HELP!!! Fees Are Killing Me!!!!!

by RyanT
30 replies
Hey Warriors

I kind of have a question plus a statement.

I do a lot of payments through paypal as it seems to be the easiest for most people.

Paypal charges a very small fee for these transactions, something like 2.9% plus $0.30 (I think) and this is really not that much when you look at each transaction singularly (usually cents on the dollar or maybe a dollar and some change for a big one.)

BUT

For all transactions adding up it gets a bit ridiculous!
For example last month alone I lost over $300 to fees! And that was a slow month.

Now I know Paypal has got to make their money somehow but it's really starting to annoy me. I'm losing a lot of money over time to fees. I haven't done the exact math but in the last few months I've lost about $1000 to transaction fees.

This is the true sense of nickel and dime-ing someone to death.

My question is is there another way to take care of this?
I'm sure I will have to pay some sort of fees no matter where I go and what I use, somewhat like a bank account, but I've never had a bank account that has taken hundreds of dollars in fees.

I don't know if I should use a different service because it may make things a little difficult for some.

Also I was considering asking my clients to transfer money via the personal options. Personal transfers through Paypal are free.
I think there may be a problem that may arise with this, and that is if there's a lot of money transfering through "personal" it may raise some eyebrows at Paypal.

I'm not sure if it would but let's say $2000 in one month is "personally transferred" to me they may not like it.

Please Warriors help! Is there a solution to this?
Or am I doomed to paying out the wahzoo in fees?
#fees #killing
  • Profile picture of the author Easy-CASH
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  • Profile picture of the author RyanT
    Awesome HypeFree

    Do you still get charged transaction fees? How much?

    Also how do your clients pay you?
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  • Profile picture of the author Frank Donovan
    Originally Posted by RyanT View Post

    Also I was considering asking my clients to transfer money via the personal options. Personal transfers through Paypal are free.
    I think there may be a problem that may arise with this, and that is if there's a lot of money transfering through "personal" it may raise some eyebrows at Paypal.
    I'm not sure that personal transfers are free. At least they weren't the last time I noticed. But in any case, it's not worth trying to game the system unless you could happily survive if PayPal closed your account.

    There's always going to be a cost of doing business. You might get a better rate with a merchant account, but it's still a fee.

    Far better to focus on your profit margins and cash flow. Control these and your business will thrive regardless of the transaction costs.


    Frank
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  • Profile picture of the author JennSpencerIM
    Originally Posted by HypeFree View Post

    Ryan we use a merchant account. We started with Paypal 6 years ago and fees go big we switched to a merchant account. There are tons of them, find one you like, we use PowerPay you can google them.
    Agreed. We still offer Paypal and also use MerchantPlus/Authorize.net which we like. I never cared much about the fees cause it just meant I was making money.
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    • Profile picture of the author Oscar D
      Originally Posted by JennSpencerIM View Post

      I never cared much about the fees cause it just meant I was making money.
      Enough said!! With proper financial control and a good business model fees should just be a small expense when compared to earnings/income
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  • Profile picture of the author JayFlow
    If you want to accept credit cards you have to pay fees...either with a third party merchant like paypal, clickbank, etc or your own. These charges originate from Visa/Mastercard then escalate depending on the service.

    On a side note, I think your goal should be to pay $3,000 in fees next month!!
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    • Profile picture of the author George Wright
      Originally Posted by JayFlow View Post

      If you want to accept credit cards you have to pay fees...either with a third party merchant like paypal, clickbank, etc or your own. These charges originate from Visa/Mastercard then escalate depending on the service.

      On a side note, I think your goal should be to pay $3,000 in fees next month!!
      Well said. I'd love to pay $1,000,000 or more in fees a month.

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  • Profile picture of the author sbucciarel
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    You're paying for their service ... you are not losing money. If you didn't have a payment gateway to use, there would be no payments. Merchant accounts charge as well. It's the cost of doing business.
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  • Profile picture of the author Avatarix
    Originally Posted by HypeFree View Post

    Ryan we use a merchant account. We started with Paypal 6 years ago and fees go big we switched to a merchant account. There are tons of them, find one you like, we use PowerPay you can google them.
    I have powerpay and I'm not at all thrilled their fees are much higher than paypal.

