PayPal send as gift option

[Bob Vavricka]

I recently agreed to buy an item and in the follow up communication, the seller wanted me to send the money as a gift through PayPal. I declined to do it because I didn't think I would have any recourse if I didn't get the item or it was not as advertised. The seller agreed to still sell it at the agreed price as a purchase rather than a gift. It also seems a little dishonest to do this, or is that just my thinking. I also saw where a seller indicated that the buyer would need to add 3% to the price of the item if the payment was not sent as a gift. In that case the seller was upfront with the request, but I would still be reluctant to do it. What are your thoughts on this?

[David Weaver]

I don't send money as gifts unless it's a gift. You don't get buyer protection.

If a seller doesn't want to pay paypal fees, they should have you send a postal money order, my opinion.

As a sometimes seller of things, I am glad to take the fees to get the coverage and the record in the paypal system of the address of the buyer.

I personally can't get into someone saying they need to extract 3% from you if you use paypal. if someone does that on small retail sales, I just don't buy from them. It's nickel and diming.

I understand on large commercial items with thin margins, that is more material, but it's often something that shows up on $100 items sold from person to person, and it's ridiculous in my opinion.

[Dan Hintz]

I'm with David...

EDIT: Also nearly got burned. Guy wanted it sent as a gift, but I declined and added in a few dollars to cover the extra cost. Sure enough, excuse after excuse, and the item never did get shipped. PP gave me my money back, but I wonder how many other folks he cheated.

[Matt Day]

I'll send money as a gift to reputable members of forums, like this one.
I can understand not wanting to give up 3% to PayPal.
Ebay and non-established members, not a chance.

[Shawn Pachlhofer]

when I list items for sale on forums, I state in the terms of the sale that payment by paypal is accepted. on small items I usually include the "cost" of paypal fees into the item, though sometimes I surcharge for paypal (especially on large sales) - but I state that up front in the ad.

[Kevin Bourque]

Ebay has a notice somewhere on their site warning buyers about this "gift" scam.

[Bruce Page]

When you signed up for PayPal, you agreed to their terms, a portion of which state:

3.4 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services, as long as the handling fee is not higher than the handling fee you charge for non-PayPal transactions.

3.5 Receiving Personal Payments. If you are selling goods or services, you may not ask the buyer to send you a Personal Payment for the purchase.

[Moses Yoder]

This will get a little lengthy. I just signed up for PayPal this year to trade on the web and love it. I found that some people will send as a gift without asking. This eliminates the ability to ship with the PayPal shipping system . If they "pay for goods" on smaller items under 13 oz. you can do a first class package that is considerably less than priority mail, and you can print the label using PayPal. If you print online shipping for USPS you are limited to priority mail unless you use the PayPal shipping button. Another issue is that my hobby funds are very limited; often times I do not have $10 available to ship something cash, and transferring money from PayPal to a bank takes 3 days. All of this is besides the honesty issue. I save almost as much on shipping when I use PayPal shipping as the PayPal fee; the shipping cost is normally about a dollar less, and on a $30 item Paypal charges about $1.20 I think.

One thing, I mentioned to someone about paying as a gift and they replied that "Well, you sent me a request for money". I guess if you request money instead of sending an invoice some people might assume you want the money sent as a gift.

[Grant Wilkinson]

I've bought and sold using Paypal and can see why sellers want the buyer to say that he is sending the money as a gift.

If the money is sent as a gift, the BUYER pays a fee to Paypal. If the money is sent for goods or services the SELLER pays the fees to paypal.

I just input an example into paypal to make sure that I am correct. If I want to send $100US as a gift, I have to pay $3.20 US to Paypal. If I want to send that same $100 to pay for goods or services, I pay nothing. Paypal states that that seller will pay their fees. So, it's easy to see why some sellers want the buyer to say the payment is a gift.

[Matt Meiser]

That's only partially true. If you use a credit card, sender pays fees. If you use funds on hand or a bank account, no one pays fees.

[David Weaver]

That's only partially true. If you use a credit card, sender pays fees. If you use funds on hand or a bank account, no one pays fees.

Ditto that. The big issue is that you save the seller a little over 3% and give up all of your rights to any kind of recourse with whatever the purchased item is.

I didn't know that the paypal TOS required sellers to offer the item at the same price as paypal, I think that's an overreach on their part, but I already avoid those people, anyway.

