A client of mine recently offered to pay the PayPal 3% transaction fee if I set up an account. I have learned that I cannot give my client an option to pay this fee upon payment of my invoice, therefore, I would need to either add this into their next invoice (retainer client) or include it in future invoices as a convenience fee.

Since this is my first experience with PayPal, I was going to offer this to the client:

Thank you for your payment... Per (client's) committment to pay the 3% transaction fee, this will reflect on the next invoice in the amount of $X.XX.

There will be two other adjustments that I need to make if you will be paying future invoices via PayPal.

• A transaction fee of 3% built into each invoice
• A payment due date of NET 11 to compensate for the transaction to transfer the payment to my bank account

(My NET terms are 15 days)

Do you think this is fair? If the client offered to pay the transaction fee? Would this be how you would go about business? I would consider absorbing the fee or not mentioning the change in NET Terms, but I run a very tight budget and timing matters.

Also, I did read somewhere that asking the client to pay the PayPal fee is against PayPal's Terms of Service. I'm not sure what the right thing is to do here.

Typically, this client was paying me via direct bank transfer (per their request) and early. Now, it's via cc and almost late.

Suggestions? Advice?

The reason it it against PayPals TOS is because you cannot legally charge a customer for using a credit card. But yes, you can charge them a convenience fee.

An interesting article about it here: http://www.foxbusiness.com/personal-...e-credit-card/

I have a convenience fee added to each online invoice payment, if the client is willing to pay the invoice on line. I will use Freshbook to general the invoice or Quickbooks and merge both. If the convenience fee is less than the transition fee, I write it off at the end of the year on my taxes.

Some clients don't like convenience fee added to their invoices, but if they pay by money order, personal or business checks, the fee is waivered.
The convenience fee is just that, it's a way my clients could pay their invoice by credit card/debit card through Paypal, Google, Quickbooks or Square. This is stipulated in my Terms and Policies.

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Phyllis L
UNIQUELY40, LLC
http://www.uniquely40.com

UNIQUELY40 - Thats a great idea - I've not thought of doing that!
I've been trying to figure out ways of making it easier, I generate invoices on Freshbooks, and then get charged.

thank you

I haven't started taking in payments yet, but this is really good information. Now, do you include in the contract that Paypal payments will be subject to a convenience fee, or do you just include it on the invoice?

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I write it off at the end of the year. I look at it this way, it is better than having to go to the bank to deposit a check or money order. However if money is that tight and they are willing to pay I can see adding the convenience fee.

You are correct about the ToS and you need to be careful about the convenience option since there are different rules for different banking entities.

The client may want to change the terms since many banks are now charging fees for ACH or direct transfer payments. You set the rules in your business so make the decision on what is best for you and not the convenience of your client. I will add that many of my clients are not paying via PayPal and credit card.

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Lee Drozak

Honestly? When it comes to bookkeeping, I'm all about keeping things as simple as possible.

I'd just tell the client I sincerely appreciate the offer but will absorb the fee myself as I do with other clients--same process for everyone. I consider PayPal fees just another cost of doing business. Instant transactions save me so much time compared to having to drive to my mailbox to retrieve a check, then to the bank to process it. It's totally worth 3%.

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AnnaLisa Michalski, Sunny Words Writing Services

Originally Posted by AnnaLisa Michalski

Honestly? When it comes to bookkeeping, I'm all about keeping things as simple as possible. I'd just tell the client I sincerely appreciate the offer but will absorb the fee myself as I do with other clients--same process for everyone. I consider PayPal fees just another cost of doing business. Instant transactions save me so much time compared to having to drive to my mailbox to retrieve a check, then to the bank to process it. It's totally worth 3%.

I'm the same way, AnnaLisa. Most of my clients are in the USA and to receive payment via check means that the payment is usually delayed, then has to clear the bank, etc. For the convenience of receiving payment instantly, I'll gladly absorb the fee and claim it at the end of the year for my business taxes.

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Anne Short -Founder - |YourGlobalVA|Providing Distinctive Social Media Marketing Solutions|

I am with AnnaLisa, I would much rather pay the 3% and get my money online then have to worry about going to the mailbox, bank, deal with NSF checks, etc. I feel that business checks can be to risky. Too easy for the check to bounce then you are stuck in collection mode.

I just consider the PayPal processing fee a cost of doing business and write it off on my taxes. Payment via PayPal is the only payment method I currently accept. Simply and easy. When I set my rates I just build this amount into my billrate.

Julie

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Julie | Virtual Resource Services, Inc (VRSI)
http://www.vrsioffice.com

Thanks so much for all of the insightful information! I currently use FreshBooks for my invoicing, so I can link my PayPal account right up to it to give clients the option to pay online.

I did change my invoice payment terms in previous and current invoices to say:

If using the PayPal service, please note that you are responsible for the transaction fee (a percentage of the invoice - typically 3%).

Which I should probably change to a convenience fee to keep things on the up and up.

Also, I should mention that I am already giving this client a monthly retainer discount, so any more profit loss really hurts. They are also under a general contract that began back in June. I should probably make an ammendment to the contract to include the new PayPal policy. I'm not a big fan of the time it takes to rewrite the paperwork.

Thanks again all!