PayPal is making some updates to its business accounts that your A/P and A/R teams need to know about if you’re using the service to make and receive electronic payments with vendors and customers.
Here’s a rundown of the changes.
Business electronic payment limitations
Effective July 28, 2022, PayPal users in the U.S. will only be able to send Friends and Family payments to individual consumer accounts – not business accounts.
This will ensure any payments your teams transmit or receive through PayPal are eligible for buyer and seller protections that businesses receive from the payment network. The update also helps Finance with recordkeeping, making sure transactions are attributed to the right areas.
Companies with business accounts will still be able to access features such as invoicing, automated reporting and multiemployee access.
The update will also help keep employers from falling victim to PayPal-related fraud. Reason: Anyone with a business account who wants to receive or send personal payments without paying fees will have to use a separate personal account to do so.
Along with this change, PayPal will be updating its P2P Goods and Services fee for consumers and merchants in the U.S. to 2.99% without a fixed fee attached. (The current Goods & Services fee is 2.89% plus 49 cents.)
Added flexibility with monthly payments
PayPal has also announced a new service to give customers more flexibility when making large purchases with their accounts: PayPal Pay Monthly.
The service was launched in part due to the popularity of PayPal’s “pay later” feature, which many customers opted to use this past year.
With Pay Monthly, large purchases and payments can be broken up into smaller monthly payments over a six- to 24-month period. The transaction will be completed immediately, and the user will repay PayPal directly. There are no late fees, and the option is available to businesses at no added cost, with no need for any additional setup.
Previously, PayPal offered users the options of either paying the full payment at a later date or breaking it up into four different payments.
This feature may make it easier for your A/P pros to pay vendors – and customers to pay you – without worrying about late fees or other penalties.