5 Options for Avoiding PayPal Fees & Keeping All Your Freelance Writing Pay

I just contacted several of my clients and advertisers and asked if they could pay me by check or direct deposit rather than PayPal. PayPal is convenient, but the fees are killing me. Though they’re tax deductible, I paid about $2000 in PayPal fees in 2009. I’d much rather have that money in the bank.

I’ve been thinking about PayPal for the past couple of weeks after one of FWJ’s contributors told me he never uses PayPal because he doesn’t want to deal with the fees. As a client, it’s cheaper and easier for me to pay via PayPal. As a writer, I feel his pain. So I’ve been thinking about the PayPal situation and how to deal with all the fees. I can’t afford to lose such a big chunk of change each year.

  • Have clients pay the fees: Negotiating PayPal fees into your project quotes will help to alleviate the blow that comes with PayPal fees. Many clients have no problems with this as they don’t want you to lose money when you write for them. If you have clients cover bounced check or other fees, you should also have it written in to your contract for them to cover the PayPal fees.
  • Use a personal PayPal account for occasional payments: If you’re only receiving occasional funds via PayPal, the personal account might be the way to go. Fees aren’t deducted from personal payments. However, if you’re only using PayPal for professional purposes, you will have to open a business account. It doesn’t cost anything to upgrade, except for the fees. Note: Just because you have a personal account doesn’t mean you won’t be hit with fees. If you accept credit card fees via your personal PayPal account, it will be considered a business transaction and you should expect to be hit with fees. Payments marked “goods” or “services” can also be hit with a fee.
  • Use direct deposit: Several of my advertisers including Amazon and Google use direct deposit for payment and I absolutely love it. The payments are placed into my business account each month like clockwork, and life is good. When I pay my bloggers, I can easily transfer payment to my PayPal account to send funds.
  • Accept checks: I don’t understand why more freelance writers don’t accept checks as payment. Running to the bank to deposit checks is only a very small inconvenience and well worth it when you consider how much you’re saving on fees. My clients are very accommodating when it comes to paying by check and every time I request check over PayPal they say yes. Some writers don’t want to deal with a bounced check. In ten years of freelancing not one client has bounced a check on me. However, it’s written into  my agreement that they will have to pay any fees associated with bounced checks or other banking errors.
  • Wire transfers are another option, especially for International clients but this can be expensive for all involved, and collection isn’t always easy.
  • Transferwise is also an option they fast, reliable and fully transparent money transfers at a small flat fee. It is a simple idea that eliminates red tape and delays around international transfers and allows companies and individuals save in bank transfers.

PayPal fees are tax deductible so be sure you’re keeping track.  If you’re not keeping track, you might be surprised at just how much you’re losing each month. There is no denying the convenience of PayPal, but it shouldn’t come at such a high cost.  Don’t be afraid to seek alternative forms of payment or request clients handle PayPal fees. You’ll find most are willing to work with you so fees don’t take such a huge bite out of your pay.

How do you get around PayPal fees?


44 responses
  1. James Chartrand - Men with Pens Avatar

    I actually welcome PayPal fees. Most accountants counsel businesses with one word: SPEND! Expenses are important. When you reach a certain level of income, you just end up paying a ton in income taxes if you don’t have the deductions to counter that.

    And I think that 2.5% isn’t really that much, and PayPal is also extremely convenient for clients as well – they can even pay with credit card, without a PP account.

    These fees are also part of your Cost of Goods Sold, so essentially you should be working them into your rates.

    Also, considering I’m located in Canada, the only option out of this list is the last, wire transfer, which is very expensive (far beyond PayPal) and considered quasi risky. Cheques are out, too – they take 60 days to clear fully when they’re from the U.S. Google and Amazon don’t work well with other locations, so they’re out too.

    Anyways, that’s my biased PayPal-lover view for you! I’m glad you found a solution that fits well with your needs, too. It’s all good.

    1. Deb Avatar

      Hi James,

      I know things are different for international freelance writers. I’m curious though, do our friends from other countries find enough work in their own respective countries or is the bulk of work coming from the U.S? If so, I’m assuming it’s much easier to pay via PayPal.

