How to setup a business account for a company doing business as (DBA) several different brands?

[GwynethLlewelyn]

Hi helpful fellow PayPallers 😄

I have an old question, which requires a new answer (unless it's still the same!).

A small company which has already set up a business account long, long ago, does business under different brand names, each run by a different department, and operating in very different markets. So far, it has been using PayPal to receive payments on just one of the brands/departments; but now they're considering using PayPal on all the others as well.

Now, not only their accountant wants to keep separate accounting for each brand/department, but the marketeers (and the Board) wish the same as well; the name of the "mother company" is far less relevant (in this context) as the name of each of its products (and the respective market where they operate). So far, with just one of them active and operational, it's reasonably easy to create all the associated PayPal pages etc. around a single email address and a single account; but, of course, with multiple brands — all managed by the same legal entity — things become complicated.

Because it's the same company, it means that all the brands/departments use the same fiscal number (I'm not sure if that corresponds to the US FEIN), but, more importantly, they use the same bank account and so forth. It's easy to set up lots of email addresses — one per brand — and associate them all with PayPal; that's not an issue (and, AFAIK, never was).

What is trickier is to have this brand separation in terms of how end-users will see the PayPal pages or what they see on their bills, etc.

A few years ago, some well-intentioned PayPal users just said, "well, why don't you create separate PayPal business accounts, one for each brand/department"? There are, of course, two problems with that simplistic approach. The first is that PayPal doesn't allow the same entity to have several accounts. "Branding" is one thing; the legal entity is another, and PayPal wishes (very correctly so) to know exactly with whom they're dealing with. That means that each of those accounts, even if they had completely different-looking email addresses from different domain names (because that's how they're actually set up!), ultimately, they are all the same legal company, sharing bookkeeping/accounting as well as banks, credit cards, and so forth.

Back in 2016, on the Archives, this very same question was asked and the answer was a bit unusual. It was alleged, or suggested, that there is a PayPal concept known as child accounts. These were allegedly designed to deal with exactly this issue, i.e. having one legal entity owning the "parent" account — which would hold all legal business data, including bank accounts, etc. — and independent "child" accounts, which would look & behave as independent accounts for all purposes, but... they would be (internally) flagged as "belonging" to the "parent" account.

Conceptually, this makes a lot of sense, because that's exactly how companies with multiple brands work, and PayPal would be directly mirroring what is a very common business practice. But... how to set such a system up?

The 2016 answer just vaguely points to the notion of getting in touch with the PayPal second-tier support — the first tier probably answering that "no such service exists" or simply "you cannot have two accounts under the same legal entity" — or the so-called merchant support, where (again, allegedly) special PayPal representatives would be aware of the existence of this possibility and give the "parent" account authorisation to create all those "child" accounts. Once again: it was even alleged that this last step required manual intervention — some tech at PayPal tweaking the database — and was not an automated process, most likely because PayPal wanted to be aware of what the company wanted to do with their multiple accounts before they started using them; by having a human interlocutor, who could assess the necessity of having parent-child relationships between separate accounts belonging to the same organisation, PayPal could make sure that everything would be done according to their own terms and conditions, and only manually approve such a setup. I'm sure I don't need to explain why that extra precaution would be necessary; all sorts of possible frauds come to mind, and most certainly PayPal's operating license in many countries (namely, the US, the UK, the EU...) demands that they can ensure who are the legal entities behind a PayPal account.

As such, this special service wasn't announced on any of PayPal's pages (and its existence was not even told to their first-tier support line).

While all this sounds highly suspicious, the truth is that, as late as 2020, that procedure seemed to remain in place. If you read the comments on this blog, you'll see that, although the article's author recommends creating separate accounts for each brand/product/service, he seems to be unaware that PayPal doesn't allow all of these accounts to be owned by the same entity. One wonders how the author had set up his own business that way while avoiding getting blocked by PayPal. Nevertheless, if you scroll down on the comments, you'll find a few people who point out to this "parent"-"child" relationship, in pretty much the same terms as the archived thread from 2016. Sadly, though, they just report on this service indirectly — saying how they managed to get access to a "merchant representative" after facing the first-tier support line (and their denial of the existence of such a service), and how PayPal exchanged emails with them about the way this should be setup, etc.

From their descriptions, it seems quite clear to me that, circa 2020, they were talking about whatever PayPal had in place since (at least) 2016. One might therefore assume that such a service existed for quite a long time, and, since there is still demand for such a setup, one might assume that PayPal still offers such a service.

