Introduced in 2000, PayPal has been prosperous to attract more than 200 million active accounts, across the globe in more than 20 countries. PayPal, a payment processing company has since then evolved rapidly and now it offers both personal and business account options for its clients. Though both these accounts provide similar options for their customers, yet there are distinct differences between the two types of accounts.
Choosing between the two PayPal account structures isn’t a fare deal for most people and so, in this post, we are going to tell you how to choose a PayPal account type and how to benefit from each type.
PayPal and its two account types
You may start off with having a PayPal personal account and then upgrade to Business or Premier accounts. One of the accounts offered by PayPal is for your personal use (Personal and Premier) and the other for business (PayPal business). You can sign up for free on each account. Both of these have varied capabilities and features. Read on to decide which is the right one for you.
If you are an avid online shopper, a personal PayPal account is ideal for you. With this account you can:
- Shop on merchant websites and eBay with the help of your credit card, bank account or debit card
- Receive and send money from family and friends
- Accept credit card, debit card and bank account payments for a nominal fee, especially when you sell on your website or on eBay
On the contrary, you can also make a right choice for your online business by choosing a PayPal business account. Through this account, you can:
- Accept credit card, debit card and bank account payments in lieu of a reduced fee
- Work with your business or company name
- Tackle users, letting you gain separate rights of access to all your employees
- Consider the Business setup guide
PayPal Personal Account
The PayPal personal account helps you with making secure and safe online payments. Not only that, you can also accept payments and send money. This is an ideal account structure for those who shop online as you get a chance to link your checking account with your PayPal account for payment options and money transfers. The customer needn’t bear any charge for personal PayPal account and this type is accepted in more than 1000 online stores.
Pros of PayPal Personal Account
- You don’t have to pay charges for any transfer that is made from a bank account that is linked, or from PayPal Cash or from a balance from PayPal Cash Plus.
- No monthly fees, no setup costs or termination costs.
- Offers a simple payment option for those who occasionally buy and sell things on Etsy, eBay or other e-commerce websites.
- Offers easy way of sending money or making digital purchases to send things to friends and family.
- Transferring money from sales to a bank account that is linked can be done free of cost. For instant transfer of funds, you can pay a 1% fee to a maximum of $10.
Cons of Personal PayPal Account
- PayPal charges fees for accepting credit cards and debit cards online
- Merchants selling online services and goods have restrained access to merchant services
- It is tough to distinguish personal and business transactions for tax purposes
PayPal Business Account
The PayPal business account is best for business entities and online merchants. This account gives businessmen the chance to accept payments sans the added processing fees of credit cards. Besides, it also gives its merchants online invoicing options, virtual terminal processing that lets you calculate your customer payments digitally and also through mail, phone or fax. Business account also offers options to express payments, giving customers a chance to check out through their PayPal account without having to disclose any personal details.
Pros of PayPal Business Account
- Setting up can be done superfast
- There are no maintenance fees, setup costs or termination fees
- There is more privacy than PayPal personal account due to the permission to register an account under the name of the business
- Users are allowed to receive payments through credit card from customers who don’t have any PayPal account
- It is possible to track profits, payments and much more
- Nearabout 200 employees can gain access to the business account and you have the discretion to choose which features of the account can be accessible by each employee
- There are live customer care services
- Sellers can process and collect payments in-store through PayPal Here
- You are given access to PayPal business products and tools
Cons of PayPal Business Account
- For every purchase, merchants will be charged a certain amount
- Once you sign in to business account, there is no other way of downgrading to a personal account. The only way out is to seek help of the customer service
Personal Account vs. Business Account – Fee Structure
For set up, maintenance of the accounts or cancellation, PayPal doesn’t charge any fee, whether in the personal account or the business account. This payment processing company only charges transaction fees when you sell an item through your PayPal account.
Sales Breakdown from Personal Accounts
- Domestic: 2.9% of the transaction amount along with a $0.30 fee/sale
- International: 4.4% transaction fee along with a fixed fee as per currency used while transacting
Sales Breakdown from Business Accounts
- Domestic digital sales: 2.9% of the transaction amount along with a locked fee according to the currency used
- International digital sales: 4.4% of the transaction amount along with a locked fee according to the currency used
However, it has to be kept in mind that transaction fees will vary among merchants who leverage PayPal in a physical store, for micropayments and for 501©(3) organizations.