If you’re like me, you don’t get paycheques. Instead, you get cheques or cash from your clients whenever they want to pay you. The irregularity of the payment can be a bitch (like when a large company forgets to put it into accounting, and then it has to wait until the next week’s cheque-sending day) but overall I love the freedom and the thrill of being an entrepreneur (well, that sounds all fancy but I guess I’m more of a risk-taking freelancer, growing and striving every day to become a big gun in this town called Earch).
Anyhow. Some clients were asking me – “Jeff, do you take credit card payments?” Of course the answer used to be “No.” – it was too much hassle to have to set up a credit card machine and all, and plus there is the 2~3% bullet I need to bite in order to receive credit card payments.
Well, I grew to a point where some of my clients are far away. Getting cheques mailed from Calgary takes some patience. Hell, I don’t even want to wait a day for cheques, or have to go pick it up anymore. There’s always the added hassle of having to go to the bank to deposit it too. Oh, and since I’m young, anything over $1,000 deposited in one day gets held for 6 business days.
Last week sometime, I set up a Paypal account under email@example.com. Once the bank account was confirmed I started using it right away.
I’m not selling any goods online or accpeting donations from random people, so the implementation was simple. I log onto Paypal.com, go to “Send and Invoice”. Once the client receives the invoice, there are links she/he can click and pay by credit card or through Paypal.
Here’s what happened on the first day.
- My client, who owed me $250 for almost a month paid me within 2 hours of receiving the Paypal Invoice. He’s not a bad-willed guy, and I never suspected he would not pay. But, he’s a really busy guy travelling a lot, and to meet me in person let alone sending out a cheque in the mail was too much. I’m one of those busy yet lazy types so I completely understand. But with this Paypal Invoice, he paid right away.
- My other client, who lives accross the Lions Gate Bridge (and if you live in Vancouver, you’ll understand why I don’t like to go over that bridge), owed me some money for business card printing. I paid the printing company out of my own pocket (I have a wholesaler account) and he was to pay me. Instead of having to run up to the North Shore, or meet him downtown, I got the money in within minutes.
- I needed to buy a new LCD screen for my Toshiba M60-CD4 laptop. I found one on Ebay. Without having to transfer funds from my bank account or my credit card, I paid it out from my Paypal account right away. I had more than enough for the new screen by then in my Paypal account.
- That evening, I received a deposit from John Chow for a secret project he hired me to do for him. It involves my inredible talent in coding… Well, OK, my knowledge in coding let’s say. My point is that, instead of having to meet him in Richmond (which is a good 30~40 minutes drive unless it’s at 3AM) to pick up a cheque, or wait for it in the mail, I just had him pay by Paypal. I had the money in right away. He paid within 5 minutes (he’s a decisive guy that will do it if he decides on it).
- I ordered a transfer for whatever money was in my Paypal account, to be deposited into my bank account. This will be done in 5 business days. Yes, I can wait this – at least I know the money is there for certain. It’s better than “Oh, sorry Jeff, I’ll mail out the cheque this Friday!”
Here are a few reasons why it’s good for small entrepreneurs like myself to accept payments by Paypal :
- Unless you are rich already, it’s a pain in the butt to have large cheques delayed. Smaller amounts are OK, but when the big ones are delayed, it’s just a hassle.
- Some people can be flakes. You may as well take the deposit quick and seal the deal. By the time some of these people sit back at their desks in the evening and ponder it, they just might change their mind.
- You don’t have to drive or walk to the bank to deposit the cheques.
- If you’re young like me, you probably have a Cashback limit. In my case, any deposits over $1,000 a day will be held back for 6 business days. That means, if I get $1,500 in a day, and I need the money quick, I need to make 2 separate trips to the bank over 2 days.
- Your clients like it. It’s easy for them to keep a track of their business expenses, and they get points too.
For these reasons, the 2.9% + 0.30 cents transaction fees that you need to pay as a merchant is totally worth every single penny. And, if your volume goes up, then your rate goes down, as far as 1.9%.