[Dan Hintz]

I didn't know that the paypal TOS required sellers to offer the item at the same price as paypal, I think that's an overreach on their part, but I already avoid those people, anyway.

The TOS on all credit cards is sellers are not allowed to add a surcharge for use of a credit card. Very few stores worry about it, but the ones that do state there is a discount for using cash. So prices shown are for credit customers, but cash custoemrs pay less.

[Brian Elfert]

The TOS on all credit cards is sellers are not allowed to add a surcharge for use of a credit card. Very few stores worry about it, but the ones that do state there is a discount for using cash. So prices shown are for credit customers, but cash custoemrs pay less.

Merchants are no longer prohibited from charging a surcharge to take a credit cards. This changed as the result of a class action lawsuit settlement. There are some very specific rules about how they handle the surcharge. Visa/Mastercard have to be notified 30 days before a merchant starts charging a surcharge. The surcharge can only be the same percentage they pay for taking credit cards. Signs have to be posted.

I have not seen any business doing this yet, but I am sure some are.

[Brian Elfert]

That's only partially true. If you use a credit card, sender pays fees. If you use funds on hand or a bank account, no one pays fees.

Is this really correct on using a bank account to pay? It seems to me that when someone paid with a bank account I still paid the same percentage to Paypal. This was a number of years ago.

[David Weaver]

If they send you the money as a gift and it's balance to balance, there are no fees.

[Mike Henderson]

If they send you the money as a gift and it's balance to balance, there are no fees.
Yep, I do it often. If they can take the money out of your bank account, there are no fees. If you use a credit card, PayPal has to pay a fee to the credit card company and they charge you a fee.

PayPal wants to be the primary way that people send money - they're competing with other systems including Google and Apple. If they charged to send money between friends, people wouldn't use it.

But don't feel bad for PayPal. They make money on the float. People keep money in their PayPal account and PayPal earns interest on all of that. When you have a lot of users, it adds up to a lot of money, and that adds up to a lot of interest. Similar to the way a bank makes money on the deposits that people have in their accounts.

They charge businesses a fee because the business would have to pay a fee to the credit card company if you used a credit card to make the transaction - they're just trying to be the "same" as a credit card to the business.

Mike

[Brian Elfert]

If they send you the money as a gift and it's balance to balance, there are no fees.

If I take a normal non-gift Paypal payment and the buyer uses their bank account I still get charged the same as a credit card payment.

[David Weaver]

If I take a normal non-gift Paypal payment and the buyer uses their bank account I still get charged the same as a credit card payment.

Yes. I'm sure paypal's take is that you are getting their buyer and seller protection on a transaction like that, but it's more like it's just good business to charge the same regardless so sellers have no preference about any type of transaction (plus they make more money).

Where they really nail you as a buyer is buying internationally in your home currency. If you buy in international currency with a credit card and let the card take care of the conversion, the price of the item is actually substantially lower. They say they're only making 2.5% or something, but that's bunk. They're making 2.5% on top of some arbitrary retail rate, which the credit card converts at wholesale and takes something like 2.5-2.9% and is a lot cheaper.

[Brian Elfert]

Yes. I'm sure paypal's take is that you are getting their buyer and seller protection on a transaction like that, but it's more like it's just good business to charge the same regardless so sellers have no preference about any type of transaction (plus they make more money).


Credit card processors charge a lot less for a debit card transaction because it costs less. Why shouldn't Paypal charge less? Paypal defaults every transaction to bank account and you have to specifically select a credit card to use one. I am almost certain they do this because they make a lot more money on a bank account transaction. An ACH debit is generally much less costly than credit card fees.

The last time I know that someone paid me with a bank account I don't think Paypal had all the protections they have today.

[Jim Rimmer]

I'll send money as a gift to reputable members of forums, like this one.
I can understand not wanting to give up 3% to PayPal.
Ebay and non-established members, not a chance.

Pay-pal is a business. They have to get paid for their services. Maybe 3% is debatable but that's their established rate. Cheating them out of that is unethical. If the rate is too high for you, find another way to send or receive payment.

[David Weaver]

I can't find a real problem with paypal, and sometimes I'm cheap. The credit card companies would get just as much out of me and it would be less convenient for me to sell stuff person to person.

I grew up with a lot of folks who had the attitude they weren't going to pay anything to anyone to do anything, but they didn't mind getting paid to do things. Everything that involved money was us vs. them mentality.

