Useful Info for Canadians with PayPal F&F Feature (how to incur no fees when sending to US)

[Axle]

I thought I'd make a quick post regarding my learnings using PayPal's Friends & Family funds transfer feature given that I recently ran into issues (e.g. PP was wanting to charge fees).


TL:DR Version
-For Canadians, you can send money for free (no fees) across to the US using PP F&F feature (or the "Gift" option) so long as you're using a PayPal balance and so long as you are sending USD$14.87 or more.
-This is likely not useful for single purchases on bundle splits, but if you're an active buyer/trader then it may become worthwhile to fund a US Paypal account.


Full Version
As most have noticed by now, PP seems to have changed the "free" option on the F&F feature to be isolated to recipients in Canada for Canadian accounts. Americans still have the flexibility to use F&F for free for sending money to Canadians or Americans interchangeably without incurring fees, but for some reason, Canadians were limited regardless if using USD currency.

I already had US accounts and a VISA (through RBC's subsidiary in Georgia) so I figured I'd go through the effort of opening a US PayPal account since I would qualify. In hindsight though, you may not need a US account or US VISA for the US Paypal account since you'll fund it from your existing Canadian account but I'm pretty sure you will need a US address (I used my CBI Address). When signing up for the new PayPal account, make sure everything is set to US on the respective screens (you'll see the little flag asking about location).

So once you have your US PayPal account open, you can simply move money from your Canadian PP account to the US PP account via F&F or "Gift" option (I used the "Gift" option in my case) so long as it's $14.87 or more, and voila, fees will show up as $0. You can then use the F&F feature for free when sending money to Americans from your US PP account.

Hope this is useful for others, I'll make an effort to check back to answer any questions if there are any.

Sidenote: All of this was done above board. There was no VPN involved and all information was factual. When I linked my US VISA I did have to call RBC to change my address to my CBI Address. I did ask RBC if I could simply add the address rather than replace it, but the agent let me know that unfortunately they could only hold one address at a time. That was necessary in order to link the US VISA to PayPal, which again, you may not need to do since your funding source will be the Canadian PP account rather than a VISA or Bank account.

[Faenix]

Wow so I have to make a US Paypal to get around the 100% fees ($1.03 USD = $1.03 Fee)

Looks like my buying off people days are over.I would of been ok with a small fee, but when it's 100% of what I send in USD it becomes a joke.

[Axle]

Originally posted by Faenix:

Wow so I have to make a US Paypal to get around the 100% fees ($1.03 USD = $1.03 Fee)

Looks like my buying off people days are over.I would of been ok with a small fee, but when it's 100% of what I send in USD it becomes a joke.

You can still opt to do it as “goods and services” where the fee structure is the same (% based with a 30c base or so). You only get that 100% fee when you try to use friends and family. So there’s still that option.

But if you want it to work like it does for Americans, then you need to sign up for an American account, similar to correspondent banking.

[Detruire]

Originally posted by Faenix:

Wow so I have to make a US Paypal to get around the 100% fees ($1.03 USD = $1.03 Fee)

Looks like my buying off people days are over.I would of been ok with a small fee, but when it's 100% of what I send in USD it becomes a joke.

The commercial (goods & services) rate will be lower than that with most sellers.

For example: when a Canadian subscriber sends me $10US, I receive $9.31US after fees (~7%.) Of that, $0.30 should be a fixed fee, so the portion would be lower for larger payments would be lower, e.g. for $20 it would be ~5%.

[Aerius]

For groupbuy bundles, send a big payment via merchant (not F&F) to minimize fees as Detruire noted. Note the fee schedule varies depending on which country you are in/send to, so you need to look it up if you are trying to send a specific amount. You should add a note in the transaction that it is for an electronic good and no physical good is to be received. Technically you can complain to Paypal that the person scammed you and you would get your money back. Not that anyone would do this, but to give the splitter some peace of mind.

For smaller amounts I use wallet if possible. I also got somebody to accept Amazon.com gift card which you can buy in any denomination above $1 and is basically no fees. While it is kind of annoying, it does give me some discipline to limit the number of game purchases, because let's face it.. most games we buy we will never play.

Can't wait for a legitimate competitor for PayPal, I read that in Asia they pay like a fraction of a percent.

[Faenix]

I forgot the Goods and Services was an option.. lol. I assume it's easy enough to figure out what the fees are so I can add the $0.30+% to my price?

I don't do the "buy bundles to add to my steam count" thing anymore so I mostly just do bundle splits these days. Also even if there was a viable PayPal competitor, it wouldn't matter unless most use it. Getting someone to signup to something else is a bigger hassle than converting funds.

[bodge]

Looks like these bundle splits are done with for me. For Australian Paypal users there will be a fixed fee of $5.99 AUD for all International friends and family transfers.

Effective from 5 April 2018.

[Aerius]

That sucks. Pretty sure the smaller markets (ie, Canada and Australia) are basically the testing grounds until they roll it out to everyone. It's a business afterall and if there is no competition they can charge whatever they want.

Like I noted above though, you can send it via biz payment for lower fees. Probably still kills off splitting though...

[Si-Fi]

Originally posted by Aerius:

That sucks. Pretty sure the smaller markets (ie, Canada and Australia) are basically the testing grounds until they roll it out to everyone. It's a business afterall and if there is no competition they can charge whatever they want.

Like I noted above though, you can send it via biz payment for lower fees. Probably still kills off splitting though...