      However, fees. I don’t think a couple of thousand dollars in PayPal fees are what accountants are talking about when they’re discussing racking up the expenses. 2.5% isn’t much on a small payment, but for my biggest advertiser $50 – $75 at a time is being deducted and that’s just to much for my liking. It adds up over time. I lost $500 from one client this year to PayPal fees.

      My preference is for direct deposit, followed by checks. Generally though, I’ll take whatever I can get.

      1. James Chartrand - Men with Pens Avatar

        Well, we do have different gross incomes, so perhaps the amount we’re earning makes the difference between a welcome deduction and an annoyance.

        But I’m still not convinced that avoiding the fees is a good thing for business. I’d really like an outside accountant’s opinion, I guess.

  2. Kristine Avatar

    There are also additional Paypal fees when you receive money from another country (I forgot how much) so I tell my clients to hold the payment instead, and give it to me weekly or monthly. Marking it as ‘Payment Owed’ also (I think) gets less fees.

    1. Deb Avatar

      Thanks for the tip, Kristine.

  3. Jenn Avatar

    These are good ideas, but I would be very wary about providing bank information for direct deposit unless it was for a well-established client. I use a modification of #1 and #5 myself. I raised my rates and the difference makes up for the occasional paypal fee. I also accept U.S. checks, but that is only possible for about half of my clients as I am a French to English translator.

    1. Deb Avatar

      Hi Jenn,

      I don’t give my direct deposit information out unless I truly trust the client. Though I’ve been using direct deposit for about 25 years now (through my employers and now with some clients) and have never had a single problem.

      Thanks for the wise advice.

  4. Phil Avatar

    I have to disagree with James.

    There are plenty of other business expenses that make more sense than PayPal fees. Direct deposit is great, but it’s been my experience that it’s usually resisted by clients. They either don’t have proper tracking in place for this, are under the mistaken impression that this can violate one of the IRS’s contractor vs. employee rules (it doesn’t, but I’ve seen this argument) or they are stuck in the old way of doing things.

    As more payments go electronic, direct deposit is gaining more acceptance. And, like Deb said, you can include the charge (in the case of international clients) in your fees — as a line item. I’m doing this with a client in Ireland.

    The best thing is to attempt to educate clients about the ease of direct deposit. They can account for payment immediately, rather than waiting for check to clear. There’s no stop payment and reissuance of a check that gets lost in the mail — which happens far too often.

    1. Deb Avatar

      Agreed, Phil. Many clients feel it’s too much trouble to research direct deposit. PayPal is simple and they want the convenience.

  5. James Chartrand - Men with Pens Avatar

    @ Phil – You’re able to accept international direct deposit? That’s news to me; I didn’t know that could be done. I’ll have to check that out – how do you do it?

    And I never said that PayPal was an expense that made the most sense, LOL. Of course there are far worthier ones. I just don’t see it as something evil.

    1. Deb Avatar

      I don’t see PayPal as something evil, I don’t feel it necessary to pay those fees. If my clients will cut a check, I prefer that. If not, we’ll have to work out how they’re going to compensate for the fees.

    2. Phil Avatar


      I’m fairly sure it was direct deposit from Ireland (may have technically be a wire transfer). When I received first one, it was for $21 less than the invoice. I questioned the client, who then had me add a line item to future invoices to cover the charge (and paid the fee on the first one). My bank didn’t show the fee, so it must have been charged on the other end.

      A couple of years ago I received an electronic deposit from a firm in Brazil. I thought it was direct deposit because there was no fee, which I’m fairly sure is common for wire transfers. In this case, I’m fairly sure it was an ACH transaction.

      1. James Chartrand - Men with Pens Avatar

        Ah, okay, I see. Yeah, that sounds like wire transfers, which is something I really don’t want to get into. But I know others who use it and it works for them, so that’s great.

        Thanks for letting me know.

  6. Dave Doolin Avatar

    International wire transfers suck. I have direct experience with this.

