PayPal alternatives

By Katharine Swan On Thursday, March 06, 2008 At 3:53 PM

Since my post about PayPal's sneaky account changes, I've been looking into PayPal alternatives. Here are three alternatives I'm interested in so far:

Google Checkout

I actually signed up for Google Checkout a year or more ago, but never used it. Compared to PayPal's business account fees ($0.30 + 3 percent of the payment amount), Google's fees are a little more reasonable ($0.20 + 2 percent of the payment amount). Plus, if you use AdWords, Google allows you to receive 10 times the amount you spent per month free of charge.

In other words, if you use AdWords, getting paid via Checkout is a really good deal.

Neteller

Neteller appears to be another well-known PayPal alternative. I can't seem to find on this site how much you'll pay in fees to receive money from other people, but it appears that withdrawing your money to a bank account costs $1. I've emailed them to confirm that amount, and to find out what fees apply to incoming payments.

Update regarding Neteller: I just received a response to my email, and evidently they don't offer their services to U.S. residents anymore. Too bad!

Obopay

Obopay is a rather interesting idea. While you can still use the Internet to send and receive money, Obopay is actually intended to be used from your cell phone. ("Hobo" pay?) The fees seem reasonable: To load money into your account from a credit or debit card you pay 2.5 percent, but the fees are waived if you load from a bank account. Sending money to someone costs a flat fee of $0.10 each time. Transferring money to your bank account is free.

In other words, Obopay's fees for your clients would be virtually nothing unless they are paying via credit card, and it's free for you. For obvious reasons, I find this very appealing!

What PayPal alternatives do you use?

I like the benefits of getting my payments instantly, but I certainly don't want to be paying through the nose for that luxury. If you use a PayPal alternative to receive payments from your clients, I'm interested in hearing from you. What do you use, what are the fees, and what do you like/dislike about it?

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Anonymous Diana Says:  

I'm not sure what you mean by fees. I have a Premier Personal account with PayPal and it's free. There are no additional fees or required payments, (you just need to go through a few steps to verify a credit card with them). The premier account has no limits of any kind (I receive over $1500 every month in payments) and it comes with a debit card that allows you to take the money out of your account instantly for only a $1 fee (rather than waiting 3-5 days for it to be transfered to your bank account).

 
 
Blogger Katharine Swan Says:  

Diana,

I don't think you fully understand what you are signed up for.

First of all, PayPal offers three types of accounts: personal, premier, and business. There is no such thing as a premier personal account.

The personal account is free, which means there are no fees deducted for incoming payments. You used to be able to receive only account transfer payment with a personal account, and there was no limit in how much money you could receive. Now you can receive up to 5 credit card payments a year, but you can only receive $500 a month before you are forced to upgrade to a premier or business account.

The premier and business accounts allow you to receive any type of payment and any amount of money a month, but you are charged a fee for every incoming payment. The fees are $0.30 + 2.9 percent for every domestic payment, and $0.30 + 3.9 percent for every foreign payment.

If you have a premier account, you are paying these fees. If you have a personal account, you aren't paying any fees, but are in for an ugly surprise later this month when you are forced to upgrade!

I think a lot of people don't understand what they are signing up for, which is no doubt exactly what PayPal and other financial institutions (banks, credit card companies) count on. It's easier to take advantage of people when they don't read the legal agreements. Your comment has therefore inspired me to write a PayPal 101 post to help keep people informed, even if they find legal agreements difficult to read and understand.

P.S. I transfer money from my PayPal account to my bank account all the time, and it never takes as long as 5 days. It usually takes just under 2 days.

 
 
Anonymous Diana Says:  

ok, no, I understand about the fees. For some reason I thought you were talking about some kind of monthly fee in order to be able to use the premier account. The percentage and $0.30 I'm aware of. However, I still prefer PayPal over checks. The money is there instantly, there are no problems with things getting lost or delayed in the mail and many companies actually insist on PayPal now. I never had a personal account. I immediately changed it to a premier as soon as I signed up for PayPal (long time ago) because it has almost no limitations. The personal account takes a higher percentage of your money and it has a limit on how many transactions you can conduct (I don't remember if it was always 5, but I do remember it was a very low number and it just didn't work for me). On an average month, I get payments from 6-10 different clients, all through PayPal and funded with credit cards. I should add, though, that I'm not exactly a big fan of PayPal. I had trouble with my original account (they froze it by mistake and I could never reopened it) and ended up having to open a new one. I had $30 in that original account that I never got back. It's not a huge loss but it's still MY money so I'm not exactly happy.

I did try using other companies, but editors are reluctant to send money through them because they're not well-known. In the end, it was PayPal or nothing. If there was something else available, I would switch, but I think the options are limited right now.

 
 
Blogger Katharine Swan Says:  

Diana,

Thanks for coming back and clarifying what you meant!

I have had a personal PayPal account since 2002 or so, and have been using it to get paid since 2005. Up until this month, it didn't take any percentage of my earnings, BUT I couldn't get paid -- at all -- via credit card. It wasn't a problem, because I made sure everything was via account transfer.

The client that alerted me to the change several days ago accidentally paid via credit card, which was when I discovered that personal accounts now get up to 5 credit card payments per year. That's also how I found out about the new $500 limit on incoming payments.

I also prefer getting my money instantly rather than having to wait for a check. However, in my case waiting a few extra days to get a check from each client could save me $30 or more per month. Therefore, unless I need the money right away for some reason, I am going to start asking my clients to pay via check.

 

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Katharine Swan is a full-time freelance writer with more than 5 years of professional writing experience. In addition to maintaining several personal blogs, she writes a variety of online marketing materials for clients, including company blogs, articles, and press releases. In her free time, she spends time with her horse, reads, and writes fiction.

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