But in reality, they're making enough money to feed their monkeys so I do not understand why they have to add more on top of the percentage rate.

[dimon222]

Originally posted by Si-Fi:

Originally posted by Aerius:

That sucks. Pretty sure the smaller markets (ie, Canada and Australia) are basically the testing grounds until they roll it out to everyone. It's a business afterall and if there is no competition they can charge whatever they want.

Like I noted above though, you can send it via biz payment for lower fees. Probably still kills off splitting though...

But in reality, they're making enough money to feed their monkeys so I do not understand why they have to add more on top of the percentage rate.

To get rid of small transactions I assume

[Si-Fi]

Originally posted by dimon222:

Originally posted by Si-Fi:

But in reality, they're making enough money to feed their monkeys so I do not understand why they have to add more on top of the percentage rate.

To get rid of small transactions I assume

Perhaps, but still, I'm disgusted.

[Axle]

Originally posted by Si-Fi | sleeping:

But in reality, they're making enough money to feed their monkeys so I do not understand why they have to add more on top of the percentage rate.

lol @ monkey comment

That's the nature of the beast, it has no finite appetite (continually maximize profit)

Originally posted by dimon222:

To get rid of small transactions I assume

I can guarantee you that is not the case (I work in the industry). The cost structure for internal payments (i.e. moving balances around between users) is minuscule and only gets smaller every year.

It is a function of competition though, they'll eventually want to compete with peers like Alipay and WeChat payments (2 competitors big in China that haven't made their way here....yet). You'll probably see a shift then, but until then, this won't get much attention.

[dimon222]

Originally posted by Axle:

Originally posted by dimon222:

To get rid of small transactions I assume

I can guarantee you that is not the case (I work in the industry). The cost structure for internal payments (i.e. moving balances around between users) is minuscule and only gets smaller every year.

It is a function of competition though, they'll eventually want to compete with peers like Alipay and WeChat payments (2 competitors big in China that haven't made their way here....yet). You'll probably see a shift then, but until then, this won't get much attention.

How about cost of working with banks, fees, taxes, ugly conversion rates, and accomodate support team who will deal with tickets of chargebacks/fraud. If u think everyone truly uses paypal balance to pay for this 15 cents bundle split, you might be potentially wrong because person will probably attach account to credit card and use it instead of getting paypal balance that he might never ever use again.(not even talking about fact that it takes several weeks to get this balance moved from bank to paypal)

Afterall, F&F wasn't really used for the purpose it was created for. People were abusing the system by trying to pay for stuff without fees.

[Axle]

Originally posted by dimon222:

I'm not talking from perspective of technology but rather cost of working with banks, fees, taxes, ugly conversion rates, and accomodate support team who will deal with tickets of chargebacks/fraud.

Afterall, F&F wasn't really used for the purpose it was created for. People were abusing the system by trying to pay for stuff without fees.

EFT/ACH payments aren't expensive so that wouldn't be it. FX they (PP) always get a cut so they would actually be interested in taking additional revenue from multiple FX conversions. Lastly, my understanding of the F&F feature is that it doesn't benefit from any protection, so there shouldn't be any meaningful increase in support outside of the odd person who doesn't understand how the feature works (which you'll eventually need to address anyways).

Here's a decent video for anyone interested in knowing more about the payment industry in general (e.g. small payments is not an issue)

https://www.wsj.com/articles/chinas-mobile-payment-boom-changes-how-people-shop-borrow-even-panhandle-1515000570

[Nil Einne]

Since no one has said it, you may want to check PP rules if you are doing this. PayPal used to only allow you to have one personal and one business account and this is what the FAQ still mentions all over https://www.paypal.com/us/selfhelp/article/Can-I-have-multiple-PayPal-accounts-FAQ762 *

But I looked at the legal agreement, both the US one and the NZ one and can't find this anywhere anymore. From some searching, it seems section 2.2 of the US agreement used to specify "You may only hold one Personal Account and either one Premier or one Business Account" but this seems to have been long removed. The only relevant thing I can find is that if you have multiple accounts, your money from any of them may be used to pay for a negative balance.

That said, since we're talking about accounts in different countries technically you may be in violation of the residency requirements. "For an individual to open a U.S. PayPal account and use the PayPal services, you must be a resident of the United States or one of its territories and at least 18 years old, or the age of majority in your state of residence." Also no matter what the rules say, actually trying to convince a large international company to reverse a decision they've made can be very difficult especially if you don't have any easy option to dispute it outside the company. I.E. if they did decide to close your accounts, I wouldn't count on easily convincing them to change their minds even if you feel you have a legitimate argument what you were doing was within the rules.

But from all I've read before PayPal never really closed multiple accounts even when they were forbidden unless you did something dodgy, then they'd often close them all as you may expect. And this also applied to people with multiple accounts in different countries. So this is more theoretical than practical, just something to bear in mind.

*=This actually could create weird situations. For example, since you can't add a Malaysian debit or credit card to a NZ account, under the rules I technically couldn't use my Malaysian debit card when I was temporarily living in Malaysia without either making one of them a business account despite the fact neither of them were for business purposes or closing or moving my NZ account to Malaysia which would mean I then couldn't use my NZ card! I suspect this situation is probably still caught up in the residency rules too.

[Axle]

Originally posted by Nil Einne:

Since no one has said it, you may want to check PP rules if you are doing this...

+1

No one is suggesting you break the rules. Only showing how you could do it if you qualify.

All this might be moot though once PP new F&F rules come into effect.