What's the best way to handle PayPal?

[Dr. David Kirkby (Kirkby Microwave Ltd)]

On 3 December 2016 at 16:35, John Morris <johnjeff at editide.us> wrote:
> As others have noted, I also use a separate account in GnuCash for my PayPal selling account. I don't use a separate account in GnuCash for my PayPal buying accounts because those accounts never hold a balance for long enough for it to be worthwhile. Those "accounts" are essentially electronic wallets rather than bank accounts.

>   That said, I will mention that I strongly encourage anyone who uses PayPal for both buying and selling to keep the two functions completely separate. I still don't trust PayPal that much.

Few do!

My worst ever nightmare was buying a portable vector network analyzer
for about $17,000 from the test equipment division of Agilent via
eBay.  There were all sort of firmware issues with this, and then a
hardware fault. I'd lost all confidence in the unit.  Agilent agreed
to take the item back for a "full"  refund. The problem was that by
the time this was all sorted out, it was outside the period that
PayPal accepted refunds (it was 90 days, but I think its now 180
days).

Anyway, Agilent wanted to refund me the $17,000, but as I did not have
a USD bank account, Agilent agreed to refund in GBP. Although there
had been very little change in the USD vs GBP over this period, the
currency conversion commission charges meant Agilent were going to
refund me about £452 less than I had paid to PayPal when purchasing
it. I was not happy!

I contacted our "Citizens Advice Bureau" who advised me that since I
bought the item in USD, and knew the transaction was in USD, if
Agilent refunded me the same number of USD, that's all they had to do.

In the end Agilent made a good will guesture of £500, so I actually
made about £48 out of the transaction! But PayPal refused to refund
the transaction, so had it not been for this goodwill gesture of
Agilent, I would have been seriously out of pocket.

(BTW, the test equipment division of Agilent is now called Keysight.)

> There have been times when PayPal froze my selling proceeds because I had reversed a previous and unrelated sale where the seller did not complete the transaction properly and PayPal was unwilling to give me satisfaction. This is also the reason I never use a debit card through PayPal. I much prefer to know that my credit card issuer will stand behind me in the event a purchase goes sour.

I know some that did this, but both accounts got frozen. This was a
case of fraud - both parties accusing the other of fraud, rather than
just a difference of opinion.

>   I do have one more question for Dr. Kirkby. Out of curiosity, does PayPal really charge 5% in the UK, or are you just using round figures for this example? We use PayPal extensively here in the US for our business because we like the accounting process, but we consider the fees to be high at 2.5%. Even with the monthly cost of the virtual terminal, our total cost barely tops 3%.
>
> Best,
> John

5% was a round number, but it is certainly higher than what you
describe. PayPal charge more for international transactions, which
most of mine are. Some recent examples

>From the UK:
1) Received £335.00 from the UK - fees were £11.59, which is 3.46%

>From outside the UK:
2) Received £35.00 from the USA - fees were £1.74, which is 4.97%.
3) Received £295 from the USA - fees were £13.18, which is 4.45%
4) Received £740.00 from the USA - fees were £32.76, which is 4.43%

Note that #1 (£335) and #3 (£295) are fairly similar amounts, but the
fees for the latter are a significantly higher percentage, as the
buyer was outside the UK.

So to one decimal place, I reckon fees are typically 4.5%, but to
round to the nearest integer, its 5%.

Where I think I can gain a bit, is if I start selling more in USD,
then get paid in USD. Then I keep those dollars there to pay for items
from anyone that wants paying in USD. It will save a fair bit on
currency conversions.

Dr. David Kirkby Ph.D CEng MIET
Kirkby Microwave Ltd
Registered office: Stokes Hall Lodge, Burnham Rd, Althorne, Essex, CM3 6DT, UK.
Registered in England and Wales, company number 08914892.
http://www.kirkbymicrowave.co.uk/
Tel: 07910 441670 / +44 7910 441670 (0900 to 2100 GMT only please)