    A much better alternative is using Paypal echeck, which cost the usual %, but only $10 fee, instead of the ridiculous wire transfer fees.

    1. Lola Avatar

      Thanks for this tip! So happy to read your comment

  7. Dave Doolin Avatar

    Actually, I believe the echeck is a flat fee, but you do have to wait for clearance.

    Apologies for the multiple posting.

    1. Deb Avatar

      Thanks, Dave!

    2. James Chartrand - Men with Pens Avatar

      $5 flat fee for echecks, and the wait is about 5 days.

  8. Benjamin Hunting Avatar

    James – I’m with RBC in Canada, and US checks take 15 business days to clear. Might be worth switching for you if you are getting stuck with 60 day clearance times.

    1. James Chartrand - Men with Pens Avatar

      From what I understand, from what I was told (Bank of Montreal), there are actually two levels of clearance for international cheques.

      There’s a first level where the cheque ‘clears’ and the money becomes available to you to use, which is 5 business days for BMO. But the bank has a second level of clearance of 60 days – they can yank the money back at any time within that period. The first ‘clearance’ does not represent ‘the cheque you were given is A-okay and it’s all yours.’

      From what I understand.

  9. Krista Avatar

    @ James, I’m also with RBC. Another option that I just found out about is an Interac e-mail money transfer. There are no fees for the receiver as far as I know, and you just need to give the client your e-mail address and agree on a security question. Not sure how it works with money from the U.S., though.

    1. James Chartrand - Men with Pens Avatar

      Yup, I use interac regularly with my Canadian clients. But can’t use it with international clients, so no go!

  10. Jeanne Avatar

    If my clients want the convenience of PayPal, they have two options 1) arrange to have payments sent to me so that I incur no fees (most do this) and 2) I add on a bit to cover the PayPal fees (one client opted for this). I always accept checks, and two clients prefer monthly billing and remittance by check.

    Also, I don’t think PayPal fees are always tax deductible; my understanding is that it depends on your business structure.

  11. Carol Avatar

    I’m just starting to get asked to use PayPal…all my clients have always paid by check, and I’ve never had a problem. But I think requests for PayPal are becoming more prevalent, so appreciate the interesting conversation about ways around it! I did the same math Deb did, and figured if a lot of my clients wanted to do it it would be thousands a year lost. No thanks!

    I just had one recent prospect that would have been a regular gig of at least $600 a month, likely growing over time, ask to use Paypal for payment. I asked him to up the pay to cover the fees, and never heard from him again! (He sounded kind of nutso so I wasn’t that sorry.) Next time if they want Paypal I’ll definitely just build it into my quote… 🙂

    Carol Tice

  12. Lucy Smith Avatar

    This is really interesting. I almost never use PayPal, I do have accounts set up, but since I only have one blogging gig from the States, I don’t use it that much. It only ends up costing me a few cents – it’s the tax provisioning that kills me!

    I do know people, though, who have been horrified at how much a few invoices paid by credit card end up costing them.

    For my local clients in NZ, I just give them my bank account number and they pay directly into that. It’s no risk, because all you’re giving them is your name and a number, they can’t use it for anything other than to put more money in, and who’s complaining? 😉 That’s the accepted way here, and I have no idea what a local client would do if you asked them to pay via PayPal. Laugh and ask for your bank details, probably.

  13. Hazel Avatar

    Very interesting discussion – thanks, Deb.
    I have a new financial adviser (CPA) and will ask him under what circumstances PayPal fees would NOT be deductible.
    Most of my clients have been happy to pay by check, which is my preference. When I have a new client, or a one-off, I generally take PayPal for the first payment to make sure I get my money. I think the fees are worth the peace of mind I get – but I’m not talking about a lot of money here. I actually like going to the bank to deposit the checks!

  14. Cathy Miller Avatar
    Cathy Miller

    I only got PayPal because that was the only way one client paid. When I went through the whole rigamarole of getting my business checking account set up with them (because I wouldn’t give them my pin#–I don’t care HOW reputable they are!), I figured they would deposit in my checking account. When I found out I had to transfer the $$ and go through the delay of that extra transaction, I asked the PayPal representative what possible service did they think they were providing for me? She didn’t have an answer for me.

