How to Make PayPal Work for You (UK)

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Do you do all your eBay trading through a single PayPal Account? If so, you might be losing money.

Are you aware that your credit card provider (and visa debit card provider) might charge back a transaction that's gone wrong if PayPal refuses your Claim?

Have you ever made payment by PayPal and thought 'I don't want to use my PayPal balance; I want to pay with my debit card, credit card or by instant bank transfer?

Have you ever wondered if there is a way to reduce the fees that PayPal takes from low-value transactions?

If so, read on. There is a way.

This Guide is applicable to UK registered PayPal account holders only, because there are some specific exclusions in the PayPal User Agreement for UK account holders.

However, if you live in a country where PayPal allows you to send, receive and withdraw money to a bank account, much of the following from my PayPal Ireland Guide will apply to you as well:

How to Make PayPal Work for You (Ireland)

eBay's rules prohibit linking to non-eBay pages in eBay Guides. There are some non-clickable URL addresses that will show you the relevant page you need to look at.

Here's a brief summary of the four types of PayPal account. Please look at the sections after for my recommendations of which account(s) you should, in my opinion, hold.


Types of Account:

1. Personal Account

A Personal Account is best used for buying only (see the Buying Section below) and receiving non-commercial payments (an eBay transaction is a commercial payment).

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_update-policy


1.    Clause 15 will include the following new definitions:

Commercial Payment” means a payment which is not a Personal Payment (including, without limitation a payment associated with an eBay item and/or other goods or services).

Personal Payment” means a payment made for the purpose of either your personal, family and/or household affairs.

If you fund a personal payment by credit or debit card, you can now choose to pay the fees instead of the recipient of the payment.

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#fees-policy


The receiving limits for a Personal account have now been removed, so there is no longer a monthly receiving limit or an annual card-funded receiving limit.

However, you now pay fees on all commercial payments to a Personal account, regardless of the funding source.

So you could in theory now use a Personal Account for eBay sales. You will now no longer have to upgrade to a Premier or Business account as the receiving limits have been removed.

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#receive-policy


The requirement to hold a Premier/Business Account to have base eligibility for PayPal Seller Protection has been removed:

www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#spp-policy

2. Macropayments Account (Premier or Business)

(Herein referred to as the 'Standard' account).

You will pay fees on all eBay (Commercial) payments you receive.

Fees on a 'Standard' account are up to £0.20p + 3.4% (3.9% on cross-border payments - see further notes for more details on international transactions).

If your monthly sales are in excess of £1,500 you should apply for merchant rates - doing so can reduce the fees to as low as £0.20p + 1.4% (from the basic £0.20 + 3.4%)

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-fees-outside
https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-receiving-fees-outside&countries=


If you sell on eBay and some of your items (including postage and packing) have a total price of £9.50 or over, you will need one of these 'Standard' Accounts.

3. Micropayments Account (Premier or Business)

As per the 'Standard' Account above, but the fee structure is fixed at 5p + 5%. The break-even mark for fees cheaper than a 'Standard' Account is approximately £9.50 (at the standard rate of 3.4% + £0.20). So if your items (including Postage and Packaging) go, or are likely to go for less than £9.50, list on eBay with the PayPal payment email of this account. This is easy enough for fixed price format (i.e. Buy-It-Now Format) but may require some guesswork with an auction - it's one of those things that's 'swings and roundabouts'. Usually you will save fees, but if the final transaction price rises to above £9.50 you will pay more than if you'd listed with the payment address from the 'Standard' Account.

This cheaper rate is now applies to cross-border payments as well as domestic payments:

https://micropayments.paypal-labs.com/

4. Business Account

As per the 'Standard' account above, plus:

If you wish to have a PayPal Account under a business or company name, you must have a Business Account.

A business account holder can give multiple users (i.e. employees) access to the account (different levels of access are available).

There are a number of 'business solutions' such as Auction Tools, Website Payments Products, Email Payments and PayPal as an Additional Payment Option [that are only available to Business Account holders].

Which Type(s) of Account Should I Open?