    I'm paying 4.3% on Visa and a bunch of other service charged right now at the level of business I'm doing the fee are almost 10% (once you add in all of he hidden charges and minimum service charge.) and the 2 day lag waiting for my money has turned int a lot longer lag.

    I was told there was not enough money in my account to pay their fee so that my batches are being held. How over $600 in sales can not pay $132 in last months fees I don't understand. I'm looking for a new merchant account.
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  • Profile picture of the author Kevin_Hutto
    Fees are part of it... Last month I paid $8000 in merchant acct fees, another $2000 in clickbank fees, then $2970 to 1SC and various other scaled fees. You can't get around it.
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  • Profile picture of the author Michael Nguyen
    Just be happy you're making sales. You know the fees I hate the most? Paypal refund fees!
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  • Profile picture of the author hd28qi
    Yeah, it's depressing to look at the QuickBooks profit/loss at the end of the year and see $30,000 spent on merchant account fees. I could buy a car with that. Or three.
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    • Profile picture of the author phpbbxpert
      Originally Posted by hd28qi View Post

      Yeah, it's depressing to look at the QuickBooks profit/loss at the end of the year and see $30,000 spent on merchant account fees. I could buy a car with that. Or three.
      It's even more depressing knowing that I hope for that some day
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  • Profile picture of the author Alan Petersen
    Such drama. You're making money and PayPal fees are tax deductible for businesses (in the U.S.) so stop worrying about it. Count your cash and at the end of the year right off the fees. Same thing with ClickBank fees, etc.
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    • Profile picture of the author Kay King
      Don't want to pay fees for money transfers? No problem - just have your buyers send you a check by snail mail.
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  • Profile picture of the author Sonomacats
    The one benefit to using Paypal is that if you don't make any money, you don't pay fees. Unlike a merchant account where you pay a monthly fee PLUS a transaction fee and percentage. So Paypal is actually pretty good in comparison.

    I have looked at e-junkie and it looks like their fees are reasonable. But you're still going to run into people who want to use Paypal. It's familiar and they trust it.

    As has been said before, it's the cost of doing business. At least it means you're making money!
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  • hi Ryan,

    I'm a little confused about what you're complaining about. Unless you're doing micro-payments, i.e. people are paying you $1 for an item (in which case you would be being charged about $0.60/transaction), then the fees you're being charged are relatively low.

    Assuming your average product price is $20, given the 2.9%+$0.30/transaction you cited, if you are paying $300 in fees and would mean you're making about $7,500 per month, with 375 orders/month. Thats a heck of a good starting point for a buyers list and good income.

    Plus, you're paying for the convenience of having the ability to accept payments from a wide range of people, fraud detection, reporting,and so forth.

    I am actually really surprised you would have this kind of perspective if you are doing that kind of volume, because most people by that time have learned how to treat it like a business. If you are still doing this kind of money by flying by the seat of your pants, and while that's impressive especially nowadays, you really should look at hiring an accountant, figuring out which expenses are tax-deductible and not, and then figuring out how you can scale up your current operations. $300 is nothing for that level of sales.

    John

    Originally Posted by RyanT View Post

    Hey Warriors

    I kind of have a question plus a statement.

    I do a lot of payments through paypal as it seems to be the easiest for most people.

    Paypal charges a very small fee for these transactions, something like 2.9% plus $0.30 (I think) and this is really not that much when you look at each transaction singularly (usually cents on the dollar or maybe a dollar and some change for a big one.)

    BUT

    For all transactions adding up it gets a bit ridiculous!
    For example last month alone I lost over $300 to fees! And that was a slow month.

    Now I know Paypal has got to make their money somehow but it's really starting to annoy me. I'm losing a lot of money over time to fees. I haven't done the exact math but in the last few months I've lost about $1000 to transaction fees.

