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Hi all.

A question for those of you who have sold guitars (or anything else for that matter...) and got paid through their Paypal account. I'm about to do this for the first time and I thought I'd ask here if there is anything tricky I should know about before giving the go to my customer (who is several thousands of miles away from me, which is bound to complicate potential issues...).

I have a standard personal Paypal account and just went through setting up my bank account information (so I can transfer the funds into it, once my customer pays me). There is still some confirmation process about that to be finished, but let's assume this all goes well. Do I have to worry about something? Like will I be limited in the amount of money I can receive from my customer? Will I be able to transfer the entire funds to my bank account or will I be limited? This sort of things...

So if anybody has some yellow or red lights to show me, please do!

Thanks!

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)

Hey Alain,

I have been using it for a few years now and really like it. I've got a business account which may function differently than your personal account. PayPal does have all the info listed on there site as to what the differences and limitations are for the different level of accounts. I can tell you I've received payments of up to $5000 at one time with no issues. Paypal is a great way to receive Credit Card payments without setting up to receive Visa and MasterCard directly (I've looked into that extensively). Unless you are doing a large volume of CC payments I think that PayPal is defiantly the say to go. It also makes international transactions a breeze. One thing to watch is that a lot of people require the customer to cover the cost of the PayPal fee if they want to pay with PayPal. If you carefully read through the user agreement you will see that this is not allowed.

All in all I'm really happy with how PayPal has worked for me.

Josh

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Josh House

Canadian Luthier Supply
http://www.canadianluthiersupply.com
https://www.facebook.com/canadianluthiersupply?ref=hl
House Guitars - Custom Built Acoustic Instruments.
http://www.houseguitars.com

Thanks for the info Josh.

I did go through the information on their web site but I thought I'd ask here just in case I missed something. Upgrading to a business account is sure tempting, if it's just for accepting credit card payments through Paypal!

Anyway, if anyone else as some extra info about that, please share it!

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)

Be prepared to not see your money for several weeks. They will hold the money for a while until you have a good history of transactions. Then they will start releasing the money immediately.

Re: credit cards
I just signed up with a merchant service and have a card reader here. I only pay $7.00 a month for the service. I think the equipment was $200. I can take all major credit cards, plus debit. I can call in a payment if I have a problem, and I can take orders over the phone.

Now that might be a slight showstopper. Several weeks? What if I don't have other Paypal transactions for a while? Any other people here experienced this issue?

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)

And if the customer is really nasty they could do a chargeback. Thankfully those people tend to be extremely rare.
I much prefer direct bank transfer.

Didn't happen like that with me. I see money out of PayPal way faster than any bank I've ever dealt with. Way easier to deal with than banks. Easier to advise customers how to use the interface, which seems common the world over, whereas every bank is different and some are highly complex with international transactions and intermediary banks. Might well be different depending on where you're domiciled and local financial regulation. I've dealt with orders from ~20 different countries.

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Trevor Gore, Luthier. Australian hand made acoustic guitars, classical guitars; custom guitar design and build; guitar design instruction.

http://www.goreguitars.com.au

Alain,
I have been using Paypal for several years and have found it very problem free. I use their "virtual terminal" as well which is the credit card application. It costs $35 per month for the virtual terminal so with my volume it is not cheap but it is a service to my customers. It takes about 5 days for the funds to transfer over to your bank account. If your customer is in Canada you can use e-transfer through your bank. I like that option because there are no service fees but almost every time I have had to call my bank because there was a glitch and the limits will need to be adjusted as they are typically a little on the low side ($1,000 to $1,500), and this only works within Canada at the moment apparently.

Shane

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Canada

Paypal has been great for my window frame work affordableviews.net. I get my money fastest through paypal, and their customer service has been good. I use the basic business service so no monthly fee. I send an invoice through paypal to get paid, I don't want to pay the $35 for the virtual terminal and it is not needed. Best part to me with that is that I never have their info, so if there is an issue on the transaction, it is on Paypal. The invoice is nice since I can add the contract to it, so they have lead time on the invoice and the details of what they ordered.

All credit card companies serve the consumer first and you second. If there is a chargeback, they will take money from your account if there is any there. I had one that was an accident, sold a frame to a large office and the accounting dept. did not know what it was so they called paypal months later who immediately debited my account. It has been many years since I opened the account, but I do recall they have limits to start and they check you out, so sign up early.

I use a paypal credit card to spend the money, the moment the customer pays my CC is credited and I can spend the $$, most processors hold the $$ for a couple of days, then there may be a delay to your account by your bank. Paypal has been my business account for some time.
Rob

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http://shastaguitar.com/
http://www.kalimbakit.com/
http://www.youtube.com/user/comfyfootgr ... ature=mhee
http://www.facebook.com/robert.renick.7

Paypal releases the funds as soon as they become available. They cannot hold the funds . Often you may get what is called an Echeck , this will show as a payment but the funds have to clear to your account , this may take a few days as this is often the result of a bank transfer.
Account transactions from debit cards, and paypal accounts clear almost immediately , Ccard transaction also are there within a few hours. I have never had to wait weeks. You may need to verify your account and that delay is because of you , you need to verify your banking information. Paypal may make 2 small deposits , you must notify that the deposits were made to your account and the amount , that way they know the information to your back is a good one.
I do like Paypal. Been a member for over 10 years. No issues. I wish my local bank could say the same thing.

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John Hall
blues creek guitars
Authorized CF Martin Repair
Co President of ASIA
You Don't know what you don't know until you know it

I used to like PayPal, until I realized that it's the basis of the 'Nigerian' scheme. Basically, anyone who receives a guitar from you can just say 'item received not as described' and get their money back and keep your guitar. I'm sure it's few and far between, and that you're likely to have vetted your client beforehand, but it is possible to get burned using it. I've come to much prefer interac bank transfers, though I have not tried international with it yet...

