Entrepreneurship & Small Business

How to reduce PayPal fees?

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Aug 2, 2010
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ak1004 wrote: Just found this - https://medium.com/swlh/how-to-avoid-pa ... 456277d9fe

Would it work? Does PayPal allow to add Transferwise as a bank account? Looks like a very cheap and convenient solution.
Funny you are still on here given you keep saying RFD is useless. LFMAO

FYI, insane to pay Transferwise fees to convert currency when you can get the bank spot rate and save that fee using my method. However, you like spoon-fed more expensive solutions so that should suit you well!
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Mar 13, 2009
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Maple
eonibm wrote: Funny you are still on here given you keep saying RFD is useless. LFMAO

FYI, insane to pay Transferwise fees to convert currency when you can get the bank spot rate and save that fee using my method. However, you like spoon-fed more expensive solutions so that should suit you well!
Transferwise fee is less than 0.5%. Definitely better than paying 2.8% to PayPal.

Regarding your method - I spoke to my accountant, and he did not recommend opening US bank account. Some of his clients did it, it worked fine for some time, but at some point they became targets for IRS. IRS now targets people who get income in US banks to pay taxes in the US.

So yes, I prefer paying 0.5% to Transferwise than taking that risk.
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ak1004 wrote: Transferwise fee is less than 0.5%. Definitely better than paying 2.8% to PayPal.

Regarding your method - I spoke to my accountant, and he did not recommend opening US bank account. Some of his clients did it, it worked fine for some time, but at some point they became targets for IRS. IRS now targets people who get income in US banks to pay taxes in the US.

So yes, I prefer paying 0.5% to Transferwise than taking that risk.
Your 'accountant' has no clue at all what they are talking about. Only a $5/hr bookkeeper would come up with that response. There are no taxes to pay. I and many of my associates who also have US bank accounts for business for many years have never been targeted by the IRS. Also, your 'accountant' is woefully unaware that you have to have nexus in the US for that to happen and many companies that simply accept US dollars do not have nexus. Furthermore, the test is not what currency you get paid in to have nexus and therefore be required to file a US tax return but whether you meet the tests for nexus. So even if you accept payments in CAD you could have nexus. Finally, your accountant is pathetically unaware that because of the US-Canada tax treaty all you need to is file the return. There are no taxes to pay.

So, um, 0.5% of just even $1M in sales is $5,000 USD. I do multiples of that in business every year. Better in my pocket that someone else's. This is RFD in case you didn't notice.

Sheesh! So much misinformation on here it boggles the mind. You need to stop spreading it or educate yourself before you chirp.
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Mar 13, 2009
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Maple
eonibm wrote: Your 'accountant' has no clue at all what they are talking about. Only a $5/hr bookkeeper would come up with that response. There are no taxes to pay. I and many of my associates who also have US bank accounts for business for many years have never been targeted by the IRS. Also, your 'accountant' is woefully unaware that you have to have nexus in the US for that to happen and many companies that simply accept US dollars do not have nexus. Furthermore, the test is not what currency you get paid in to have nexus and therefore be required to file a US tax return but whether you meet the tests for nexus. So even if you accept payments in CAD you could have nexus. Finally, your accountant is pathetically unaware that because of the US-Canada tax treaty all you need to is file the return. There are no taxes to pay.

So, um, 0.5% of just even $1M in sales is $5,000 USD. I do multiples of that in business every year. Better in my pocket that someone else's. This is RFD in case you didn't notice.

Sheesh! So much misinformation on here it boggles the mind. You need to stop spreading it or educate yourself before you chirp.
Trust me, my accountant already forgot what you don't know.

This is a real experience from real clients. What worked great till couple years ago might not work anymore. You might do okay - till you don't. And when you become a person of interest for IRS, it will cost you much more than $5,000. Even if at the end you just file the tax return in the US and pay no tax, all the hassle, the wasted time and the audits are not worth the risk.

And no, the test is not the currency you are paid by. The test is getting paid into US bank account.
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Sep 22, 2005
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BC
Switch to Stripe. Receiving US funds and get the funds deposited to US dollar account in Canada.
ak1004 wrote: Hello everyone.

I'm running an online business and using PayPal for payments. Few years ago they had 2.2% fee for merchants, no matter where the sale is coming from. Then in 2017 they increased the fee to 2.9% and added 0.8% cross border fee for US transactions and 1.0% for international transactions. I'm getting a slight discount and paying 2.6%, but since most of my sales come from US and Europe, my average fee is around 3.4%.

In addition, each time I withdraw money to my bank account, I'm paying around 2.8% Currency Conversion Fee (despite the fact that the official fee is 2.5% and they mention discounts on their website).

