As a leading global online payment system, PayPal provides a robust feature known as Goods and Services, designed to facilitate secure transactions between buyers and sellers. This service is distinct from sending money to friends and family and is specifically tailored for commercial exchanges.
Before diving deeper, it’s important to understand what constitutes goods and services in this context:
- Goods: These are tangible items you purchase, such as electronics, clothing, or household products.
- Services: This refers to intangible offerings, like freelance work, consulting, or digital services.
This article will explore the functionalities of Paypal Goods And Services, detailing its benefits for both buyers and sellers, and introduce Wise Business as a cost-effective alternative for international transactions.
Understanding PayPal Goods and Services
PayPal Goods and Services is designed to protect both buyers and sellers in online transactions. When a buyer pays for goods or services through PayPal using this feature, the transaction becomes eligible for PayPal Purchase Protection. This protection offers buyers recourse if they don’t receive the item they purchased or if it significantly differs from its description. For sellers, it provides a structured and secure way to accept payments for their offerings.
How PayPal Goods and Services Works for Buyers
Typically, when you make a purchase on a website and proceed through the checkout using PayPal, the payment is automatically categorized as Goods and Services. This ensures that your purchase is covered under PayPal Purchase Protection from the outset.
In situations where you’re directly sending money to someone for a purchase, you have the option to designate the payment as “Goods and Services.” This is crucial as it activates the Purchase Protection, safeguarding your transaction. While you, as the buyer, can choose to pay the associated fee, it’s also possible to arrange for the seller to cover it.
How PayPal Goods and Services Works for Sellers
Sellers, including freelancers and businesses of all sizes, can utilize their PayPal accounts to receive payments for goods and services. Upon receiving funds, sellers can maintain the balance within their PayPal account or transfer it to their linked bank account, debit card, or credit card.
For individuals who frequently sell goods and services, especially businesses, upgrading to a PayPal Business account is advisable. A business account offers additional features and tools tailored for commercial activities, such as business reporting and multi-user access. You can easily start with a personal account and later convert it to a business account as your selling activities grow.
Step-by-Step Guide: Paying with PayPal Goods and Services (Buyer)
Paying for goods and services using PayPal is a straightforward process:
- Access the PayPal Website: Go to the PayPal website and log in to your account.
- Navigate to ‘Send & Request’: Click on the ‘Send & Request’ tab located at the top of the page.
- Select ‘Pay for Goods or Services’: Click on the ‘Pay for Goods or Services’ option.
- Enter Recipient’s Email: Input the email address of the seller in the designated field and click ‘Next’.
- Specify Amount and Add a Note (Optional): Enter the payment amount and include any relevant notes in the provided text box.
- Confirm Payment: Review the transaction details and confirm to send the payment. Follow any additional prompts to complete the process.
Step-by-Step Guide: Requesting Money with PayPal Goods and Services (Seller)
If you are selling goods or services, you can easily request payment from your customers using PayPal:
- Log in to PayPal: Go to the PayPal website and log in to your seller account.
- Go to ‘Send & Request’: Click on the ‘Send & Request’ tab at the top of the page.
- Choose ‘Request from anyone’: Under the ‘Request payments’ section, click on ‘Request from anyone’.
- Enter Buyer’s Email: Enter the email address of the buyer from whom you are requesting payment and click ‘Next’.
- Input Amount and Add a Note (Optional): Enter the amount you are requesting and add any necessary notes in the text area.
- Request Payment: Click the ‘Request Payment’ button to send your request.
Understanding PayPal Goods and Services Fees
It’s important to be aware of the fees associated with PayPal Goods and Services, particularly for sellers. PayPal classifies these transactions as commercial and applies fees accordingly. The fee structure varies based on whether you are a domestic or international seller.
PayPal Goods and Services Fees for International Sellers
For international sales, PayPal charges a fee of 2.99% plus a currency conversion spread, based on the currency involved in the transaction.¹ These fees can accumulate quickly for international sellers receiving frequent payments from overseas.
Consider this comparison between PayPal and Wise Business when receiving £1,000 from the UK to your US account for goods or services:
| Comparison | PayPal | Wise Business |
|---|---|---|
| Total Sent | £1,000 | £1,000 |
| You Receive | $1,175.49 | $1,265.80 |
Fees as of August 15, 2023. Pay-in funded via customer’s bank account.
As illustrated, using Wise Business could result in receiving significantly more – almost $90 in this example. Wise Business offers transparent pricing, utilizing the mid-market exchange rate and applying only a minimal fee. Setting up a Wise Business account is a quick and simple process.
PayPal Goods and Services Fees for Domestic Sellers
For domestic transactions within the same country, PayPal also applies fees to Goods and Services payments as they are considered commercial transactions. The fees differ slightly based on whether the payment is processed online or in-store:
- Online Payments: 2.59% + a fixed fee based on the currency.¹
- In-Store Payments: 2.7% + a fixed fee based on the currency.¹
Benefits of Using PayPal Goods and Services
PayPal Goods and Services offers several key advantages for both buyers and sellers:
- PayPal Purchase Protection: Buyers benefit from PayPal’s Purchase Protection, which provides a safety net against non-delivery or significantly misrepresented goods.
- Seller Protection: While sellers incur fees, they gain legitimacy and security by using a trusted payment platform. PayPal also offers seller protection in certain eligible cases, safeguarding against chargebacks and disputes.
- Secure and Trusted Platform: PayPal is a globally recognized and trusted payment processor, providing both parties with confidence in the security and reliability of transactions.
- Dispute Resolution: In case of disagreements, PayPal offers a dispute resolution process to mediate and resolve issues between buyers and sellers.
Wise Business: A Cost-Effective Alternative for International Sellers
For international sellers seeking to minimize fees and maximize their earnings, Wise Business presents a compelling alternative to PayPal Goods and Services, especially when receiving international payments. Wise Business offers:
- Lower International Transaction Fees: Receive international payments with significantly reduced recipient and conversion fees compared to traditional systems.
- Multi-Currency Accounts: Hold and manage funds in multiple currencies, enabling you to transact in the currencies your customers prefer.
- Integration with Platforms: Seamlessly link your Wise Business account to various online marketplaces and e-commerce platforms, facilitating international sales.
- Local Bank Details Globally: Obtain local bank details, including IBANs, routing numbers, and sort codes, within a single account, simplifying international transactions.
Conclusion
PayPal Goods and Services is a valuable tool for facilitating secure online transactions, offering essential protections for both buyers and sellers. While it provides numerous benefits, particularly Purchase Protection and ease of use, the associated fees, especially for international sellers, can be a significant consideration.
For businesses and individuals engaged in international sales, Wise Business emerges as a competitive alternative, offering lower fees and enhanced features for managing international payments efficiently.
Consider exploring Wise Business to optimize your international transactions and reduce costs.
Sources: All sources checked on August 8, 2023
Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
