The Anti 9-to-5 Guide » Ask the cubicle expat: Should I use PayPal to get paid?

Ask the cubicle expat: Should I use PayPal to get paid?

January 21st, 2008

Traci asks: Do any of your clients pay you via PayPal? I have an account, and I’ve seen that other freelance folks sometimes list it as a payment option. Has it worked for you? Any pros/cons to consider?

I answer: I have not used PayPal to receive payment. Nor do I plan to anytime soon. Not when I can get clients to send me a check or make a direct deposit payment into my bank account, which, as far as I’m concerned, is accounts receivable nirvana.

Here are what I see as the pros of using PayPal for freelance work:

If you work with clients halfway around the world, it might be easier to get paid this way.
If you sell your wares (earrings, silkscreened T’s, hand-crafted journals) through your site or blog, it’s an easy way to accept credit card payments. You definitely don’t want countless people you’ve never met sending you checks for $25.
If you work in a super-tech sector where everyone uses PayPal, you might want to apply the “when in Rome” philosophy. Clients don’t appreciate freelancers who aren’t up to speed and throw a wrench in their carefully crafted systems, accounting or otherwise.
I imagine PayPal can enable getting paid faster. Like direct deposit, it does cut out the step of having to deal with a hard copy check. But there’s something that never fails to excite me about opening my P.O. box and finding a check there for a writing job well done from the comforts of my home office.

Here’s my take on the cons:

Doesn’t PayPal take a cut of your pay or charge an annual fee? Why should I do this when I can get paid for free?
Not all clients use or want to use PayPal. Again, if you’re selling a service (rather than a product), you want to make it easy for them to work with and pay you. Meaning, you want to abide by the payment systems they have in place. (See pros, above.)
I hate the idea of leaving my bank account or credit card info with an online service. Here’s a perfect example of how things can go horribly awry.

I realize I may be old school in my views on PayPal (and web banking in general), so I welcome your input, especially if you’ve used PayPal to receive or make freelance payments.

Got questions about self-employment? I got answers. And if I don’t, someone else around here is bound to. Here’s where you can reach me.

Entry Filed under: Ask the Cubicle Expat

8 Comments Add your own

1. a girl named Rock. | January 21st, 2008 at 9:05 am

I have to disagree. I am a freelance graphic designer and web developer. I have been freelancing for awhile and my preferred form of payment is via PayPal.

But then again, I work in technology and have been with PayPal for at least 8 years (the company was founded in 1998). I haven’t had any negative experiences with my accounts, in fact, I feel more secure using PayPal than giving out my bank account for clients to make direct deposits.

I would recommend (like you mentioned above) everyone find what works best for them. PayPal is a acquired taste.
2. Thursday | January 21st, 2008 at 9:11 am

I’ve actually run into many clients who refuse to use anything but PayPal! They’re often willing to pay for the convenience.

PayPal does take a cut of any funds sent through it, but that fee is tax deductible. Furthermore, it can be a great reason to raise your rates, and make sure your clients are paying you what you deserve. Some freelancers charge a convenience fee to clients using PayPal — it’s typically a little more than the expected fee.

Unfortunately, in this day and age, security must be a concern. However, I’d like to note that a freelancer runs just as many risks using other methods — an unethical individual can do a surprising amount of harm with the information needed for direct deposit. No matter which method of payment you prefer, there are still precautions you must take. PayPal is no worse than other options in this respect.
3. boohoo | January 21st, 2008 at 12:46 pm

I actually use paypal for ebay and have done so for the last 6 years. From what I know paypal is NOT A BANK and arbitrarily has frozen accounts with tens of thousand of dollars in them. These are not heresay, but actual documented accounts sometimes ending in lawsuit settlements. Some people who make their living off ebay treated paypal as a business-banking device, only to find out that thier funds were frozen for any number of reasons (sometimes over many months). Also since paypal is NOT A BANK there were no standard policies to undo a mistake made by paypal (banks aren’t perfect, but there are polices to protect bank consumers). Things have improved over the years, but paypal is still not a bank and I would treat it as such. I would feel extremely uncomfortable keeping funds in my paypal account for any long period of time. Also FYI, I do have a paypal check card, but I never leave more money in there than I can stand to lose at any given time.
4. Rhebe (Michelle's mom) | January 21st, 2008 at 9:42 pm

I have been using the PayPal personal account for a year to receive payment from a freelance client monthly. There are no fees for that account and you can request money with a PayPal bill from another PayPal account. As soon as I receive an email that payment is made, I sign on and do an electronic funds transfer to my bank account. The money is there within two days. I have had no problems.
5. Michelle Goodman | January 22nd, 2008 at 8:01 am

it’s official. i am a luddite. even my mom is more tech savvy than me.

btw, before any gives out their bank routing info to a client (for direct deposit payments), i’d get references and do some detective work with other freelancers to ensure that the client’s on the up and up. i only give my routing number to reputable companies i know have a stable of satisfied freelancers, and i certainly wouldn’t give it to an individual that called me out of the blue.
6. Chryselle | January 23rd, 2008 at 4:26 am

Just to share something for the other side: Amy Derby has had a harrowing experience with Pay Pal recently.

Here’s the link:
http://www.write-from-home.com/2008/01/do-you-trust-paypal-i-no-longer-do.html

or a shorter version:
http://tinyurl.com/ysmfpo
7. amypalko | January 23rd, 2008 at 11:54 am

My paypal account was also hacked into a couple of weeks ago. I didn’t lose as much as Amy Derby did, thank goodness, but I have had my faith in their system knocked. I don’t think I’ll continue to do business through them. When it works, it’s great - extremely convenient. I just don’t trust them with my card details any more.
8. Michelle Goodman | January 23rd, 2008 at 1:59 pm

thanks for weighing in with these warnings. that’s my biggest fear. i do like the idea of using an empty checking account just for paypal, if you decide to go that route.