That comes to total of over 6% of my sales.

Is there any way to negotiate and lower those fees?

P.S. re posting here as advised by one of the members.
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Mar 13, 2009
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Maple
iceage wrote: Switch to Stripe. Receiving US funds and get the funds deposited to US dollar account in Canada.
Thank you. I'm actually in contact with them right now, but I was less than impressed with their customer service so far. Took them 5 days to reply to my initial request, and now i'm already waiting another 4 days for more information.

Plus i'm not sure how realistic it is to switch few hundreds customers from PayPal to stripe.
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ak1004 wrote: Trust me, my accountant already forgot what you don't know.

This is a real experience from real clients. What worked great till couple years ago might not work anymore. You might do okay - till you don't. And when you become a person of interest for IRS, it will cost you much more than $5,000. Even if at the end you just file the tax return in the US and pay no tax, all the hassle, the wasted time and the audits are not worth the risk.

And no, the test is not the currency you are paid by. The test is getting paid into US bank account.
If you do not have nexus there are no audits and no hassle. That shows how little your book-keeper knows. Whether or not you become a 'person of interest' has no bearing on your US taxes because the test is not if they 'heard of you'. The fact your book-keeper told you what they did already shows they don't have a clue. I have forgotten more than both you and your book-keeper know about US tax law for Canadian businesses.

The test is whether you have nexus, not which bank account your money goes into. You can have nexus with your proceeds all being deposited into a Canadian bank so the test is not which bank account the money flows into but if your activity in the US is sufficient to give you nexus. The fact that you actually think that merely having only a Canadian bank account shields you from US taxes regardless of your activities in the US shows how little you know. Even a simple google search will prove that to you. If it was so easy to avoid US taxes by just having your proceeds flow into a Canadian bank account then all companies would be doing that. Did you learn that from your book-keeper too? Sheesh!

Again, stop spreading such blatant kindergarten misinformation. You are not doing anyone any favours by parroting what your clueless book-keeper whispered to you. You have proven you are the LAST person anyone should trust on with respect to these issues.
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Mar 13, 2009
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Maple
eonibm wrote: If you do not have nexus there are no audits and no hassle. That shows how little your book-keeper knows. Whether or not you become a 'person of interest' has no bearing on your US taxes because the test is not if they 'heard of you'. The fact your book-keeper told you what they did already shows they don't have a clue. I have forgotten more than both you and your book-keeper know about US tax law for Canadian businesses.

The test is whether you have nexus, not which bank account your money goes into. You can have nexus with your proceeds all being deposited into a Canadian bank so the test is not which bank account the money flows into but if your activity in the US is sufficient to give you nexus. The fact that you actually think that merely having only a Canadian bank account shields you from US taxes regardless of your activities in the US shows how little you know. Even a simple google search will prove that to you. If it was so easy to avoid US taxes by just having your proceeds flow into a Canadian bank account then all companies would be doing that. Did you learn that from your book-keeper too? Sheesh!

Again, stop spreading such blatant kindergarten misinformation. You are not doing anyone any favours by parroting what your clueless book-keeper whispered to you. You have proven you are the LAST person anyone should trust on with respect to these issues.
Your "theories" is just that - theories. IRS doesn't care about your theories. I'm talking about real people who did what you do for years - until things started to change about 2 years ago. So next time someone follows your advice and gets audited by IRS, trust me, they are not going to thank you.

I noticed you already had similar discussions with other people. I also noticed that you have very little respect for your opponents. When someone disagrees with you, you start insulting them and trying to make them look small. The problem is that the only person who looks small is you. You believe you are smarter than others, and your arrogance clearly shows in almost every post.

A little secret: you can disagree with people without insulting them.

I also noticed that you posted over 13,000 posts on RFD. You basically live here. I'm just wondering how you find time for all your businesses. But then again, when someone constantly brags on public forums how he makes millions, makes you wonder.. Truly successful people are modest and humble. They don't need all that bragging.
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Feb 3, 2011
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eonibm wrote: I process very sizeable US revenue and use a US payment processor both to avoid the cross-border fee and the currency conversion fee by having the funds deposited into the US side of my BMO Harris US bank account then I just write a cheque, deposit the funds into my BMO Canada Investorline account and use Norbert's Gambit to convert the USD to CAD at the bank spot rate. That saves me the 2.8% currency conversion fee + 0.8% cross border fee, 3.6% total, that you are paying. My US payment processor, Elavon, costs me an average of about 2.5%.

