ or €). However, even with all of those charges, it beats (for me) having a proper merchant service, I once investigated a well known merchant to see how much it would cost me… and unless you’re rolling in high amounts of stable monthly income, it may not break even on the cost ratio (depending on the merchant). 
PS: Oh, and invoicing is so much easier on PayPal, I literally just hit “request money” enter their PayPal address and the amount, state what the bills for and hit the request button. It gets sent to them to authorize and in some cases I’ve received payment in under 5 minutes flat. Transferring to a bank account is easy too.
I also accept bank transfers from one long-term client who is out of the country. The fee for that is $15.00 per transaction. My client also pays a transfer fee on his end. Bank transfers aren’t free.
What about when I use online bill pay from my bank? I doubt anybody is paying $15 to get my payments.
Does paypal have some sort of an invoicing system? Can I send my client an invoice using my business paypal account?
Does paypal charge extra if somebody uses a credit card?
Are you sure paypal is cheaper than a merchant account? I have a guy from Chase telling me that he can easily beat paypal’s rates with a Chase merchant account.
What about an invoicing system where somebody enters account number, and routing number, and money is sent like a bank e-pay system?
That is definitely a consideration, but I have literally never had that happen once! Maybe I’ve been lucky, though.
Taking 2 to3 percent off of my revenue over a period of 10 years would REALLY add up! I do understand some business rely on the convenience of credit card transactions and really need to accept them to remain competitive. But 3% is a lot, and it’s not just 3%, it’s 3% plus the earning/capital power of the 3% compounded over a few years.
If 3 percent of my revenue went into a cash account over all these years, I could pay for my kids college!
But, I am lucky because I deal mostly with larger clients that have better cashflow. Paypal is a good way to protect yourself from all sorts of problems if you are making smaller transactions with less stable clients.
But man, those checks are nice. They pile up in a little holder near my desk and at the end of the month when I do the books I get out my little stamp and stamp away. Well, on a good month I do.
Paypal is definitely more expensive than cashing a check, but it’s way cheaper than opening a true Merchant Account to accept credit card payments. A lot of my clients like being able to pay by credit card, so I do use Paypal. I figure I should make it as easy as possible for people to give me their money:)
If possible, I ONLY accept physical checks. No fees, self documenting, and easy. I’m not really in a hurry to get payments as long as they are within 30 days of invoice, so checks work well. I mail checks to the bank once per month. Easy.
Quite true! But paypal is the only acceptible way to me. I also think it is too expensive, but I have no choice.
“Are you sure paypal is cheaper than a merchant account? I have a guy from Chase telling me that he can easily beat paypal’s rates with a Chase merchant account.”
Shyflower is correct - your monthly carrying costs (service fee, deposit fees, gateway set up / monthly) on a merchant account, before transaction fees, will be $30-$45 dollars. For transaction fees expect to average 2.5% with interchange adjustments and about $0.15 per transaction on the gateway fee.
A merchant account will give you more robust reporting and tools (like chargeback management)- and daily deposits - but for volumes under 5K a month Paypal is a good option.