Tuesday, January 5, 2010

account pay pal real cost

As of early 2010, there are already 150 millions PayPal users over 190 countries. No doubt it is the BIGGEST payment service provider in the world, it is definitely one of the methods you should use too but is it the BEST you can have or should it be your primary payment processor ? What is account Pay Pal real cost ?

There is NO startup cost to sign up with PayPal, that is why they have so many users. But despite many confusion, there are actually charges when you receive payments in your PayPal account. In Malaysia a flat fee MYR 2 plus a percentage is charged on every transaction. The percentage fee will depends on your total monthly received funds ranging from 2.4% to 3.4%.

Monthly SalesPrice Per Transaction
RM0.00 MYR - RM12,000.00 MYR3.4% + RM2.00 MYR
RM12,000.01 MYR - RM40,000.00 MYR2.9% + RM2.00 MYR
RM40,000.01 MYR - RM400,000.00 MYR2.7% + RM2.00 MYR
> RM400,000.00 MYR2.4% + RM2.00 MYR

For example, if you receive a total of MYR 1,000 in ONE transaction in a particular month, you will be charged MYR 2 + MYR 34 = MYR 36. An equivalent of 3.6%

So the less money you receive in a month, the higher fee you paid: For example, if you receive MYR 100 in a particular month, your fee is effectively 5.4%

Its even more ridiculous if you receive less than MYR 10 a month, in which case you will be charged 23.4% fee. If you receive MYR 1 that month, not only you do not really get any profit, you will be charged 203.4% or you will have to pay PayPal MYR 2.03 in order to receive MYR 1 so you end with - MYR 1.03 loss !

The more number of transactions you have in a month, the more you will pay too. For example in below chart, assuming your month end total received fund is MYR 100 but the number of transactions you have are different. You will see if you receive MYR 10 in 10 times in that month, your cost of using PayPal will be 23.4%

So PayPal is only GOOD for VERY EXPENSIVE stuff that you sell ONCE A BLUE MOON. Its VERY BAD if you have plans to increase sale volume using pricing strategy ...

The numbers shown here is Malaysia specific but the derived concept apply in most places ...

No comments:

Related Posts Plugin for WordPress, Blogger...