The 2 % Business Turn-Off

Recently I ordered services and was very happy to have found a supplier. We had agreed prices, scope and timescale of the project. Later I received the contract by email and started reading it. Everything seemed to be as agreed, until I got to the payment terms. There I found an unusual insertion:

We will charge 2% extra for PayPal payments.

Te motivation is quiet understandable, Paypal will charge you 2% to process your inward payment. But should you really charge your client extra for this? I would think not, since this is a great business turn-off. More business is lost through little charges here and there, it generates the feeling in the buyers mind of hidden charges. While at the same time the buyer will wonder why he/she should pay for the suppliers bank charges.

I was given options to send a cheque or pay by bank-transfer. This makes the whole situation even worse, since you would be inclined to send a cheque, which would take weeks to clear through the banking system – this was a international transaction. You would certainly not use the bank transfer option since it would cost even more. The whole problem was no made easier by demanding stage-payments.

It seems to me the solution here is to increase your prices by 2% and don’t talk about it, or enquire before hand which payment method should be used. One needs to remember that getting payed is of the utmost importance for any small business, so PayPal seems a good way to go in this instance.

Look at your payment terms and do not create unnecessary business barriers. — ST.

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