How can BILL be a PayPal Alternative?

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.

How PayPal Fees for Business Payments Can Add Up Fast

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.

PayPal has one of the highest transaction fees for credit card payments after raising their fees from 2.9% + $0.30 per transaction during 2021. For online payments and invoicing, a fee of 3.49% plus a fixed fee of $0.49 applies to payments in United States dollars (USD). While PayPal does offer small reductions in the percentage fee for high-volume users, they don't offer lower fees for debit card payments or bank transfers as is common in the payment processing industry.

If you're using PayPal as your main platform for invoicing and payments, these fees stack up quickly. For example, let's say you invoice a customer for $1,000. You'll end up paying $35.39 in fees on the incoming payment, netting only $964.61. If you want to see how much you'll lose to PayPal invoice fees on higher amounts, check out this PayPal fee calculator.

Fortunately, there are alternatives to PayPal, such as BILL, that provides an affordable, efficient way to get paid via ACH payments.

What about PayPal fees for International Transactions?

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.

Can I Avoid PayPal Fees?

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:

  • Preventing you from using PayPal to generate invoices (generating an invoice will automatically designate the payment as a business transaction instead of a personal transfer).
  • Making your business look unprofessional by asking clients to lie.
  • Limiting the number of payments you can accept before PayPal notices your attempt to avoid fees.

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.

How Do I Accept ACH Transfers Instead of PayPal Payments?

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.

How Does BILL Compare to FreshBooks?

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.

When it comes to credit card payments, FreshBooks beats PayPal with fees of just 2.9% of the transaction amount plus a per-transaction fee of $0.30. When it comes to bank transfers, FreshBooks charges 1% on ACH transactions. That's better than PayPal, but BILL wins unless your average transaction size is under $49 (since BILL charges a flat $0.49 per transaction).

How Does BILL Compare to Stripe?

Stripe is another option that people look at as an alternative payment method to paying PayPal transaction fees. Stripe is a unique payment processor in that it's not designed to send invoices or accept payments directly within Stripe. Instead, Stripe provides a way for eCommerce software developers to create their own customized checkout experiences. Its merchant fees depend on what kind of software you're building.

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.

How Else Can BILL Help Businesses Get Paid With ACH?

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.