I have had quite a bit of experience (not all good) using PayPal lately, and wanted to share that with my friends so that you do not have to go through what I did (or potentially WORSE).
Like many of us who buy and sell gis in the secondary BJJ market, I use PayPal to both purchase (send funds) and sell (receive funds) when buying and selling gis. There really isn't much of an alternative.
Well, like everyone else I would prefer to NOT pay any fees for the PayPal service so I was using PayPal's "Friends & Family" option to both send and receive money. I should have been using the "Goods & Services" option which is specifically designed for the buying and selling of "goods." But in using that PayPal takes a fee that ranges from around 3% to over 4% for transactions involving "foreign funds" or "new accounts."
So like so many people that I've dealt with in the sale and purchase of gis I have learned that there is not a ton of profit. Therefore every dollar saved counts. That is amplified further if you sell on eBay where they take 10% off the top PLUS they take a small fee from the shipping. Then PayPal digs in for their fee. So it is hard enough to even break even when using eBay. Hence me not using it too much anymore.
So, there I was buying and selling gis using various sources, but mainly through the BJJ groups on Facebook. And all the time using PayPal's "Friends and Family" service to send and receive funds. Then one day PayPal shut down my account for suspected money laundering.
I could not move the money (over $10,000) from my PayPal into my bank, nor could I spend any of it. All I could do was accept more money, but only via the Goods & Services plans.
It took me TEN DAYS of gymnastics to prove that I was not laundering money. I had to provide photocopies of items like my bank statement, social security card and drivers license. I also had to dig up and provide the tracking number for EVERY GI that I had sold in the past few months. That was DOZENS of transactions. And what a pain that was.
And yes, they did check out each one and I had to explain why a few of the items were not mailed from Honolulu (where I am) but from other areas in the country to the buyers.
Let me tell you that was ten days of hell.
But, what I did learn that I want to pass on to you is this little tidbit that I learned in my discussions on the telephone with a representative of PayPal.
The risk you run as a SELLER when a buyer pays you via Friends & Family is this: Buyer pays you....then you ship the gi (or gis)...buyer receives the gi(s)....then the buyer rescinds his payment to you. Paypal will not even ask you before they return the money to the buyer because he transferred the money via Friends & Family and as such no transfer of goods occurred (in Paypal's eyes). And YOU have NO recourse to get the money back and the buyer has your gi (or other goods). So, that is one hell of a risk that to me, just isn't worth it.
As a result of all of this I no longer accept payment for goods via PayPal's Friends & Family. For any sale I generate and invoice and either I suck up the fee, I have the buyer pay the fee, or I split the fee with the buyer. I do the same when I buy goods. I will not pay for good via Friends & Family either. Sometimes the seller eats the fee, or if he balks I'll sometimes pay it or split it with him.
There is another alternative...and that is Venmo. Venmo is a service like PayPal but much simpler. And if you link your Venmo account to either a debit card or bank account then there IS NO FEE at all. How's that!
I've used Venmo several times and it's great. Not to mention that it literally takes 2 minutes to set up. Unlike PayPal which takes a while to set up properly.
The other downfall of PayPal, or so I'm told, is that if you generate a certain level of activity (I'm told $20,000), then they report your activity to the IRS. Now I don't know about you, but I buy and sell gis for fun and MAYBE make a small profit that is less than minimum wage. I do not need the IRS breathing down my neck to pay taxes on my profits. And this is not my business, I don't keep track of what I paid for the gis nor my expenses. So how the hell am I suppose to include my PayPal activities in my tax returns.
It never ends......just be aware and be careful.
Update...VENMO has no buyer or seller protections either. So you better know who you are dealing with when you send money.
See this link.
Update...VENMO has no buyer or seller protections either. So you better know who you are dealing with when you send money.
See this link.
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