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PayPal: A Way to Pay or Get Paid Across Borders


You’ve landed a sale overseas. Now you need to get paid. One easy option for payment is PayPal, an online payment service. Every account type that PayPal offers allows you to accept and make international payments. Sounds like a dream come true, doesn’t it? Are you signed up? If not, you must have a few reservations. Let’s examine why establishing a PayPal account can be a good thing while working in the import/export industry. (Full disclosure: I do not work for PayPal, nor do I have any vested interests in the organization.)

In “Using Google to Go Global," I highlighted PayPal’s international reach--more than 150 million accounts worldwide, customers across 190 countries and the ability to handle 17 currencies. And in “How to Make the Most of Global Mobile Commerce," I touched on using PayPal as an m-commerce payment option.

Here’s what else PayPal allows you to do:

• Accept a variety of global payment methods (such as Visa, MasterCard and Switch/Solo cards from the UK)

• Receive payments worldwide (from more than 150 million accounts)

• Sell globally to more than 190 countries in 17 different currencies

Whether you are a broker, supplier, importer, exporter or international customer, PayPal makes collecting and receiving international payments easy. It also helps you increase your sales and profitability, gain market share and diversify your product and service offerings. There’s no set-up fee. You simply pay as you go.

PayPal Fees


When you buy or make a payment in the United States, it’s free! The seller pays PayPal a small fee to securely handle your payment. Basically, as a buyer, you never pay a fee to use PayPal. That’s the good news.


The not so great, but not that bad news, is when you sell using PayPal, you pay a 2.9% transaction fee on the total sale amount plus a 30-cent-per-transaction fee. PayPal states clearly on its website that there are some exceptions. Be sure to read every word carefully before moving ahead. Note: PayPal services are not available in every country. Be sure to inquire to see if the country you are about to transact business with accepts PayPal. If you have a business, refer to PayPal Merchant Fees for discounted rates and other pricing info.

Transferring money

Sending money inside the United States to friends and family is free for you and the recipient when you fund the transfer with your bank account or PayPal balance. You can also use a debit or credit card or make an international transfer for a small fee, typically 2.9% of total amount sent plus a 30-cent-per-transaction fee (the sender decides who pays this fee).

For transactions outside the United States, there is a small fee of 0.5% to 2% (depending on the destination) when you fund the transfer with your bank account or PayPal balance. It ranges from 3.4% to 3.9% if paying with a credit or debit card (again, the sender decides who pays this fee).

For a full listing of PayPal’s transaction fees, visit: https://www.paypal.com/webapps/mpp/paypal-fees.

Traditional Bank Payment Option

All in all, I generally recommend using PayPal on smaller transaction amounts. When you get into bigger transactions--$5,000 or more--consult with your banker because you might be better off protecting your financial interest in such a way that you are guaranteed payment and the payment processing fee does not gouge your profit margin on the sale.

When you get into bigger transaction amounts, ask your buyer what the typical bank charges are in his/her country to open and negotiate a Letter of Credit (L/C) based on the sale of transaction. Compare that rate to what PayPal charges. Remember, as the exporter (seller), you might be charged to accept the L/C payment, so be sure to check with your bank on how that works. As the exporter (seller), you typically quote your buyer with all the costs involved: freight, insurance, duty, bank L/C charges (at your end that you are aware of), and issuing bank opening and payment fees. When you add up all the L/C charges, it could make the deal unprofitable if the transaction amount is relatively small. That’s where PayPal can serve as an advantage to a small business owner who is accustomed to dealing in small-ticket items.

Letters of Credit fees can range from 1/8 of 1% to 1.5% for L/Cs in excess of $100,000 (minimums will vary from bank to bank). Some banks charge a flat processing fee regardless of the dollar amount of the transaction. In underdeveloped countries, the issuing and negotiation cost tends to run in the higher range of 1.5% or more of the transaction amount.

Bottom line: Having a PayPal account set up and in place won’t cost you. During a sale negotiation, check with your banker to see whether PayPal or another payment method might be better suited to your immediate business needs.

Related resources:

The PayPal Guide to Selling Overseas

5 Tips on Using a Letter of Credit

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