What is PayPal Friends and Family? PayPal is putting new limits on a feature in its payment system that allows people to receive money without paying extra fees, the company recently announced. Starting July 28th, only personal PayPal accounts will be able to get funds via Friends & Family, a transaction method intended for trusted recipients.
There are two ways of sending money on PayPal: Friends & Family and Goods & Services. F&F is intended for paying your friend back for dinner, for example, or giving your kid some birthday money — you know who’s receiving the funds and what you’re paying them for. There’s typically no fee involved, but it also drops protections for issues that might come up, like refunds or scams.
G&S is intended for purchases, and money sent this way is subject to PayPal fees. Everyone hates fees! But with G&S, if the thing you buy isn’t as described, it’s damaged when it arrives, or it just never gets to the buyer, you can often easily get a refund for the purchase.
What is PayPal Friends and Family?
PayPal Friends and Family is a feature you can use to send and receive funds for personal reasons. For example, you could use it to repay a friend for dinner or get help paying your bills. While many PayPal users like to use Friends and Family for other types of payments, it is not ideal for business-style transactions, and there is a separate feature for buying or selling.
How To Use PayPal Friends and Family
The steps for sending money on PayPal are pretty similar across all devices and payment methods. You can follow the general steps below:
- Click “Send and Request” — or “Payments” on the PayPal app.
- Enter the recipient’s name, email address, mobile number or PayPal username.
- Enter the payment amount and add a note if you want to.
- Choose your payment type. This is where you would choose “Sending to a friend.”
- Choose your payment method.
- Review your payment information and then click “Send Payment Now.”
If you’re using PayPal.me to pay, you can click the link that the recipient gave to you and then follow a set of similar steps. However, if you’re using PayPal and can’t change to the Friends and Family option, it’s likely because you can only send Friends and Family payments to personal accounts. So if your recipient only has a business account, you can only send a Goods and Services payment.
How Much Does PayPal Friends and Family Cost?
In many cases, it is possible to avoid paying PayPal fees while sending money with PayPal Friends and Family. If you send a domestic payment using either your PayPal balance, a bank account or an Amex Send™ account, there are no fees for the sender or the recipient.
However, if you send a domestic payment using a card, you will have to pay 2.9% plus a fixed fee based on the recipient’s currency. For example, the fixed fee for U.S. Dollars is 30 cents per transaction.
Sending international payments with PayPal Friends and Family has a 5% fee for every payment method. However, it won’t cost less than 99 cents or more than $4.99. If you use a card, you will also have to pay the 2.9% plus the fixed fee. In addition, you may need to pay a conversion fee if fees are charged in a currency other than the currency you use to send payments.
Is PayPal Friends and Family Safe To Use?
One of the biggest concerns when using PayPal Friends and Family is that these payments are not covered by PayPal Purchase Protection. PayPal Purchase Protection ensures that buyers receive what they pay for by allowing them to file a dispute if they don’t receive their item or if the item is different than described. Therefore, using Friends and Family to buy an item or service is not recommended.
However, PayPal Friends and Family is a generally safe platform to use for sending and receiving personal payments. PayPal includes the following security features:
- Hides important financial information from other users
- Monitors transactions
- Encrypts transactions
- Assists with fraud
- Dispute resolution and investigation
- Purchase Protection for buyers and Seller Protection for sellers.
PayPal Friends and Family vs. PayPal Goods and Services
While PayPal Friends and Family is for sending and receiving personal payments, PayPal Goods and Services is for sending and receiving business payments. For example, you can use PayPal Goods and Services to buy a physical or digital item or pay for a service.
Since PayPal Goods and Services is used for business, it will include PayPal Purchase Protection or PayPal Seller Protection. However, it will also include more fees for the recipient, or the seller in this case.
While buying with PayPal Goods and Services is free for buyers — unless you need to convert currencies — seller fees may cost somewhere between 1.9% and 3.49% plus a fixed fee for domestic payments, depending on the payment method. For example, PayPal Invoicing and Pay with Venmo will have a 3.49% fee in addition to a fixed fee, while standard credit and debit card payments will have a 2.99% fee and a fixed fee.
Can you get scammed on PayPal friends and family?
Here’s a good rule: If they’re not your friends and family in real life, they shouldn’t be your friends and family on PayPal.
Occasionally, sellers will request that you make a purchase using PayPal friends and family rather than the traditional Goods and services payment. This can be a convincing argument as there is no fee required, meaning they may offer you a discounted rate.
Don’t take the bait.
In fact, using PayPal friends and family for business purchases is explicitly against their User Agreement:
“You must not use the “send money to a friend or family member” feature in your PayPal account when you are paying for goods or services.”
Business owners know this as well as should never ask you to pay in this way. Take it as a red flag and just pay the goods and services fee.
As one user commented “3% is a small price to pay for peace of mind”
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