Collecting dues for an organization

[luckydog5656]

I would like to use PayPal on my organization's website to collect biannual dues. We must collect $40 from each member in order to operate out budget and we are unable to raise our dues. The problem arises when PayPal takes out a cut via fees which had about a $100 loss this past year and has set us back quite a bit. As a solution we thought to charge a $2 convenience fee for those who pay their dues by PayPal instead of cash or check but a member said that that would be against the PayPal agreement and we could get the PayPal account closed. Is this true? Is there any way we can collect all $40 of the dues using PayPal? Also would your answer be effected if we were non-profit. We are currently using the Payment Standard buy now method.

[sandypurins]

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@luckydog5656 wrote:

As a solution we thought to charge a $2 convenience fee for those who pay their dues by PayPal instead of cash or check but a member said that that would be against the PayPal agreement and we could get the PayPal account closed. Is this true?

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Yes, it's true... here's the applicable User Agreement text and link...

4.5 No Surcharges. You agree that you will not impose a surcharge or any other fee for accepting PayPal as a payment method. You may charge a handling fee in connection with the sale of goods or services, as long as the handling fee does not operate as a surcharge and is not higher than the handling fee you charge for non-PayPal transactions.

https://cms.paypal.com/us/cgi-bin/marketingweb?cmd=_render-content&content_ID=ua/UserAgreement_full&...

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@luckydog5656 wrote:

Is there any way we can collect all $40 of the dues using PayPal? Also would your answer be effected if we were non-profit. We are currently using the Payment Standard buy now method.

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You cannot avoid the PayPal payment receiving fee.  The non-profit fee is slighly lower... it's 2.2% plus 30 cents.

[luckydog5656]

Thanks for the quick reply. I know I can't get around the fee but I was wondering if there was a way to get around that part of the agreement. I'm totally ok with paying PayPal for their services but I'd like the nonprofit organization not to take the hit but the members instead. The whole reason for the clause (I'm assuming) is so PayPal would have an equal playing ground in the checkout process among the many check out companies available. But collecting dues isn't paying for a product or really a service either; is there a third category? I think you can send money as a gift or direct transfer for free. Is there something like that that would apply here?

[sandypurins]

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@luckydog5656 wrote:

But collecting dues isn't paying for a product or really a service either; is there a third category? I think you can send money as a gift or direct transfer for free. Is there something like that that would apply here?

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PayPal has two types of payments... Purchase Payments and Personal Payments. Here's the definitions from PayPal's User Agreement...

"Purchase Payment" means a payment received for any of the following:

• A payment for the sale of goods or services;
• A payment you received after using the “Request Money” tab on the PayPal website;
• A payment you received for a donation;
• A Micropayment for Digital Goods; or
• A payment that is sent to, or received by, a business or other commercial or non-profit entity.

"Personal Payment" means amounts sent between two individuals (not to or from a business) without a purchase. Examples of Personal Payments include sending a gift to a friend or paying a friend back for your share of a lunch bill.

As you can see, your dues payments do not qualify as Personal Payments.

Here's another related section of PayPal's User Agreement...

4.1 Receiving Personal Payments. If you are selling goods or services, you may not ask the buyer to send you a Personal Payment for the purchase. If you do so, PayPal may remove your ability to accept Personal Payments.