If you’re like many a home-based business owner, you’ve probably gone through something similar to the Five Stages of Grief when it comes to using PayPal to receive money from clients. First there’s denial (“I don’t have to pay transaction fees, do I?”), and then anger (“PayPal fees are sucking the life out of me!”) until you finally get to acceptance (“Considering what’s out there, I guess I’ll stick with PayPal”).
But is there truly a better alternative to PayPal’s ubiquitous 2.9% + $.30 transaction fee? The answer: Maybe so, but there are some caveats.
First you have to wrangle with the fact of PayPal’s sheer dominance. Everybody has PayPal. To ask a client to switch over to another payment processor, register for an account, fill out their information, link and verify their bank account, etc., might just be too much to ask. For example, Neteller features a smaller transaction fee of 1.9%, but it would require the sender to sign up for a Neteller account.
Then there are sites, like PaySimple, that offer theoretically more attractive transaction fees (like only $.55 per receipt of an e-check transaction). But these sites feature basically the same credit card transaction fees (2.9% + $3.0 or so), plus they charge you monthly rates of $30 or $35. Bummer! PayPal, of course, has no monthly fees. So unless you’re moving a lot of non-credit card money, these subscription sites don’t make a whole lot of sense.
There are also the other “big boys” who have more recently come to the payment processor party, in the form of Google Checkout and Amazon Payments. And while these services are gaining attention as alternatives to merchant transactions, their fees are pretty much the same for us online freelancers just trying to get invoices paid. Plus, in the case of Google Checkout, there is no easy way to send, receive, and withdraw money that isn’t tied to some shopping cart system.
But given all that, there actually may be light at the end of the tunnel for some: Intuit Payment Network. Not so concerned with buying online and other e-commerce stuff, IPN is geared toward straight-up sending and receiving money. And it actually features no percentage transaction fees, just a flat $.50 per transaction, which is extremely attractive.
Three drawbacks: IPN does not accept credit cards, just bank-to-bank transactions. Intuit’s credit card processing solution costs $14.95 a month, and there are still credit card fees. Also, IPN runs a credit check on you, and may reject you if your score is too low. Finally, IPN has the same problem as some others: both parties have to register with IPN to swap money.
So, if your home business involves frequent invoicing with clients ready to pay from their bank accounts, and your creditworthiness is good, consider Intuit Payment Network as an alternative to PayPal. Otherwise, you’re probably better off cycling quickly through those Five Stages of Grief and just getting used to PayPal’s fees.