Now, giving ebay 10% on the other hand, I like that a lot less and I hope they're happy, because I will not sell anything on ebay unless it absolutely demands a large audience to sell. I used to sell everything there by default, and still would if they had reasonable fees (that being an opinion, of course...reasonable).

[Brian Elfert]

From 1996 to 2000 I ran a business selling Internet access. Most paid $18.95 a month. I preferred to get paid via credit card instead of sending a paper bill. It cost me 75 cents to a dollar to send a paper bill and 55 to 60 cents to process a credit card. Credit card customers were automatically charged every month while some other customers we had to chase down their money and sometimes just write off the amount owed. (We never would have used a collection agency.)

[Judson Green]

Merchants are no longer prohibited from charging a surcharge to take a credit cards. This changed as the result of a class action lawsuit settlement. There are some very specific rules about how they handle the surcharge. Visa/Mastercard have to be notified 30 days before a merchant starts charging a surcharge. The surcharge can only be the same percentage they pay for taking credit cards. Signs have to be posted.

I have not seen any business doing this yet, but I am sure some are.

Gas stations do this, especially ones located near freeways and trucking hubs.

[David Weaver]

I noticed the stations in NJ did it, but around here, they don't. It must vary by state. We used to have cash discount at stations around here, and then all of the sudden it disappeared. The cash discount is usually 2-3%. My credit card's rewards on gas is cash rewards in the amount of....drum roll....3%.

I'd rather just pay cash and get the discount without having to screw around, on principle. There was one last holdout cash only station near my parents in central PA, and they did have gas about 10 cents cheaper than anyone else. But they eventually gave up and they take cards and their price reflects it.

[Brian Elfert]

Gas stations do this, especially ones located near freeways and trucking hubs.

What gas stations I've been to do is offer a cash discount for using cash. It is not a surcharge for using a credit card. This got around the old rules where to take Mastercard and Visa you could not charge extra for a credit card. Many (maybe most?) truck stops give the cash price for credit at the auto pumps. The extra cost for credit cards is only at the truck pumps. I have a motorhome that takes diesel and I often fill at the auto pumps to avoid the extra cost for using a credit card.

Having you actually seen a gas station charging a percentage to take a credit card on top of the posted price? This is allowed now, but they have to charge the exact percentage they get charged, and they have to post pretty specific signs at the card reader.

[Moses Yoder]

I don't really see a cost of $3 to be too much to send $100 which is basically insured and guaranteed against anything that might happen with the exchange. I bought 3 large boxes of cross stitch patterns this summer at a garage sale for $20. My wife took out the ones she wanted and she is selling the rest via Facebook groups. We are channeling the money through my PayPal account, my wife does not have one, and I myself have found it to be extremely convenient. We have sold probably $200 worth of books now at $1 each, without a single glitch in the system.

[Jerome Stanek]

We have a very large lumber yard Keim lumber here that gives a discount for cash. Its real nice as their prices are better than most.

[Matt Meiser]

Having you actually seen a gas station charging a percentage to take a credit card on top of the posted price? This is allowed now, but they have to charge the exact percentage they get charged, and they have to post pretty specific signs at the card reader.

That varies by state. Here and in Ohio its allowable to advertise one price for cash, another for credit. IIRC there's some symptomatic to the wording with respect to whether its a surcharge or a discount, but in reality based on the nearby competition, most are charging a 10c premium for credit. I purposely avoid them.

[Judson Green]

What gas stations I've been to do is offer a cash discount for using cash. It is not a surcharge for using a credit card. This got around the old rules where to take Mastercard and Visa you could not charge extra for a credit card. Many (maybe most?) truck stops give the cash price for credit at the auto pumps. The extra cost for credit cards is only at the truck pumps. I have a motorhome that takes diesel and I often fill at the auto pumps to avoid the extra cost for using a credit card.

Having you actually seen a gas station charging a percentage to take a credit card on top of the posted price? This is allowed now, but they have to charge the exact percentage they get charged, and they have to post pretty specific signs at the card reader.


I think here in Wisconsin retailers can offer a discount for cash and also charge a counter or service charge for credit. The gas stations in question I've only noticed while driving on the freeway to Chicago from the Milwaukee area, I've never stopped and filled up.

Edit

The DMV is the only place I can recall that uses a counter fee for credit cards, they prefer cash or check.