    I hate the fees, I hate the hassle and why should someone else sit on my $$ until I can claim it on taxes. I just don’t get what service they are supposedly providing me, their account holder.

  15. Benjamin Hunting Avatar

    Personally, I see no difference between accepting PayPal as a form of payment and accepting credit cards. Both charge fees for convenience, and it is up to me to reconcile those fees with my clients or my business model.

  16. Omar Avatar

    Very informative. Direct deposit is better. You don’t have to worry about fees. That’s great that employers will offset the cost of fees via paypal.

    1. Phil Avatar

      Just a point of semantics: They’re clients, not employers, even though sometimes they want to treat you like an employee in terms of your time or focus (I don’t have any single client that can pay the bills, so they don’t have exclusive rights to my work time — unlike an employee).

  17. AuroraGG Avatar

    I am in Canada and my clients are US companies who pay in US dollars. I only accept cheque as a form of payment. If a bank charged me 2.5% and also took a chunk of the exchange rate on every transaction I did, I would find a new bank pretty darn quick. Sure you need write-offs, but I’d rather put 2.5% of my income in to an RRSP, purchase new office equipment, or make a charitable donation (in amounts over $500) than just give it away to PayPal!

    I hold a US-funds RBC account and use Internet banking to ensure I get the most out of every US dollar I make. I deposit US funds and watch the exchange rate and transfer it to a CDN funds account when I like the rate (or I need money, of course).

    With PayPal, you just can’t do that. All you can do is get the funds to your bank account, they have zero flexibility and, unlike a bank, you have no options to actually manage your money while in holding on PayPal. I prefer it to go straight to a US funds RBC account so I can handle the balances and exchange myself.

    I have been an RBC client for 15 years. Several years ago, I spoke with the bank manager and we agreed on a dollar amount that would clear on any US cheque I cash, with no hold. You may get better options for holding US cheques if you go in and speak with someone at your local branch.

    Great discussion!

  18. Kevin Freeman Avatar

    PayPal is amazingly convenient, but you are absolutely right – the fees add up to way too much at the end of the year. Unfortunately, many of my clients call me today with work they want ASAP, and I require a 50% deposit to get started. If anyone knows of a cheaper solution, PLEASE let me know!!

  19. Imogen Avatar

    Unfortunately, Paypal have changed their system and personal transfers now attract a fee. The only difference between the Business and Personal transactions is that the payer can opt to pay the fee when they are processing the transaction.

  20. Dawn Avatar

    Just a note–Paypal tracks the fees for you for the past 12 mos. transactions…that’s one nice benefit come tax time.

    I agree with you, and have started asking some clients to cover the fees. Only one flipped out at me about it. And he really flipped out. (I no longer work for him.)

    I was going to add what Imogen said, as well.

    And, since you posted I think Paypal has changed their structure…again. As people find Loopholes, Paypal finds ways to get their percentage…which, when you think about it, is totally valid. They are a business. It’s all a matter of choice.

    With branches of my bank conveniently located EVERYWHERE (and my daughter loves visiting the bank–she’s too young for lollipops, but likes the signage and the tellers) I prefer the costs of time to drive to the bank and gas rather than Paypal fees. Checks deposited also clear more quickly than Paypal transfers into my checking account.

    .-= Dawn´s last blog ..Writing, Editing & Coaching Services =-.

  21. Georjina Avatar

    I came to this party a bit late, but I don’t understand something. It appears that many of you are quoting per hour or on-the-fly-by-the-seat-of-your pants to clients. Sure Paypal fees are an expense, you as a business owner knew that going into this but now that you’re making a little money you are balking at a legitimate business expense? Ok.

    And why are you ‘asking’ your clients to pay the fee? I’d balk too if you quote me one thing and as an “Oh, by the way….” you want to add your business expense for more money. It would give me the impression you’re gouging or have no idea what you’re doing as a business owner. Either one makes you look amateurish at best, sleazy at worse.