    This is the true sense of nickel and dime-ing someone to death.

    My question is is there another way to take care of this?
    I'm sure I will have to pay some sort of fees no matter where I go and what I use, somewhat like a bank account, but I've never had a bank account that has taken hundreds of dollars in fees.

    I don't know if I should use a different service because it may make things a little difficult for some.

    Also I was considering asking my clients to transfer money via the personal options. Personal transfers through Paypal are free.
    I think there may be a problem that may arise with this, and that is if there's a lot of money transfering through "personal" it may raise some eyebrows at Paypal.

    I'm not sure if it would but let's say $2000 in one month is "personally transferred" to me they may not like it.

    Please Warriors help! Is there a solution to this?
    Or am I doomed to paying out the wahzoo in fees?
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  • Profile picture of the author ruscontent
    don't worry about fees. Just grow up your volumes.
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    • Profile picture of the author Alan Mc Donald
      paypal fees can be written off as an expense when you do your accounts, well at least in my country they can
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  • Profile picture of the author PaulaC
    It's just all part of doing business online. You are always going to have to factor costs into your business. I personally don't have a problem with it. Paypal makes it easy for payments to be made and saves me having to worry about it all.
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    • Profile picture of the author sal64
      This is a funny thread.

      Like my accountant tells me.. if you have a $1m tax problem then be happy coz you're making at least $3m

      If you don't need recurring fees, make one-off sales via e-junkie. One low monthly fee, and that's it.

      For recurring, then you need a processor.

      One idea if big $$ are involved is a mass pay instead of transfer??
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      • Profile picture of the author BAC Ops Manager
        The fees are a must. Processors need to make money you know. It's either a processor or directly pay with your credit card.
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      • Profile picture of the author Alan Petersen
        Originally Posted by sal64 View Post

        This is a funny thread.

        Like my accountant tells me.. if you have a $1m tax problem then be happy coz you're making at least $3m

        If you don't need recurring fees, make one-off sales via e-junkie. One low monthly fee, and that's it.

        For recurring, then you need a processor.

        One idea if big $$ are involved is a mass pay instead of transfer??
        Agreed.

        However on using e-junkie, you still have to use PayPal, ClickBank, 2CO, Google Checkout which all have transactional fees.

        So you're paying monthly fee to e-junkie plus the transactional fees of PayPal or whomever you're using.

        I use e-junkie so I like them but there really is no work-around paying processor fees unless if like Kay said you only accept checks. And even those might have banking fees for business. So cash only?
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        • Profile picture of the author Kay King
          This is funny, guys.

          We got snookered - we're all posting in an old thread because a newbie bumped a thread from June! How funny is that?

          I guess we have to check the dates on every thread now since they are being bumped at record rates these days.

          kay
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          • Profile picture of the author Alan Petersen
            Originally Posted by Kay King View Post

            This is funny, guys.

            We got snookered - we're all posting in an old thread because a newbie bumped a thread from June! How funny is that?

            I guess we have to check the dates on every thread now since they are being bumped at record rates these days.

            kay
            D'OH! Didn't even notice that. Dagnabbit!
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  • Profile picture of the author Suzy 29
    I know what you mean about Paypal I feel the same. The only thing i can suggest is using a company such as SWReg for Card transactions as the amount they charge wont be as much
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  • Profile picture of the author gtptaosb
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    • Profile picture of the author Richard Van
      Sorry but this is all relative.

      You're using Paypal and your earning are going up so the amount you pay in fees go up to. I'd look more at the profits not the fee's.

      This a nice problem to have.
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  • Profile picture of the author aspiepower
    I know the OP's in the US, but if anybody in the UK's reading this, there's an independent fee checker here: ePDQ - Secure online payments your customers can bank on

    They say they're it's UK's only impartial site - and I was given the url on my Uni e-commerce course by the lecturer, so have no reason to doubt it.

    This is for existing merchants to compare their existing turnover/fees with what's out there in the UK.

    Hope that helps somebody. I don't sell stuff online .... not keen to start taking money from people that then expect something from you
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