You are allowed one Personal Account, one 'Standard' Premier or Business Account and one Micropayments Premier or Business Account (i.e. one type of each account). If you read the PayPal Help Pages, they don't exactly advertise the existence of a Micropayments Account.

Buying

My advice is for everyone to open a Personal Account for buying with.

Why? Because you can use this account for making purchases only - and if so, it will never have a PayPal balance. This means that you can select the funding source of your choice (as funds in your PayPal account are always taken first, unless you manually select eCheque).

If you fund with a 'reward' credit card (there are plenty around - PayPal even offers one), you will earn points or cash-back every time you make a purchase funding with your 'reward' credit card. This is ideal if you pay off your credit card balance every month and don't pay any interest fees. Earn points or cash-back while you spend!

Furthermore, if you fund with your credit card (or visa debit card), your card provider may pursue a charge back for a transaction gone wrong if PayPal rejects your claim. This may provide you with more protection than paying with any other funding source.

Ideally you will add a bank account for the purposes of verifying the Personal Account and then when verification is complete, remove the bank account from your Personal Account. Adding a bank account to your PayPal Account is a further step in proving your identity to PayPal, but it is not necessary to leave the bank account associated with your PayPal account once the verification process has been completed. Also, don't forget, that when you add the bank account, you complete a Direct Debit Instruction to your bank allowing PayPal Direct Debit rights. If you don't intend to fund your PayPal Personal Account by instant bank transfer, once your Personal Account has been verified remove the bank account and cancel the Direct Debit Instruction with your bank.

Verifying a PayPal Account will lift the sending limit that applies to an unverified account (due to European anti-money laundering laws). If you remove the bank account, it will leave the sole funding source as your credit or debit card. If you prefer to fund by instant bank transfer, leave your bank account in situ.

See point 3 here in the PayPal User Agreement:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#payments-policy

Selling

It is now mandatory to list on eBay.co.uk with PayPal as a payment option (although there are some exclusions).

Accepted Payments Policy

You are not allowed to discourage payments by PayPal and if you refuse to accept a PayPal payment you can be reported as a Non-Performing Seller and sanctioned by eBay. This includes items that are collection-only (apart from those excluded, such as those in the motors, commercials, services and property sections).

Seller Non-Performance


If you sell some items that have a total transaction value of £9.50 or less, I would advise you to open a Micropayments Account as well as a 'Standard' Account. If you do not sell low-value items under £9.50, you do not need to open a Micropayments Account.


Whichever account or accounts you decide to open, my advice is to complete all the 'security' requirements that PayPal require. This means that you should verify your account and complete the Expanded Use Program if you have added a card.

Why? Because there is a maximum total receiving limit of £1,700 for an unverified Premier or Business Account due to European anti-money laundering laws. If you reach this limit and your account is not verified, PayPal will limit your account and stop you from making or receiving any more payments from it / to it until you have completed the verification process. This may cause you major problems if you are suddenly unable to use your PayPal account for trading with. It takes about five banking days for the deposits to be sent to your bank (one step in the verification process).

See point 4.3 from the PayPal User Agreement:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#receive-policy


There is also a limit on withdrawing money from an unverified account set at £500 per month, or if this limit is not reached £650 per calendar year

See point 6.2 from the PayPal User Agreement:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#withdraw-policy


PayPal may also 'suspend' your credit / debit card (for PayPal use - i.e. removing the option of this funding source) if you have not completed the Expanded Use Program.

For your security, double-check that any PayPal sign-in page begins with 'https://' the page has the SSL padlock and that the URL name in the address line is paypal.com.

If there are any limits set on your account, click the 'View Account Limits' hyperlink on the 'My Account Overview' page.

To check if you need to complete the Expanded Use Program, log into your PayPal Account, go to the Profile Tab and then Financial Information > Credit/Debit Cards. This will show you all your associated cards and will indicate here if you need to complete the Expanded Use Program.

If there is no button to start the Expanded Use Process, here's the URL to get to the correct PayPal page:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_authorize-cc-start&


and here's a Help Page from eBay.com.sg

Completing the Expanded Use Program

In my opinion, you do not want to give PayPal ANY excuse to limit your PayPal Account. You will find impossible to trade on eBay without it. Most categories require mandatory acceptance of PayPal and some categories are PayPal exclusive.

