Why Can I Request Money on Paypal Friends and Family
As a creator, you have payment from your make partners in exchange for your content and services y'all are considered a "seller" past PayPal's acceptable utilise policy. As sellers, creators should never accept payment from their brand partners via the "friends and family unit" choice through PayPal. Accepting payment through the "friends and family" option puts the creator concern at pregnant risk.
What is the "friends and family" payout option vs. the "goods and services" payout option on PayPal?
When your brand partner is electing to transport your payment via PayPal, they will have two types of transactions to cull from. Per PayPal's help heart they ascertain the difference between sending money "friends and family" or every bit "goods and services" as the following:
- Sending to a friend and family - used when sending money or a gift carte to a friend or family member. Before you lot complete a payment, you lot can opt to pay the fee, or pass it onto the recipient to exist covered by PayPal Purchase Protection.
- Paying for appurtenances or services - used when buying an particular or service from someone. When you make a purchase, the seller pays a modest fee to receive your money. Your payment is covered by our protection policy automatically.
What are the PayPal Fees associated with "friends and family" vs. "goods or services?"
Friends and Family Fees:
The friends and family unit payout method is intended for occasions like sending cash gifts or paying back friends/family unit members for casual personal purposes. (splitting dinners, splitting hotel costs, etc.)
When paying on credit/debit: 2.9% fee
When sending money via "friends and family", if the person sending the money is using a credit or debit carte and so the payor is charged a 2.9% fee with the choice to pass that fee on to the recipient of the coin.
When paying from a US depository financial institution business relationship: 0% fee
If the payor is paying from their bank account, they can transport money to anyone in the The states for no fee.
Goods and Services "Seller fees"
When sending money for "goods and services", the "seller" will incur a fee of 2.9% + xxx cents per transaction. The "seller" is the ane receiving the coin from the "buyer."
Are content creators considered "sellers" on PayPal?
Short answer: Yep.
As an influencer, content creator, or freelancer, when yous charge a make for your services you are considered a "seller" providing a "adept or service" to the brand who is considered a "buyer." Accepting payments when collaborating with brands is considered a commercial transaction.
Why do brand partners request to send payment to creators via the PayPal "friends and family" selection?:
The reason why a make partner may offer to pay a creator via the "friends and family unit" option instead of the "goods and services" option is elementary- it'south free (if the recipient is in the US and the brand is paying from a depository financial institution account.)
Per PayPal'due south fee policy, if a brand were to select to pay a creator via the compliant "goods and services" option, then the creator would be subject to pay the 2.ix% +30 cents per transaction seller fee. Some brands may offer to send the money non-compliantly via the "friends and family unit" to avert having to cover the fees on behalf of the creator or equally an selection for the creator to avoid incurring the fees themselves.
What are the risks and penalties of accepting money via the "friends and family unit" PayPal selection?
As Sellers, Creators are held responsible for violating PayPal'south policy:
Using PayPal friends and family for business purchases is explicitly against their User Agreement (under the category of "Restricted Activities -department Af.)
When a brand offers to send the money not-compliantly to pay a creator for their goods and services via the "friends and family unit" payout option, the brand is not held answerable for the legal liability or penalties for violating PayPal'southward terms of service.As the "seller", the creator is responsible for accepting payment compliantly and would be the party penalized.
Chance of Banned/Locked Accounts:
The PayPal Enforcement Sectionalisation team may lock or ban your business relationship if you are suspected of accepting money for goods and services as a seller via the "friends and family" selection. PayPal locks accounts that are suspected of violating the terms of services for restricted activities in order to complete an investigation. Fifty-fifty if yous are not banned afterwards the investigation is complete, you volition exist locked out of your account and unable to access your funds for the length of the investigation until PayPal can close the case which tin take several months-years to accomplish a verdict.
Daily limits:
PayPal limits the corporeality of money a seller tin receive to $60,000 per twenty-four hour period. Each transaction cannot exceed $10,000. For some creators, existence sent money from brand partners that exceed this corporeality can pb to getting their account locked for investigation.
Lack of Protection and limited ability to resolve disputes:
When accepting money via the friends and family method, PayPal offers does not offer protection or dispute help if something were to go wrong with the payment. When sending/accepting coin via the "goods and services" option, all transactions are backed by PayPal'south protection programme.
To put it just, according to the article by Moneysavingexpert.com, "A PayPal spokesperson said: "PayPal Heir-apparent Protection does non cover money transfers betwixt friends or family. If someone selling you goods or a service asks you to send a friends and family payment, yous should pass up."
How does Lumanu compare to PayPal?
Lumanu was built specifically for creative businesses collaborating with brands.
Not merely does Lumanu offer additional tools and benefits to assist creators run their businesses more smoothly that are not offered by PayPal, just creators can rest assured that accepting coin through Lumanu is a secure and compliant option.
With payments, expense management, collaboration tools, and creator protection, we take the hassle out of your hustle.
Gear up to get started with Lumanu? Sign up now!
Source: https://www.lumanu.com/blog/payment-via-paypals-friends-family
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