Warning, amigos. Yes, I understand that the recent hubbub about 1099-K tax liability (possibly) being triggered in Tax Year 2023 by online sales exceeding $600 (again, possibly) are fueling sellers who ask buyers to use Family & Friends instead of Goods & Services when paying via PayPal. Recently I said OK in that exact situation here on shf.tv. (I had never done F&F on PayPal before.) Welp! I got stuck with TWO fees that I wasn't expecting. A fee from PayPal. (Apparently PP started this upcharge in the summer of 2022. What ya don't know can bite you. . . .) And a fee from my credit-card company for "CASH EQUIVALENT - TRANSACTION FEE." (The company claims that I sent a "cash advance" to the seller.) Anybody else on the Forum also run into this cash grab? Related, I called my CC company and spent 20 minutes with a rep who, at the end of the call, said that she would put in my "request" to have the fee waived. (Yeah, I'm sensing a thumbs-down on its being waived.) If it isn't, then I'm looking for a new CC company. (Been with this CC for 10, 12 years.) Any suggestions for a new CC company? Or comments, y'all? Chaz
If you use Friends and Family on PayPal, it needs to be drawn from your bank account. Using a credit or debit card always incurs a fee. Otherwise there wouldn’t have been a fee for you or the recipient. Only use F&F with people you trust, as you have no recourse if there is a problem with your order.
I don't think you'll find a credit card that would treat a friends and family PayPal transfer as anything other than a cash advance or as they call it a "cash equivalent" transaction. So you'll need to look for a credit card company that doesn't charge a fee for cash advances, which may be very difficult. Even if you do find one, they likely charge a higher interest rate and they start charging from day 1. I'd double check with your card company. If they are charging interest right away, and they probably are, it may be worth paying off that cash advance asap.
My gardener is now insisting on a "friends & family" PayPal payment for yard maintenance each month. Am I to understand that B of A will be charging me a fee each month for this if the payment goes from my card, and PayPal will be charging me a convenience fee?
That is what happened to me when I recently purchased a power amp here on the Forum. And, as eddiel wisely warns, I'm probably paying interest on the F&F sum because BofA considers the transaction to be a cash advance. As best I remember, PayPal lets us change method of payment. As Ken Dryden suggests above, it seems possible to avoid the BofA fiasco by paying through a bank account instead by a credit card. But PayPal will still ding you a fee for Family & Friends. . . .
As I remember from the few times I have sent F&F payments through PayPal, there was one way to send it with a fee, and one way without. I am guessing that the payment routed from the bank account was no fee. So I know for the future, is it correct that an F&F payment drawn from the bank account will have no fees?
First off, Friends and Family is a terrible idea if you aren't buying from friends and family. There's no PayPal protection at all. Second, PayPal saw this coming a mle away, and has adjusted their fees accordingly. If you try to avoid the government's knives, PayPal wants a slice of the pie instead.
Friends and Family is a great way to deal with small payments to whomever. One does not generally need to worry about lower cost transactions going south, or not have any protection at all, most sellers here and other venues care about their reputation more than paying out on your $35 lost or damaged order. A seller too appreciates not paying fees on peanuts size orders. However, for big ticket items it unacceptable, and near insulting to ask of a buyer. About $50 is the top I would risk sending via F&F as a buyer, or ask as a seller. I generally don't ask, I give the option to the buyer in some cases. and they can save on shipping fee as well if they choose F&F..
PayPal fees are about 3%. If the seller is so concerned about $1.50 on a $50 order, and I'm giving up my ability to force a return if things go south, I'll pass.
Can't you just use Venmo instead? I don't see any odd fees on my account when I use Venmo, or maybe I should take a closer look.
Never have used Venmo; however, it might be in my future, especially if the IRS and PayPal and credit-card companies and sellers continue to conspire against me. . . . How would you compare Venmo and PP?
Welp, my payment was close to $500. My CC company charged me almost $25 because F&F was judged to be a cash advance. . . .
Yeah, F&F is basically the equivalent of handing someone some cash. That person could easily just give the cash back to you. So a credit card company will consider it a cash advance. You don't want to do that except from cash already in your PayPal account.
