How to Sell on eBay | How to Make Money on eBay | How to Sell on eBay - PayPal 101

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Accepting PayPal payments is pretty much a requirement if you are going to sell on eBay. Yes, you can accept other forms of payment in lieu of accepting PayPal, but PayPal really makes your life easier, and we are all about simplifying as much as possible when it comes to selling on eBay.

We have previously discussed the benefits of using PayPal to accept payments as an eBay seller. We have also explained the three different PayPal account types and why you really should have a PayPal Business Account.

Today, we are going to answer some questions that a loyal reader of ours, Bill, recently posed to us. Not only are we going to answer Bill’s questions, but we are going to throw in some bonus information.

The question arose about how PayPal fees are paid. At the time of this posting, PayPal charges a flat, per transaction fee of $0.30, plus a percentage of the amount received. PayPal charges a higher percentage for payments received from buyers outside the United States. They call these cross-border payments.

You only pay a PayPal fee when you accept a payment via PayPal. What happens is an eBay buyer pays you via PayPal and the money goes into your PayPal account. As the money is being deposited into your PayPal account, PayPal is removing their fees from the transaction. The resulting net deposit amount is what your buyer paid you, less the PayPal fees.

This works differently than how eBay charges you fees. eBay fees are due once a month and will accrue in your seller account during the 30-day period. You then receive an invoice from eBay at the end of your invoicing period and have a certain number of days to pay the invoice. PayPal never sends you invoices as they take their fees out immediately.

You will need a minimum of a PayPal Premier Account if you are selling on eBay, as this is the minimum account level which accepts credit cards. Your personal PayPal account won’t cut it if you are selling on eBay, so you will be forced to upgrade when you start selling. There is no charge for this. All you are doing is upgrading your account type.

As you can imagine, if you are doing any sort of volume selling on eBay, your PayPal account should be fairly healthy. Fortunately, you have the option of opening a PayPal Money Market Fund, which is currently yielding 3.62%. This is far more than the average checking account and we have seen it in the 5% range when interest rates were higher.

The PayPal Money Market Fund is free to you and simple to sign up for. Once you are signed up for it, your PayPal balance will start accruing interest. You don’t have to do anything special to your balance. Just let it sit there and grow, until you need to use it.

You can transfer your PayPal balance at anytime to a separate bank account. If you do this electronically, it is free. Otherwise, you can have PayPal cut you a check for a nominal fee. Not sure why you would choose the check option when electronic transfer is free and fast.

You can sign up for a PayPal Debit Card to gain access to the money in your PayPal account. It, too, is free and as an added bonus, you receive 1% back on all purchases made via the PayPal Debit Card.

Here is how we use our PayPal account. All of the payments we receive from our eBay listings go into our PayPal account. We have a PayPal Money Market Fund on the account, so we accrue interest on our PayPal balance. We use our PayPal Debit Card to make purchases for our business and we electronically withdraw money, as needed, to our business checking account. We keep a fairly healthy PayPal account balance to take advantage of the interest we accrue, as our business checking account doesn’t pay any interest.

We pay all of our vendors with our PayPal Debit Card, so we get 1% back on all of our inventory purchases. This can add up to a rather large number throughout the year.

Notice how we said that we only use our PayPal balance for business purchases and to transfer funds to our business checking account? That is because all of the money in our PayPal account is business funds, not personal funds. The way we get money into our personal accounts is via our salary. This is because we are running a real business.

This should clear up some questions about how PayPal works for those that sell on eBay. If there are any additional questions, feel free to write a comment (you may also use the ‘Contact’ link at the top of the page if you are not comfortable leaving a comment) and we will do our best to answer any questions.

Image: crazyneighborlady

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