Payment Standards re Credit/wire transfer and withholding tax

[jbtut]

From my experience (novice paypal business user), you aren't accurate.

I know for a fact that if I charged 3.5% I would lose money on the transaction (versus the invoiced cost).

Yes... the "basic fee" for receiving money is 3.4% (+20p GBP)

BUT... there is also a "cross-border" transaction fee of 1.5 - 4.9%

ALSO...Paypal don't have the most competitive currency exchange rates. They also charge a currency conversion fee of 2.5-4.0% above market rates. They can often cause a substantial difference between the banking of what is requested and what is received. Something that any prudent business would ensure against, through the imposition of a generalised transaction fee.

It's a shame that Paypal aren't more transparent about their fees for business owners. I'd love to send accurate invoices - where Paypal could add the necessary fees in advance. They don't - which means businesses have to 'guesstimate' what the charges will be...and add them as a statutory amount. It sucks... for all parties concerned (except Paypal).

That's interesting. I was going by the Paypal "Philippines cross border transaction fee" schedule.

As far as conversion rate, does paypal cheat you on conversion when billing in your own currency? Paypal can invoice in Php. When we looked at it they were going to invoice my paypal in Pesos. I'm no expert though. I assumed if they billed X amount of Pesos it would be X-3.5% deposited. The Dive op sent the invoice in case we had issues wiring $. It shows up to me as Pesos, not USD.

Does your bank charge a significant fee for wire transfers?

I've never had this issue in Indonesia or Malaysian diving. That's why I was surprised by the charges. Obviously I will include a specific request regarding payment when requesting quotes in the future.

 

[Midget]

Does a bank taking 7% from the wire transfer deposit sound right? Is that what banks in the Philippines actually do, or is that hogwash?

 

[ocdiver1]

I've wired several times to the Philippines to pay for diving and it's never been mentioned to me..and the resort didn't levy any type of additional charge. Ask I mentioned in my last post, I'd pay them the agreed amount, minus the surcharge, and not give it a second thought

 

[stevenl]

The exact Paypal costs depend on the amount transfered, but for me are on average around 4%.

Advice your guests to pay by credit card in your local currency, so the bank/credit card company does the currency exchange for the guest and you recieve in your currency. If a payment is made using a Paypal account in stead of credit card Paypal will do the currency exchange, which is bad news for all parties involved, and if the payment is made not in the receiver's local currency that is very bad news for the receiver, and 10% extra costs does not seem out of the ordinary.

 

[Quero]

In SE Asia, the transaction fees for wire transfers, credit card transactions, and pay-pal receipts are typically the responsibility of the buyer and are charged separately. (Different regions/countries have varying practices--for example, in Brazil, where much of my family is from and where most payments are made via credit cards or pre-dated cheques, merchants don't impose percentages on credit purchases, but they do offer discounts for cash purchases, which amounts to the same thing!) I think it is reasonable for the operator to ask you to cover the additional charges for wire/credit card/PayPal payments, particularly since it's accepted practice throughout the region. I would ask for some documentation of the exact fees, however.

On the other hand, I would advise you NOT to pay the withholding tax. That is the business's responsibility, and they should have factored all such taxes into the amount they invoiced you for. Here in Thailand, for dive trips there is a 7% VAT tax and a 3% withholding tax that businesses need to produce accounting documentation for so that it gets paid only once for each customer's purchases, but these taxes are not added on top of anything the customer has to pay, so they are essentially "invisible" to the public.