PayPal accounts come with a built-in invoicing tool that might seem convenient to small business owners. While you can certainly quickly accept payments, the processing fees from PayPal business payments can add up and cut into a significant amount of your profits. In this article, you will learn all about PayPal fees, international transactions, ACH payments, and alternative payment platforms to PayPal.
PayPal is a great platform for consumer payments, and many self-employed entrepreneurs consider it for business because they already have a personal account there. However, using PayPal for a business payment can quickly become expensive.
Fortunately, there are alternatives to PayPal, such as BILL, that provides an affordable, efficient way to get paid via ACH payments.
If you have international clients, PayPal fees can be even more expensive. PayPal adds an additional fee of 1.5% on international transactions for a total fee of 4.99%. They do have a special partnership with American Express where payments made using an American Express card don't get charged the extra 1.5%. However, not all clients have American Express cards or want the inconvenience of being limited to only using one specific credit card for business expenses. If you need to convert foreign currency, PayPal charges a spread of 4%, which is effectively an additional 4% in fees.
BILL currently supports transfers with over 130 countries, offering international wire transfers in local currency starting at $0 if you don't need to convert currency. There is a small flat fee for wire transfers in USD, and BILL offers competitive currency exchange rates. If you accept international debit or credit cards, standard transaction fees apply—there is no additional processing fee.
A few options can potentially help you avoid PayPal fees. None of them are long-term solutions, though. For example, you could ask a client or customer to choose "Family and Friends" instead of "Goods and Services" when paying you. A "Friends and Family" payment doesn't get charged any fees, so you might think you have made a smart choice. This approach quickly leads to several problems, such as:
You could also try charging your clients extra fees to cover your PayPal expenses. Again, this can make your business look unprofessional. Generally, customers don't like companies to bother them with negligible fees. They may feel like they're getting "nickeled-and-dimed."
No matter what approach you take, PayPal will eventually notice your attempts to avoid its fees. When that happens, the payment processor will either close your account or charge you for previous transfers. If you refuse to pay, PayPal could freeze your assets or try to pass charges to your connected accounts.
It's much easier, safer, and affordable to choose a payment processor that doesn't charge high fees that eat into your profits.
Platforms designed specifically for ACH business payments are a great alternative to a PayPal business account. Switching to a cloud-based platform like BILL allows you to easily send, receive, and track ACH payments from any device on the go.
Instead of a percentage fee that eats into every transaction, BILL only charges an exact amount of $0.49 per ACH payment. This rapidly drives down the cost of getting paid electronically, even when you factor in the cost of a monthly subscription. For example, if you select a plan with a $45 monthly fee, you beat PayPal's cost after collecting just $1,118 in monthly invoices because $45 is 4.03% of $1,118. Remember that PayPal will keep charging you that percentage on everything you collect, while BILL only charges the small $0.49 flat fee per ACH transaction.
FreshBooks is a common option for people looking to get away from PayPal fees. FreshBooks is primarily a bookkeeping software similar to QuickBooks. They do have invoicing software, but it doesn't have the same robust features for business transactions as BILL.
If you're looking for a turnkey solution that lets you quickly receive and send money without having to build your own payments platform, BILL is the answer you're looking for.
BILL combines the convenience of PayPal with the power your business needs. You can get paid up to 2x faster via ACH, and send recurring invoices and automatic overdue reminders to customers.
And, since BILL can integrate with your accounting software, all incoming payments are synced automatically. You reduce the amount of time spent on double data entry, speed up account reconciliation, and improve the accuracy of your books.
The best way to see why BILL is the best PayPal alternative for business is by starting a risk-free trial.