Accepted Payments Policy

General Announcement - PayPal Required for Listings in Some Categories

There is an increased risk of having your PayPal account frozen / limited if you sell high-risk / expensive items (such as mobile phones, MP3 players etc). If this happens, you will be asked by PayPal to provide invoices from your suppliers and proof of delivery (by way of a tracking number that can be electronically verified) for goods that you've already sent to your buyers. This proves to PayPal that you own the goods and are delivering them to your buyers.

Always keep your Recorded Delivery / Special Delivery / Courier slips for at least six months (and probably safer for a year) after receipt of goods by the buyer. Don't throw them away as soon as your buyer receives the goods, as you might need them later on.

PayPal will not accept positive feedback that has been left by your buyer as evidence that the item was received. PayPal will only accept evidence of delivery by way of a tracking number that can be verified electronically on the Carrier's Website.


How do I Open a PayPal Account?

For a Personal and Premier/Business Macropayments 'Standard' Account

  • Go to PayPal UK http://www.paypal.co.uk/uk
  • Press the 'Sign Up Now!' button
  • Select the account type that you want
  • Make sure the Country selected in the drop-down box is the UK.
  • Press the Continue button.
  • Fill in all the relevant information and press the Sign Up button at the bottom of the page.

For a Premier/Business Micropayments Account

New method: sign-up via this new web-page:

https://micropayments.paypal-labs.com/


Further Notes

International transactions will be subject to cross-border fees and you may pay more in PayPal fees. Here's the PayPal web-page with details:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-xborder-fees-outside


Note this bit though, essentially it means if a payment is made from Europe in €Euros, the extra 0.5% fee is waived:

* UK sellers who receive payments in Euros from other European Union countries will receive an additional 0.5% reduction in their cross-border fees.

With regards to the 2.5% charge on the currency exchange, this is paid by the person that makes the exchange. So if you list on eBay.co.uk in £GBP, you will be paid in £GBP and the buyer will pay the currency exchange fee. However if you list on another site, in their local currency, you will receive payment in that currency. If you want to convert that to £GBP, you will be charged the 2.5%. The alternative is to open Currency Balance in your PayPal Account - but that's only useful if you intend to make a payment in that currency.

Here's the full Domestic Fee structure:

https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-fees-outside
https://www.paypal.com/uk/cgi-bin/webscr?cmd=_display-receiving-fees-outside&countries=

A little known fact is that there is a £3.50 fee cap on receiving an eCheque payment (although it does not specifically state this on the domestic fees page). So if you have a large incoming payment it might work out cheaper in fees to have the payment made by eCheque (you would obviously need the co-operation of your buyer - but perhaps you could discount some of the difference?) If it was a large value transaction, I'd be prepared to wait for an eCheque to clear if it saved me a significant amount of money.

You can't associate the same bank account or card with more than one PayPal account. So if you open both a 'Standard' Account and a Micropayments Account, you will either need two bank accounts - one registered to each account - to withdraw money to. a (savings bank account should suffice) or use the Send Money > Personal Payment tab to send (to the account with the bank account associated with it) the PayPal balance as a Personal payment, which will be free to send and receive.

If you only have one or two bank accounts, but want to open three PayPal Accounts as per my recommendation, use one of the bank accounts in the verification process on the Personal Account first, then remove it when verification is complete, before adding it to one of the Premier/Business Accounts. As already stated, adding a bank account forms part of the verification process (it forms part of proving your identity), but it is not necessary to leave it associated to the Personal Account. 

My general advice is to open one of each of these accounts:
  • Personal
  • 'Standard' Premier/Business Macropayments
  • Premier/Business Micropayments
When you list on eBay, based on the total or estimated total transaction price, select the PayPal email payment address from the PayPal Account that will yield the least fees. So if the total transaction price (item price plus P&P) is or is likely to be less than £9.50, use the email address from the Micropayments Account, otherwise use the 'Standard' one.