    Yes, I’m looking at it from the perspective of an accountant and business owner. You include these fixed expenses into your pricing structure before you make a quote, not after. The client still pays the fee, but they are none the wiser because it’s bundled into your pricing structure.

    Simply add 5% to the fees you charge, especially if you’re going to start accepting checks (because your bank is not going to pass a bad check fee on to your client) and make your quote based on that number. Paypal fees can go up to that 5%, then if and when they raise their prices – you do the same.

    Revenue is not profit, and if you are moaning over paying a fee of 3% it’s time to take a hard look at your pricing strategy because it’s not working for you.

  22. Michelle Avatar

    I just got an email from PayPal, and called them to clarify. This looks ugly to me. I’m not sure if it’s because I have recently accepted payment of a total of $19.00 for an eBay sale or if it’s for non online merchants as well, but here is what they said:

    [i]From now on, payments you receive will be temporarily held in a pending balance. This pending balance helps make sure that you’ll have enough money in your account to cover any buyer claims.[/i]

    [i]Payments will be held in a pending balance for up to 21 days. For example, if you receive a $100 payment (after fees), the $100 will be held in a pending balance for up to 21 days. After 21 days, the money will be available for withdrawal.
    The money may be released sooner if:[/i]

    [i] 1. We can confirm that the item was delivered[/i]
    [i] 2. Your buyer leaves positive feedback. (Applies only to eBay items.)[/i]

    Well, I called, and they are telling me that it applies to ALL funds coming into my PayPal account. This despite the fact that I am a ten-plus year customer and get most of my paychecks through PayPal.

    They are looking at my account individually and promised to get back to me “within 24 hours,” but it does not look promising.

    Does anyone have a tested alternative for automatic payments?

  23. Brian Knowles Avatar
    Brian Knowles

    I sold and posted an item and the receipt was acknowledged with positive feedback. The buyer then initiated a chargeback. I was asked to respond to PayPal but found the process impossible. I tried to make contact by email, telephone or correspondence – all to no avail.

    I am closing my PayPal account.

    1. J Avatar

      I’m not a writer, but I am self-employed and stumbled across this post. I have not seen a mention of the one trick I know with PP to avoid fees – by selecting “Personal — Other” when the seller sends the payment.


  24. organist Avatar

    Sorry that I missed the beginning of this party, but fell onto it while looking for a certain writing company that I can’t find!

    I am an American freelancer living in China and have found that PayPal has changed my account settings to all Chinese, making it unusable ! When contacted, their resposnse was that “”I”” changed the settings…..which haven’t been changed since the account was opened some 10 years ago and I’ve had lots of transactions there.

    Long story short is that for International Debits and Credits, I prefer to use UnionPay…..which is a China originated but now almost worldwide easy to use system. I can get payments in Dollars, Or Pound or EU and the currency conversion costs are very low.

    Myu success rate with UnionPay is 100% and I suggest those of you having PayPal issues to investigate them and give them a whirl……and a twrill…..will be good for your mental health to get away from the PayPal {are they really a “pal” anymore ? ?} headaches and charges! So much for hearing from another country…….Thanks for the ride!

  25. Patty Avatar

    This is a terrible idea. Never, ever, ever, ask clients to pay your Paypal fees. That is the best way to make yourself a liability. Not only does it say directly in their Terms of Service that a merchant cannot charge for Paypal fees, but all it takes is one disgruntled customer to report you.

    You are running a business and Paypal is providing you a service. Deal with it or risk losing your account.

  26. Benjamin Hunting Avatar

    Patty – PayPal offers payers the option to pay the fees when they send payment. It’s not against their terms of service.

  27. Avi Avatar

    I have just learned while sending a PayPal invoice online is 2.9% +.30 | If you send an invoice from PayPal Here on your phone it is free!

  28. Colin Newcomer Avatar

    Using an invoicing service that supports PayPal Business Payments is another really good way. It’s only a flat $0.50 fee for payments via bank/balance for US clients.

    1. Colin Newcomer Avatar

      Oops accidentally hit send too soon 🙂 TransferWise is the best I’ve found for international clients – so I agree on that one.

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