Depending on your US revenue that 3.6% for you might be a lot of coin.
Thanks for pointing me to BMO Harris. I don't process as many payments as you so I've just been eating the PayPal fees. I've had to do this ever since they removed the ability to keep my RBC US account tied to the PayPal account. I really hate PayPal...
Baaaaaaaaa!
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ak1004 wrote: Your "theories" is just that - theories. IRS doesn't care about your theories. I'm talking about real people who did what you do for years - until things started to change about 2 years ago. So next time someone follows your advice and gets audited by IRS, trust me, they are not going to thank you.

I noticed you already had similar discussions with other people. I also noticed that you have very little respect for your opponents. When someone disagrees with you, you start insulting them and trying to make them look small. The problem is that the only person who looks small is you. You believe you are smarter than others, and your arrogance clearly shows in almost every post.

A little secret: you can disagree with people without insulting them.

I also noticed that you posted over 13,000 posts on RFD. You basically live here. I'm just wondering how you find time for all your businesses. But then again, when someone constantly brags on public forums how he makes millions, makes you wonder.. Truly successful people are modest and humble. They don't need all that bragging.
I run a number of businesses selling into the US and from the US so they are hardly theories. Nice try. I realize your feelings are hurt because you have been proven so wrong about this topic (easily proven by a simple google search). Time to take the chip off your shoulder and man up to your ignorance of the basics of doing business in and to the US. I also strongly suggest you change bookkeepers immediately before it costs you every more money. Also, be thankful of the fact there are people who 'live' in RFD all day long every day with no life to speak of (obviously my situation) so that people like you don't lead others astray. :rolleyes:
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sharpshooter88 wrote: Thanks for pointing me to BMO Harris. I don't process as many payments as you so I've just been eating the PayPal fees. I've had to do this ever since they removed the ability to keep my RBC US account tied to the PayPal account. I really hate PayPal...
You are welcome. BMO Harris has worked great for me and I have saved a fortune in fees for years now by having my credit card processor payments deposited in USD there and then transferred by cheque to BMO Canada (Investorline) for free and then Norbert Gambited into CAD. BMO Harris will require you to provide them with a W8-BEN-E form (available on the IRS website) in order to open an account, as well as some other documents. An IRS investigation can be triggered regardless of whether you have US bank account or not and then only if you have nexus in the US will you have to file a US tax return. It has nothing to do with where and in what country or what currency your revenue is deposited but rather the extent of your activity in the US. A clueless RFD member parroting their clueless bookeeper on here would have you believe otherwise even in the face of so many savvy RFD'ers reporting they've been using BMO Harris to save on fees for years as have I. Of course it's up to you if you want to pay more by having only a Canadian bank account.
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Mar 13, 2009
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Maple
eonibm wrote: I run a number of businesses selling into the US and from the US so they are hardly theories. Nice try. I realize your feelings are hurt because you have been proven so wrong about this topic (easily proven by a simple google search). Time to take the chip off your shoulder and man up to your ignorance of the basics of doing business in and to the US. I also strongly suggest you change bookkeepers immediately before it costs you every more money. Also, be thankful of the fact there are people who 'live' in RFD all day long every day with no life to speak of (obviously my situation) so that people like you don't lead others astray. :rolleyes:
You just proved my point with your arrogant and condescending response..

If something didn't happen so far, it doesn't mean it cannot happen. The only one who is spreading misleading information is you.

P.S. If you make millions every year like you claim you are, you would have no problem to have PayPal to reduce your fees significantly and make them competitive with your US provider. I had my fees reduced already by PayPal based on my volume, and I don't make nearly as much as you claim you make.

Sorry, I'm done with you. I have no intention to have a discussion with someone who doesn't have a basic respect to their opponents.
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ak1004 wrote: You just proved my point with your arrogant and condescending response..

If something didn't happen so far, it doesn't mean it cannot happen. The only one who is spreading misleading information is you.

P.S. If you make millions every year like you claim you are, you would have no problem to have PayPal to reduce your fees significantly and make them competitive with your US provider. I had my fees reduced already by PayPal based on my volume, and I don't make nearly as much as you claim you make.

Sorry, I'm done with you. I have no intention to have a discussion with someone who doesn't have a basic respect to their opponents.
You being wrong and me pointing it out to help others so they are not be led astray by you = me arrogant and condescending. Only snowflakes react that way. I get it and so be it. I would rather you think that than you costing others a lot of money with continual misinformation you heard whispered from your bookkeeper.