You can't link a single eBay account to more than one PayPal Account, but as long as your eBay Selling Account is linked to a verified Premier / Business PayPal Account you will not be stopped from listing items that require a linked, verified PayPal Account if you list with the PayPal payment email address from the non-linked PayPal Account.

Here's a couple of Help Pages that tell you how to link your eBay Account to your PayPal Account if you haven't already done it:

Linking your eBay account to your PayPal account

Link your PayPal and eBay accounts


PayPal Seller Protection Policy


YOU need make sure that you understand the steps you need to take so that transactions where you cannot afford to lose money through a ' payment reversal' or ' charge-back' are eligible for the PayPal Seller Protection Policy (SPP).

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_payments-outside#spp-policy


Any type of account now has base eligibility for PayPal Seller Protection.

All eligible sales via eBay.co.uk are now eligible for PayPal Seller Protection regardless of the unconfirmed/confirmed address status of the buyer.


https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_spp-outside#spp-policy


11.10 What are examples of items/transactions that are not eligible for seller protection?
  1. Intangible items, licences for digital content, services
  2. Items that you deliver in person (or allow the buyer to collect)
  3. Transactions made through PayPal Website Pro
  4. Claims, Chargebacks and Reversals with the reason Significantly Not As Described (SNAD)
https://www.paypal.com/uk/cgi-bin/webscr?cmd=xpt/cps/securitycenter/sell/SellerPPOverview-outside


There are slightly different rules for PayPal Seller Protection for non eBay.co.uk sales.

https://www.paypal.com/uk/cgi-bin/webscr?cmd=xpt/Marketing/securitycenter/sell/SellerOffeBay-outside


NEVER send an item if you receive a payment email that appears to be from PayPal that tells you that funds will be released on receipt of a tracking number. It's a classic SCAM:

Announcement: Spoof Email Asking for Tracking Number Before Payment

read the opening post here, which gives you details of what to do:

How to deal with scam buyers

It is sensible not to accept payment by PayPal for an expensive item that it to be collected, as you can't prove delivery by way of on-line tracking to the buyer. However, eBay now make it mandatory to offer and accept PayPal payments (in most categories), even when the item is collection only. If it's an amount of money you can't afford to lose, then maybe you should not list that item on eBay.

Don't make the mistake of thinking that you must fill all SPP criteria for every transaction. If you sell low-value items like myself, it's a complete waste of money charging the buyer an extra 74p in Postage & Packing just to you can send Recorded & Signed for.

Use common sense. If it's an item less than £41 (where you can potentially claim from the Royal Mail for loss or damage) and the buyer has good feedback, you probably don't need Seller Protection. If the transaction is worth more than £41, you should use Special Delivery (Domestic) or Airsure/ISF with the appropriate level of claim cover (International) to ensure that the item is adequately covered.

Confirmed Address


https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/shipping-address-outside


I recommend that if you are a buyer that you 'confirm' your address with PayPal if it's 'unconfirmed'. This is because some sellers might be unaware of the change in PayPal Seller Protection Criteria for eBay.co.uk items.. Posting to a confirmed address is no longer one of the criteria for sellers to be eligible for PayPal Seller Protection - for eBay.co.uk items.

However, for purchases on other eBay sites, or places other than eBay, having an unconfirmed address will mean a seller will not have full eligibility for seller protection, only partial, so they may be reluctant to accept the payment.

https://www.paypal.com/uk/cgi-bin/webscr?cmd=p/gen/ua/policy_spp-outside#spp-policy


The only current way to confirm your address with PayPal UK is to either:
  • add a debit or credit card. If your provider subscribes to the 'Address Verification System' your address will be confirmed automatically, or
  • your address can also be confirmed when you complete the phone validation step when verifying your account.


* Updated Jun-2010 *



If you have any questions, please email me on the link you will find on my me page

About Me: ajcardiac

or ask on the Payments and Postage Discussion Board

Payments & Postage Board

If you have a PayPal problem that is not dealt with here, you may find the answer on one of my other me pages:

About Me: ajcardiac3

Regards & hope you found something of interest.

AJ
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