Be your own boss, live the life you want,
and make money on your terms.

Fill out the form to get access to the Budding Boss Resource Center, a FREE online portal full of hand-picked tools to help you break free financially.

How to Decrease Your PayPal Fees

August 14, 2015

This article may contain affiliate links. Read our Disclosure Policy.

Costly PayPal fees are tough to avoid, especially for freelancers. Here are several ways to decrease how much you pay via @shoeaholicnomore

There are so many good things about getting paid to write for blogs that it’s nearly impossible to name the bad. Seriously, I love working my freelance business that much. (I mean I better since I quit my job to pursue it full-time, right?!) But the one thing about freelancing that I absolutely hate (besides self-employment taxes that I can’t do anything about) is paying PayPal fees.

PayPal fees are so irritating to me. I hate it when I send out my invoices for freelance work I’ve completed only to have a chunk of my income taken away by PayPal. I understand they are a business and they have to make money too, but I still hate paying their fees.

For the longest time, I wondered if there were any legitimate ways to help decrease PayPal fees so I could keep more of my freelance income. After a year of working my business online, I’ve come up with a few strategies to decrease my PayPal fees and now I’m sharing them with you so you can keep more of your money too.

Opt to be Paid Less Often

One way to help lower your PayPal fees is to opt to be paid less often. I have some clients who pay me weekly, some that pay me twice a month, and others that only pay me once a month. There are a lot of benefits of getting paid by your clients more often, like avoiding cash flow problems in your business, but one major downside of getting paid more often is paying higher PayPal fees.

The reason this works is because PayPal not only charges you a percentage of the money you receive, but they also charge you a one-time fee for every transaction. By opting to be paid only once a month you’ll avoid some of these one-time per transaction Paypal fees. You just need to make sure your business can handle the change in cash flow that comes with only getting paid once a month instead of more often.

Change How You Take Your Money Out of PayPal

After you get paid in your PayPal account, how do you take your money out? If you request a paper check from PayPal you’ll be charged another fee. To access your money faster and avoid this fee, you should do one of two things:

  • Request a free PayPal debit card so you can access your money right away. This card has no fee for use at any retailers that take Visa debit cards. You can also use the card at an ATM to withdraw cash – up to $400 each day. Using your card at an ATM does cost $1.50 per transaction.
  • Transfer money from PayPal to your bank account directly. This method of accessing your money has no fee. PayPal says it can take 3-4 business days for your money to show up in your bank account, but mine seems to happen much faster.

Ask to be Paid as a Friend or Family

Instead of sending a PayPal invoice to your clients, send them an invoice via another program not connected to your PayPal account. When your client pays a PayPal invoice you get charged a transaction fee. But if your client opts to send you money via the friends or family option in PayPal instead you won’t be charged a fee for receiving the money.

Use Account Software to Lower Your PayPal Fees

I recently started using FreshBooks for my accounting. I used to do all of my finance tracking manually, but now that I’ve started using Freshbooks, I’ll never go back. Freshbooks has saved me tons of time and stress at the end of the month when I get ready to send invoices to my clients.

Freshbooks costs $9.95 per month, but if you use my affiliate link you’ll get to try it free for 30 days!

I had heard of Freshbooks from several of my freelancer friends in the past, but I finally got up the nerve to try it out when I heard that Freshbooks reduces your PayPal fees to a flat $0.50 charge for every qualifying business payment you receive.

I immediately added up how much I was spending on PayPal fees every month and I realized that if I paid $9.95 for Freshbooks and my PayPal fees were lowered to $0.50 for each transaction I’d end up with $5-10 in my pocket every month than if I kept using my old manual system. FreshBooks is definitely worth a look to lower your PayPal fees.

Factor PayPal Fees Into Your Payment Equation

A tip I’ve picked up that doesn’t really reduce your PayPal fees, but helps you to feel better about them is factoring them into your payment equation.

For example, instead of charging your client $20 for a blog post, you could increase your rate to $22 per blog post. This will help you cover those fees so you are still making $20 after the fees are taken out of your earnings.

Don’t Forget to Include PayPal Fees as an Expense on Your Tax Return

Finally, another tip I learned about PayPal fees is to make sure you don’t forget to include them as an expense on your tax return. This won’t lower the PayPal fees you pay throughout the year, but it will help you lower your tax bill so you can keep more of your money that way instead.

Do you have any other ideas for lowering your PayPal fees?

Costly PayPal fees are tough to avoid, especially for freelancers. Here are several ways to decrease how much you pay via @shoeaholicnomore
The following two tabs change content below.

Kayla

Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.

Like this post?

This is just a taste - fill out this form to get access to the Budding Boss Resource Center. It's a FREE online portal full of hand-picked tools to help you break free financially.

18 responses to “How to Decrease Your PayPal Fees

  1. Great strategies! I have clients who pay me all different times of the month as well and I’d rather just be paid monthly for the sake of simplicity and lower fees. I’ve heard so many good things about FreshBooks I don’t know why I haven’t jumped on the opportunity yet. It’s something I’ll need to do real soon.

    1. I agree Chonce! I do like being paid multiple times throughout the month for cash flow reasons (so I can pay my bills, haha) but it does make the PayPal fees higher.

  2. I juuuust started using Hiveage for my invoicing. Now I might just change to FreshBooks. Time to do some quick math.

    Of course, the biggest problem are international clients. How do you usually accept payment? Just grit your teeth and use PayPal?

    1. This is the one I’ve been waiting for! Will have to check out Freshbooks. And I do have a decent number international clients, Will. I haven’t figured out a better way than pay pal. If you do, PLEASE tell me!

      1. Interesting that you guys have quite a few intl clients. I don’t, so I haven’t investigated how to lower intl payments fees. I’d be interested to hear if you guys figure it out though.

  3. I definitely agree about trying to be paid less frequently (if your budget can handle it) and factoring those fees into your rates. Corporations and companies certainly account for all the fees they must pay and include that in their pricing; entrepreneurs and writers should do the same. Great points!

  4. I think doing the math between paying for Freshbooks or paying PayPal fees is a great idea. I’d been meaning to do the math myself, but your free 30 days affiliate link is the push I need to do it! Also, I had no idea you could take out PayPal fees on your taxes. Awesome!

  5. This is a great tip sheet, especially the one about factoring the fees into your pricing. This will remind me to move it to the front of the process.

  6. Thank you so much for writing this!! I recently quit my job to become a freelance makeup artist & PayPal fees are hitting me hard!

Leave a Reply

Your email address will not be published. Required fields are marked *