Btw I have never written in any post that I 'make millions'. Stop making things up or quote where I did. How much I make is no one's biz.
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Mar 13, 2009
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Maple
eonibm wrote: So, um, 0.5% of just even $1M in sales is $5,000 USD. I do multiples of that in business every year.
Direct quote from you, from just few posts ago.
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ak1004 wrote: Direct quote from you, from just few posts ago.
Here's a tiny lesson in basic kindergarten accounting for you my dear: The money you 'make' is a percentage of your revenue not the revenue itself. Hopefully your bookkeeper didn't lead you astray yet again like they did making up stories about the IRS banging down your door to do an audit just because you have a US bank account and led you to believe that your revenue is actually your profit.
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Mar 13, 2009
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Maple
I guess you won't let the facts to confuse you..
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Maple
I'm pleased to report that TransferWise method is working well. I was able to add TransferWise account to my PayPal account (make sure to indicate US as a country, select savings account and indicate the ACH routing number). The account was linked within one day, then I sent the USD funds from PayPal, they arrived within one business day, and the funds sent from TransferWise to my Canadian bank account arrived within 12 hours (same day). The rate was the real rate, and the fee around 0.4%.

Very pleased with TransferWise customer service so far, and the whole process is very clear and transparent.
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0.4% on every transfer sure is a hefty fee. You can do it for basically for free following my method as do countless people as it's a no brainer.

As for the 'real rate' I had to chuckle. That's not even a valid term regarding currency rates. Whose 'real rate', lol...
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Mar 13, 2009
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Maple
eonibm wrote: 0.4% on every transfer sure is a hefty fee. You can do it for basically for free following my method as do countless people as it's a no brainer.

As for the 'real rate' I had to chuckle. That's not even a valid term regarding currency rates. Whose 'real rate', lol...
You know exactly what I mean by real rate (it is a mid-market rate, and I compared it it real time with the rate displayed in my IB account, it was the same up to 4 digits).

As for your method - sure, it involves norbert gambit? If you believe you don't lose money with norbert gambit, you are mistaken. You lose on: 1) bid/ask on the shares 2) broker commissions 3) potential rate change within the 3 days your shares are settled. Depending on the amount, it could be actually more than 0.4%. Not to mention the time and the hassle, and the potential risk of dealing with US bank account.
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ak1004 wrote: You know exactly what I mean by real rate (it is a mid-market rate, and I compared it it real time with the rate displayed in my IB account, it was the same up to 4 digits).

As for your method - sure, it involves norbert gambit? If you believe you don't lose money with norbert gambit, you are mistaken. You lose on: 1) bid/ask on the shares 2) broker commissions 3) potential rate change within the 3 days your shares are settled. Depending on the amount, it could be actually more than 0.4%. Not to mention the time and the hassle, and the potential risk of dealing with US bank account.
There's the Bank of Canada rate, the rates the banks use, the rates IB uses, etc. There is no rate known as the 'real rate'. If anything the Bank of Canada rate is the rate to measure against and that fluctuates all day long. Different financial institutions can post different rates at exactly the same time. Just because IB matches who you are using means absolutely nothing and does not qualify it as the 'real rate', to use the term you pulled out of the air.

Regarding converting funds again you are woefully uninformed again, this time about Norbert's Gambit. Let me, yet again, educate you.

1) The buy and sell happen instantaneously as you make the trades right after one another so there is no rate change 3 days later. Where in the world do you get that? Sheesh!

2) As for the bid/ask again you are way off base. Anyone who knows is familiar with NG uses Royal Bank (RY) or Toronto Dominion (TD) shares. RY trades at around $107 CAD on the TSX and about $77 USD on the NYSE right now. I've never even seen a 1 cent change in the 1 or 2 seconds between my buy and sell. So, let's see even a 1 cent decline = $0.01/$77= 0.012%, which is almost nothing and far less than your 0.4% fee. In fact, sometimes I have seen the stock price move a fraction of a cent to my favour, resulting in me making money on the trade.

3) Broker commission is $9.99 per trade so less than $20 total. That dwarfs your 0.4% unless you are converting incredibly small amounts each time, which would make zero sense.

So, you are the one mistaken and the loser financially by handing over 0.4% with every conversion as I have proven.

I've had zero hassle dealing with a US bank account as many RFD members know. In fact it's been way easier than dealing with a Canadian one. I deposit the rare printed cheque I get using the BMO Harris iPhone app, transfer USD for free to BMO Canada, do wire transfers over the phone in minutes instead of having to show up anywhere in person, pay US suppliers via ACH for free, not to mention the BMO Harris account does not cost me a dime. And to pre-empt your fear-mongering, there is no IRS coming after you if you file the required IRS W8-BEN-E form with BMO Harris (which you have to do to open the account).

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