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The Sad Truth Behind PayPal Fees

            Working as a freelance writer is great. Flexible hours, interesting work, zero politics, and no commute time are just some of the perks. However, one thing I have a beef with cross-border clients is their insistence on using PayPal. What’s wrong with that, you may ask. I’ll tell you.

Should You Use PayPal for Cross-border Payments?

The status quo of getting paid as a freelancer
            When I first started out as a freelancer, I had to open a PayPal account because that was how my foreign clients paid for my work. This was around 2002, so there weren’t any other online payment platforms available.
            At that time, PayPal didn’t even have a site for the Philippines, so I had to open one in Singapore. Today, of course, there are many more payment platforms, and they accept many currencies, including cryptocurrencies. However, my clients still insist on using PayPal, so I have a very little choice.
Reality check
            At first, I didn’t really mind as I wasn’t really making much money. I would make a withdrawal about once every three months or so, which is pathetic, I know. Those are the breaks with freelancing.
            However, as my client base grew, I started to notice that I was getting less in my bank than I should. I checked the PayPal fee table, and I realized I was getting it coming and going.
The fees charged by PayPal
            First, as I typically receive payment in U.S. dollars even from my non-U.S. clients, I pay a whopping 4.4% plus $0.30 on all payments I receive. This means that for every $100 I receive; I pay $4.70 to PayPal just for receiving a payment.
            PayPal considers me a merchant, which is fair enough, I guess, but I thought the 4.4% was a bit much. However, it gets worse.
            You associate a local bank account with PayPal so you can withdraw your money. However, PayPal automatically converts what you withdraw to local currency before depositing it into your account.
            That sounds reasonable enough until you compute the difference between the current exchange rate and the PayPal one. After a bit of math, I concluded that PayPal charges around 2.7% as a conversion fee. Add the merchant fees above, this means I give PayPal a total of $7.40 for every $100 I make. It is sad but true.
            PayPal is a giant in third-party payment processing, and they made it on the backs of millions of freelancers like me. I understand that PayPal has to make money as well, but I question if 7.4% is reasonable. I am hoping that cross-border clients will move to alternative payment platforms in the future that will not take such a large bite out of the payments they process.

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