PayPal is putting new limits on a feature in its payment system that allows people to receive money without paying extra fees, the company recently announced. Starting July 28th, only personal PayPal accounts will be able to get funds via Friends & Family, a transaction method intended for trusted recipients. Show There are two ways of sending money on PayPal: Friends & Family and Goods & Services. F&F is intended for paying your friend back for dinner, for example, or giving your kid some birthday money — you know who’s receiving the funds and what you’re paying them for. There’s typically no fee involved, but it also drops protections for issues that might come up, like refunds or scams. G&S is intended for purchases, and money sent this way is subject to PayPal fees. Everyone hates fees! But with G&S, if the thing you buy isn’t as described, it’s damaged when it arrives, or it just never gets to the buyer, you can often easily get a refund for the purchase. Many businesses handle transactions using a PayPal business account and take payments for goods and services through F&F, even though you’re technically not supposed to. The buyer might not realize the difference or care, or the business and the customer could agree to send cash that way to avoid seller fees. This is fairly common in many informal transactions, like people selling things on social media platforms — perhaps the buyer knows the seller personally and trusts that they’ll deliver. Sometimes sellers insist on F&F to avoid transaction fees, which causes problems if something goes wrong down the line. The change is already causing frustration on the part of 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 won’t be able to accept fee-free personal payments, and people who use PayPal for their company will need to create a personal account to receive money fee-free from friends and family. PayPal didn’t immediately respond to questions about whether it changed the rules to crack down on miscategorized purchases but said in the announcement the tweak will “drive consistency on [the] platform” and “[remove] confusion around which payments are eligible for buyer and seller protections.” In the same announcement, PayPal also said the transaction fee structure for goods and services would change beginning later this month. Currently, sellers pay 2.89 percent plus $0.49 per transaction, but starting July 28th, that will change to 2.99 percent without an additional flat fee.
When you make a payment in PayPal, you’re presented with two options: ‘friends and family’ and ‘goods or service.’ To be fair to PayPal, the branding is pretty self explanatory. If you’re informally paying somebody you know well, you want ‘friends and family.’ If you’re buying something from someone unknown (a company or a random seller on your marketplace of choice), you want ‘goods and services.’ The two options carry different fees and shift who pays. As such, you may be tempted to use a friends and family payment to complete a business transaction. There’s a very good reason you shouldn’t do that, which we’ll get on to in a moment. But first, some background information. How do I use PayPal friends and family?It’s pretty straightforward to use PayPal friends and family. 1. Log in to your PayPal account. 2. Click “Send & Request” on the navigation bar at the top of the screen. 3. Enter the phone number, contact name or email address of the person you’re sending money to, or select a contact that's already attached to your account. 4. Enter the payment amount, and add a note if you like. Then press Continue. 5. In the pop-up box, select “Sending to a friend.” 6. You may now be prompted to choose a bank account to pay from. Finally, you'll get one final chance to check all the details are correct before you press submit and send your money on its way. How much does it cost to send a PayPal friends and family payment?Within the United States (or within the U.K.), personal payments between friends and family are free via PayPal, as long as you’re paying directly from your PayPal balance or bank account. If you’re paying via debit or credit card, there’s a “small charge” explained here (opens in new tab). International payments between friends and family do, however, have a fee attached. It’s charged to the sender and comes in at 5% of the sent amount, up to a maximum of $4.99. Can you use a PayPal friends and family payment to buy things from strangers?Yes, but you really, really shouldn’t — and not just because it’s against PayPal’s user agreement (opens in new tab). The lack of fee makes it a tempting option for sellers to use instead of ‘goods and services,’ and you may be offered a discount on the agreed amount if you acquiesce. In theory that sounds great. You pay less, and the seller takes more — what’s not to like? Well, scammers can use this approach to take the money and run, knowing that you’ll have no recourse to open a fraud claim with PayPal. If you sign off someone as a friend or family member, PayPal reasons, then you’re vouching for the contact and therefore you’re not entitled to extra protections. ‘Goods and services’ payments are covered by PayPal Purchase Protection (opens in new tab). Friends and family payments are not. While a seller asking you to use ‘friends and family’ may just be trying to save a few bucks (albeit in a slightly underhand way), it simply isn’t worth the risk: consider it a red flag and insist on using the ‘goods and services’ option or find someone else who will. For more information on PayPal, check out our guide to how to set up a PayPal account. Get instant access to breaking news, the hottest reviews, great deals and helpful tips. Freelance contributor Alan has been writing about tech for over a decade, covering phones, drones and everything in between. Previously Deputy Editor of tech site Alphr, his words are found all over the web and in the occasional magazine too. When not weighing up the pros and cons of the latest smartwatch, you'll probably find him tackling his ever-growing games backlog. Or, more likely, playing Spelunky for the millionth time. Can you still send PayPal to friends and family?With this new change, US business accounts won't be able to accept fee-free personal payments, and people who use PayPal for their company will need to create a personal account to receive money fee-free from friends and family.
How do I send money as friends and family?How to transfer money online to friends and family. Use a money-transfer app.. Consider a bank-to-bank transfer.. Set up a wire transfer.. Request your bank send a check.. |
How to send money through family and friends on paypal
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