How Do I Get Around the PayPal or Stripe Fees?

Do you know how often I get asked how often a business owner can get around the PayPal or Stripe (or any other payment processor)’s fees? 

Well, I’d be retired on the beaches of Hawaii right now if I got a quarter every time I get asked. 

The short answer to this question is: there is no way around these fees. 

I know that is NOT the answer that you want. But these fees, also known as merchant fees, are a cost of doing business, meaning they reduce your taxable income in your business

Every store that you shop at, every restaurant that you eat at, they also have these fees. 

It’s a convenience fee for being able to transfer money from your bank account/credit card to the person you are paying, right into their account, without the use of cash. 

Why should you as a business owner not pay these fees, but everywhere that you shop at has to pay these fees? 

Shop Around

My first response to this question is always to shop around. 

There may be options out there that charge a little bit less of a fee than PayPal and Stripe do. But you won’t find these things out unless you spend some time shopping around looking at other options. 

In my experience, when you work with your bank, you can usually get a rate lower than 2.9% + $.30. You’ll need to discuss having a merchant account with your bank. 

Can I Use Venmo or Zelle? 

Technically, no. 

If you read the terms (fine print) of using these two systems, you can have your entire account shut down for using them for paying your business payments to avoid paying the fees. 

When you create your account with Venmo or Zelle, you are agreeing to not use your account for business payments. 

What about sending money through the Friends & Family method?

Absolutely not. 

You could lose your entire PayPal account for doing this. And in the process, you’ll also lose all of the money that you have in the account at the same time because PayPal will either hold it hostage on you, or make you prove you are a business and earned the money legitimately to get your money back. 

You really don’t want to risk your business or your money on using this option to get around paying the fees. 

It will do you much more harm than good. 

Cost of Doing Business

These fees are a cost of doing business. 

They are deductible expenses on your tax return

If you receive a payment of $27 from a client, you’ll put the $27 as revenue and $1.07 as merchant fees. So the net income from this one transaction is $25.93. 

You Can’t Avoid PayPal or Stripe Fees

Even if you are a business owner who doesn’t make a lot of money and those fees seem really high, you cannot avoid these fees. 

The more you try to avoid the fees and find ways to not have to pay them, the more you risk putting yourself and your business in a position of getting in trouble. 

Just play it safe and pay the fees. 

Find a way to make more money in your business, sell more of your stuff, and the fees won’t seem so expensive. 

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