PayPal For Freelancers: Pro’s and Con’s

When I bill out a project, my experience has been that most clients prefer to pay me the old-fashioned way by mailing in a check. However, as the internet continues to make things more convenient some companies are beginning to embrace online options as a way to pay for outside services like freelancing. And more and more freelancers are beginning to offer their clients the option, via PayPal or through their bank.

There will probably come a day in the not-too-distant future when paper checks are a thing of the past. Paypal could be the wave of the future. But before you jump on the Paypal bandwagon, weigh these pro’s and con’s:

Pro #1: Speed and Convenience. You can get paid in days rather than weeks or months, and it saves you having to drive to the bank and wait in line to deposit a check. If you work with clients overseas, getting a fast payment that is automatically converted into US dollars sure beats waiting for a check to be mailed half-way around the world.

Pro #2: Clients Like Convenience. Even though most clients will still prefer to pay with a paper check, the fact that you offer them a convenient online option shows that you are committed to making their life easier. Your clients will be grateful and will appreciate that you value customer service.

Pro #3: You May Appear More Professional. Ultimately your professionalism is determined by the quality of your work and how you treat your clients. But little extra touches like Paypal can help you appear more organized and tech-saavy, which may add to your professional cache.

However, there are drawbacks every freelancer should consider.

Con #1: Loss of Income. Paypal takes a small percentage of any payment for themselves (usually 2-3%), which for a large project can add up to tens or even hundreds of dollars lost. Personally I do use Paypal for small payments (i.e. accepting tips from blog readers or selling copies of my downloadable sketchbook), but I try to avoid it for client projects for this reason. However, you may feel differently.

Con #2: Easy Come, Easy Go. Paypal has one set of rules for the sale of tangible items (i.e. books, CD’s, etc.) and another set of rules for “intangibles” (i.e. freelance services). If for any reason a client is unhappy with your services (regardless of whether the cleint’s expectations were reasonable or not), Paypal makes it very easy for the client to get his/her money back, no questions asked. This story from FreelanceSwitch.com (a great blog for freelancers, by the way) should serve as a warning to any freelancer thinking of using Paypal to collect client payments.

I’m sure the day will come when we will all get paid online. But for now, be sure you are aware of the benefits and drawbacks before you offer Paypal as an option for your clients.

EDIT: FreelanceSwitch.com lists some alternatives to Paypal.

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3 thoughts on “PayPal For Freelancers: Pro’s and Con’s

  1. My partner and I were looking at using PayPal. After reading this, I think we’ll wait and find a better, more secure way to transfer money.

    Thanks for the great info!

  2. I have one client that pays me via Paypal. It’s nice to get paid quickly. It’s not nice that a fee is taken by paypal. It’s nice that that fee is tax deductable, just like paying your sever to host your website. I don’t do enough volume to upgrade my membership past the first level, so I don’t know if there are any benefits to upgrading as far as you can go.
    If you start with the free membership paypal doesn’t take a fee, if I remember correctly, Because you end up having to wait for a while to get paid. Upgrade once and you get paid within 3 days.
    I don’t think I’ll encourage any other clients to pay via paypal because of their “non dispute” clause. Alot of people get worked over on ebay because of it.

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