A Problem With PayPal: Don’t Pay Any Extra Fees

Lately, even my biggest clients have paid via PayPal. It’s an easy way to handle payments for freelancers, allowing you to accept payments without needing to wait for a check or hand out your banking information.

Today, though, I’ve heard some worries about PayPal from several freelancers: seemingly overnight, the payment processing service added a fee for receiving payments in a personal account. Leaving aside the question of whether PayPal acted properly in how they notified account holders, I think it is important to note that it’s very easy for freelancers to avoid this new fee.

Many freelancers, especially those who work part-time, seem to have personal PayPal accounts because it’s the easiest type of account to set up. However, as long as you’re freelancing, you’re not really using your PayPal account for personal purposes.

The Differences Between Accounts

A business PayPal account offers you the ability to handle far more complex transactions than a persona account, from invoicing clients to creating a shopping cart on your website. You also don’t face the limits on transactions from a personal account. You can’t transfer more than $500 out of a personal account in any given month, for instance. That limitation can be a major problem for a freelancer — unless your landlord accepts PayPal.

There’s no cost for upgrading your account to a business account: it’s more a matter of time. You do have to verify your information beyond the basic level used for a personal account, but that can be a benefit.

PayPal Problems

Despite its ease of use, PayPal has had its share of problems. Besides this morning’s issues, some freelancers have found themselves facing situations where they could not access funds in their PayPal accounts or clients had scammed them through the site. I still use PayPal — but I transfer money out immediately and am cautious about how I use my account. It’s worth reading up on such problems in order to be aware of the issues, as well as make sure that PayPal is the best choice for you. Cara William’s story may be a good starting point.


  1. Tracy L. Barnett   •  

    Thank you, Thursday. This is really good to know. I’m gearing up for a year abroad, and I’m planning to use PayPal pretty extensively since I won’t be able to receive checks. This will be a good starting point for me as I get everything set up.

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  3. thursday   •     Author

    @Tracy, I’ve actually heard good things from people who use PayPal while living abroad. It’s like any other service — you just have to be aware about the company’s policies and keep your eyes open for changes.

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  6. Jarkko Laine   •  

    Thanks for the info! I noticed the fees appearing lately, but didn’t realize it was because I’m using a personal account. Have to go and upgrade to a business account, then.

  7. thursday   •     Author

    @Jarkko, Glad to help — I know those fees snuck up on a lot of people.

  8. aufgelosst   •  

    I am now on the telephone again trying to resolve an issue with paypal. It’s now the 3rd day. My account has been linked to another paypal account. they say it may be because of name, financial info, phone, or address. Completely different email address for the other account, too. Paypal can’t tell me how they were linked, only that they are and I am responsible for the other accounts deficiencies.
    I don’t know how they connected the accounts or how. I will be sending an email to the other account holder shortly and hope for a response. It appears as though Paypal can take your information and connect you to another account with a similar name even if the rest of your info (SSN, etc) doesn’t match.
    Anyone else out there have that problem?

  9. aufgelosst   •  

    I was being transferred to a “Supervisor” before I started writing the other comment. I’m still on hold and it’s been 30 minutes.

    Yesterday when I called, they broke connection and I had to call back.

    I heard about Googlecheckout last night. Anyone know anything about that?

  10. thursday   •     Author

    @aufgelosst, I haven’t heard of PayPal connecting accounts under similar names (although I do know that they don’t allow multiple accounts with details like the same bank account or email address). I’ve never had an occasion to use Google Checkout, but there are also a lot of payment processors out there that are now catering specifically to small businesses.

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