Peer-to-peer / Personal payments on PayPal
Paypal, the fintech conglomerate headquartered in Sunny city of San Jose in California, defines ‘Personal Payments’ as transactions between friends and family. Money transfer, when initiated through the ‘Friends and family’ tab under the ‘Send Money’ option, is counted under such transactions. Paypal account to account money transfer takes place in such a scenario and is used by many for non-commercial purposes.
In contrast to a ‘Paypal commercial transaction’ where buying and selling of goods and services are involved, a ‘personal payment’ is targeted towards crediting the value from your account. Once credited, the amount is immediately reflected in the receiver’s account window.
Sending payments to friends and family via PayPal
Transferring money to your friends and family through the PayPal app is not restricted to only PayPal account holders. If the person you are sending money to is not yet a PayPal user, you can still make the transaction. On the user’s end, he or she will have the option to open a Paypal account right away to accept payments. In such a case, money can be transferred via the email address or mobile number of the receiver. Paypal offers the flexibility to make personal payments using anything from a credit card to a digital wallet and debit cards.
If in case the receiver declines to receive the payments, the money is immediately reimbursed.
Two situations which can prevail here include:
- Reimbursement to the original payment method you used for the transaction
- Return payment to your linked business PayPal account. If you used a cash account for the transaction, the money would return to the same.
- If your Cash Account is linked to your personal PayPal account, the payment will be stacked. You can claim this payment via various methods such as holding a balance or transferring the money to a personal PayPal account.
Fee involved in ‘personal payments’ via Paypal
The cost you need to pay against every ‘personal payment’ transaction varies in numerous ways. This is why PayPal creates a custom financial sheet for every individual account holder and charges the fee according to the currency, amount and frequency of payments.
Regular currency charges apply to the transaction when you pay using your cash account or business PayPal account and convert the currency. When making payments using a credit card, your card service provider can also charge a car advance fee against the transaction. On the other hand, if you use an external payment system or a non-PayPal platform to make the payment to your friends and family, the operator may charge a fee according to their policies.
The PayPal Personal v/s Business account fraud
As noticed by many studies done by PayPal and external sources, it was revealed that many people use personal accounts to make business transactions. This practice is done to avoid the transaction fee involved in business account transactions.
According to the ‘PayPal Policies’, you are not allowed to use your personal transaction account to pay for goods and services. Not adhering to this can result in account freeze and you may lose the money available in your PayPal account.
PayPal v/s Starkflow
If you are considering paying your contractors via Paypal’s ‘Personal transaction’ tab, you may be at risk. Paypal reserves the right to block an account which could be found suspicious in such transaction activities. This is why one great way to manage payroll is through Starkflow. Our automated payment system helps you gain full control over the transactions while we do the calculations for you. Paying your contractors across the orders is convenient with us as we take care of taxation in various countries. Not just this, we can also offer payslips and documentation to your remote teams across the globe.
Reach out to us for a demo tour of how stark flow can make your contractor management process simple and easy.