So, here are my questions...

1. How is this service called? In other words, when I face the first-tier support line, what do I tell them? I mean, I can't possibly say: "Hi, I'm aware that PayPal has a business service allowing multiple accounts to be setup as "child" accounts of a "parent" account, to which I would like to subscribe, but I know that you probably never heard of this before, so can you route this call/chat/email to whoever deals with child/parent accounts, please?"
   That sounds silly and even marginally offensive 🙂 I would therefore much rather prefer to ask them for the product/service's name instead, and ask them to get me in touch with whomever manages requests to access that service.
2. Is there really nothing on PayPal's website(s) explaining the process? (Since I don't know the service's name, whatever searches I do basically just returns that archived 2016 thread...)
3. It's also unclear what are the correct steps to take, and in which order. In my case, the "parent" company already has a PayPal account — for many, many years, in fact. It doesn't have any other account (except for the business owner's personal PayPal account, but that's a completely different — and separate! — story). Should it simply register a handful of free accounts, as yet unvalidated (except for email validation, of course), and then apply to establish child/parent relationships between these freshly registered accounts and the parent company's existing one? Or is it better to get in touch with the "special" representatives of PayPal first before one starts creating accounts left and right, possibly risking getting those accounts blocked or banned before the "special" rep is able to "fix" them.
4. How long — on average — does this process take to be implemented/validated by PayPal, assuming there are no extra complications?
5. What exactly does this child/parent relationship allow, and what does it limit (either technically or via their terms and conditions)? For instance, on these threads and comments I've linked to, it seems that the child accounts cannot have their own bank accounts or credit cards etc. associated to it; instead, they can only receive or transfer money from the parent account. The parent account is the only one carrying all the bank accounts/payment methods. It seems to also be possible to have each of the child accounts billing clients with their own billing ID (which is exactly what we wish to do).
6. What can the parent account restrict upon its children? For example, some child accounts might acquire services from third parties using "their" account (as opposed to using the parent's real account), which would internally be implemented as a transaction that would charge to the parent's credit card and/or bank account. Is there a way to limit the amount of these transactions, e.g. per month, or per transaction, or with a global total? If such a limit can be implemented, is this something that has to be "fixed" beforehand — namely, during the manual setup process — or are there special pages on the backoffice where the parent account can determine such limits? Are these limits applied to all children automatically, or can each child have its own limits set?
7. How are the many transaction fees calculated? Will each child benefit from fees that are calculated over the bulk of all the transactions (i.e. the sum of all the transactions from all children plus whatever transactions the parent also does on its own)? Or are each child's fees calculated only based on their individual transactions, not taking into account all the others? Since it seems that only the parent account has valid financial data (i.e., associated bank account(s), credit cards, etc.), one would assume that fees are calculated over the bulk of the transactions, but, since such fees will be reflected on the final sales price, each child account needs to know what to expect to pay in fees before the system is in place...
8. And finally, how much does this service cost? None of the threads/comments I've read talk about what PayPal charges for this service. One therefore assumes that it is "free", in the sense that it's just a manual setup, and then everything works exactly as per the usual PayPal fee model, applied to the parent account. Or is there a setup fee? (Per child?) Are there any recurring costs for keeping the system active? Or are there any extra fees — on top of all others — for processing the children's transactions? Is there a "commitment period", during which the parent company agrees to keep the service active (say, for 12 or 24 months...) in order to get some (or all!) of these (potential!) fees forfeited?

Many questions, I know. I don't expect all of them to be answered — unless a PayPal representative happens to read these and offers a link to their website where all these questions have already been answered, which would be a reasonable assumption to make; after all, there are at least a few companies already using this system (or, at the very least, which used it in the 2016-2020 period), and who must have had these questions (and possibly more) answered.

Thanks in advance for any insights!

Cheers,

    — Gwyn

[PayPal_JonK]

Hello @GwynethLlewelyn, 

Welcome back to PayPal's Community Forum! I'm sorry to hear there's been some confusion and difficulty finding a specific process and it's availability. After reading the description of the service you're looking for, I believe I've found it here: How do I link multiple PayPal business accounts and manage them centrally? 

That should answer most all of your questions in that article except fees. I couldn't find any difference in how fees are charged there or on our Fees page. If you have any other questions, please don't hesitate to reach out to our Customer Support teams. 

Best wishes!

 - Jon K