PayPal closes off popular loophole in business payments system
PayPal business users will now have to pay transaction fees on all their transfers, regardless of whether they are sending payments to friends and family.
All PayPal payments are currently classified into either “Goods & Services” or “Friends & Family”, with the latter not being subject to fees
However, the party is over for businesses using this loophole to bypass fees; from July 28 only personal PayPal accounts will be able to receive free “Friends & Family” payments.
Future of PayPal
The announcement comes as PayPal is set to “simplify” its Goods & Services seller fee to 2.99%, with no fixed fee, for US customers. PayPal’s current Goods & Services fee is set at 2.89%, plus $0.49.
This latest decision also means business PayPal users, using it for its merchant services, will need to set up a separate account if they want to receive friends and family payments.
PayPal’s stock has taken a hit as of late, falling even harder than the average tech stock in 2022. The company has lost arounds two-thirds of its value over the past year since peaking in July 2021, despite still offering one the most popular payment gateways worldwide.
However, PayPal is refining its offering as it tries to grab a piece of the growing BNPL market and other emerging sectors.
The payments giant recently announced it is expanding its service with a new Pay Monthly plan, which will allow US-based customers to spread repayments over periods as long as 24 months.
The service is available for purchases valued at anywhere between $199 and $10,000, with interest rates ranging from 0% to 29.99% APR depending on the length of the payment plan.
PayPal is also expanding into the cryptocurrency space, adding features that support the exchange of cryptocurrencies between users, effectively turning the platform into a fully-featured crypto wallet.
- No fan of PayPal? Checkout out guide to the best mobile payments apps
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