PayPal is putting new limits on a feature in its payment system that allows people to receive money without paying additional fees, the company recently announced. Starting July 28, only personal PayPal accounts will be able to get funds through Friends & Family, a transaction method intended for trusted recipients.
There are two ways to send money on PayPal: Friends & Family and Assets & Services. F&F is meant to pay your friend back for dinner, for example, or give your kid some birthday money – you know who’s receiving the funds and what you’re paying them for. There’s usually no fee involved, but it also removes protections for issues that might arise, like refunds or scams.
G&S is intended for purchases, and money sent in this way is subject to PayPal fees. Everyone hates fees! But with G&S, if what you buy is not as described, damaged when it arrives, or simply never reaches the buyer, you can often easily get a refund on your purchase.
Many businesses handle transactions with a PayPal business account and accept payments for goods and services through F&F, even though you’re not technically supposed to. The buyer may not notice or care about the difference, or the company and the customer may agree to send cash that way to avoid the seller’s charges. This is quite common in many informal transactions, such as people selling things on social media platforms; perhaps the buyer personally knows the seller and trusts him to deliver. Sellers sometimes insist on F&F to avoid transaction fees, which causes problems if something goes wrong in the future.
The change is already causing frustration from some creators, who use PayPal to run their business and will now be subject to additional transaction fees.
With this new change, US business accounts will no longer be able to accept personal payments for free, and people who use PayPal for their business will need to create a personal account to receive money for free from friends and family.
PayPal did not immediately respond to questions about whether it changed the rules to crack down on miscategorized purchases, but said in the announcement that the change will “drive consistency across [the] platform” and “[remove] confusion about what payments are eligible for the buyer”. and seller protections.”
In the same announcement, PayPal also said that the transaction fee structure for goods and services would change starting this month. Sellers currently pay 2.89 percent plus $0.49 per transaction, but starting July 28, that will change to 2.99 percent without an additional flat fee.