That is in process right now. I'm still waiting for the two small deposit to appear in my bank account, but that shouldn't happen before mid to end of the week (3 to 5 working days, as they stated). I want to make sure I'm not going to be limited in the amount of money I can transfer from my Paylpal account to my bank account. My account is currently limited to 700$ a month for transfers to my bank account. But if I understand correctly, that limited will be removed (or increased?) when my bank account information will be confirmed. If that is the case, then I guess I'll give the 'go ahead' to my customer.

Regarding being scamed by customers who might cancel their payment after receiving a guitar, well I would need to hear some more actual stories about that before I worry too much. If that was so easy and frequent, word would spread. People like Josh and John would have had such problems, and they did not mention anything about that...

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)

Caution with NEW Paypal accounts. Paypal's "new" policy is to with hold up to 30% of each transaction for 90 days. They say this is to cover chargebacks.
The issue is they only do this randomly and you have no way to know until after you receive money. Google "Paypal rolling reserve" and read about it.
Good luck

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Lance Peck

I work for a bank so I can maybe add to this. PayPal transactions are ACH transactions, Automated Clearing House, and are transfers between banks that take place without the Federal Reserve wire system. They will only go through when there is money in the account being debited and the money goes through almost immediately. PayPal is a bank after all. Since it is the same as cash, the receiving bank will almost always make the funds available immediately but they can hold them for 24 hours.
An e-check is what you get when your bank is Check21 compliant, which most are or should be by now. The paper check is scanned and shredded and the electronic image is now the valid instrument. This is why you no longer get cancelled checks back with your bank statement, only pictures. My bank provides check scanners to customers, same as we use in house, to scan and deposit the checks they have received directly into their account. They then can shred the paper check since it is no longer valid.
This Check21 initiative is why you can get your money faster when you deposit a check and also why checks you write clear out of your account faster too. But who writes checks anyway?
Anyway, if there is a disput with a credit card transaction, the CC company can reverse the transaction up to 6 months after the fact. At least Paypal limits it to 45 days.
PayPal is also more expensive to the vendor than a credit card. PP charges 2.70% or so per transaction where a credit card processor charges about 1.70% for any card except American Express who does their own processing and rips vendors off for close to 3.00%.

Anyway, I hope some of this was helpful. Banking can be boring and this stuff is about as exciting as it gets aside font alcohol fueled sales meetings of course...which I am at right now waiting for the prospective customer to arrive and drinking vodka tonics. Three deep right now. Yeehaw!!

Also a reserve account is required for anyone accepting credit cards or ACH payments for exactly the reasons mentioned above. Chargebacks can cost banks a lot of money if not handled properly, i.e. reserve accounts mandated in customer agreements.




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http://www.CostaGuitars.com
PMoMC

One more thing, the fact that PayPal didn't have a reserve account for vendors until now is a miracle.
Let's pretend I want to rip off PayPal. I set up a bunch of bogus transactions with a bunch of fake customers. After I get the money from PayPal, I empty my bank account or just close it. Then I dispute the bogus transactions with PayPal saying I never got the goods. PayPal gives me(as the fake customer) my money back. They then try to get the money back from me (this time as the vendor) and I have skipped town and closed my bank account. PayPal honored their agreement with the buyer and gave back the money but can't recoup losses from the vendor so Paypal is out the money.
As a bank, we require a 10-25% of monthly billing reserve account depending on the type of business and the historical charge back rate of said business. For example, we might require a business doing $100,000 in monthly credit card/ debit/ ach sales to maintain a reserve account of as much as $25,000. PayPal is only covering potential losses by requiring a reserve account/ holding some money back. It's not BS. It's smart business.





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http://www.CostaGuitars.com
PMoMC

Thanks John,

All this is most certainly very informative.

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)

re: Paypal holding money

I just opened a new paypal account...maybe a couple of months ago. Please read this:

https://www.paypal.com/us/webapps/mpp/s ... -holds-faq

They can, and do, hold money up to 3 weeks. It's not unusual for them to hold money on new accounts the full 21 days. After you've had a good history with them, they usually start releasing the funds immediately. My funds release immediately now, but it was a bit of a pain for the first several transactions. At one point, they were sitting on about $4000 from several transactions, and all I could do is wait and twiddle my thumbs.

That said, I've had zero issues with Paypal so far, and actually they've been quite helpful getting funds released when their package tracking wasn't working for me.

I have had a long relationship with Paypal . When you look at the convenience of it , you can get payments from all over the world , you can also use a Paypal debit card for getting your money out like any bank card. You can send money requests or take Ccards , it is a great service. Once you are approved it is service you will find you can't do business without .
The more you do the lower the fee % rate . It is better than my bank , the rebate is better than the saving interest rates at my local bank. Like anything , do your home work . Tony gave an enlightening essay of why the money is held. All in all it is a part of modern day business.

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John Hall
blues creek guitars
Authorized CF Martin Repair
Co President of ASIA
You Don't know what you don't know until you know it

Well guys, thanks for your input. I believe I will go ahead and use Paypal for this transaction. I was able today to confirm my bank account information and it seems I don't have any limits.

If in the worst case the hold my money for a while, I can live with that. Although I doubt this will happen, as my account exist since 2009 and they never had any issue with me.

Thanks for your help everyone!

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Alain Moisan
Former full time builder of Acoustics, Classicals and Flamencos.
(Now building just for fun!)