PayPal announced new restrictions on a feature in its payment system that allowed people to receive money without paying additional fees .
As of July 28, only personal PayPal accounts can receive funds via Friends and Family, a transaction method intended for trusted recipients.
There are two ways to send money via PayPal: friends and family, and merchandise and services.
The idea is about the way friends and family let the sender know who is receiving the money and what they are getting in return for payment.
There are usually no fees, but they lack protection from issues that may arise, such as refunds or scams.
While the goods and services method is for purchases, funds sent in this way are subject to company fees.
In the event that the thing you buy does not meet the specifications, was damaged upon its arrival, or did not reach the buyer, you can, through the method of goods and services, recover the money of the purchase easily.
Many businesses handle transactions using a PayPal business account. You receive payments for goods and services through the friends and family method, although technically you are not supposed to.
The buyer may not realize the difference between the two methods, or the company and the customer can agree to send money in this way to avoid seller fees.
This is fairly common in many informal transactions, such as people selling things via social media platforms.
And the buyer may know the seller personally and trust him to deliver the goods. Sellers also sometimes insist on the friends and family way of avoiding transaction fees, which causes problems if something goes wrong.
PayPal simplifies the fee structure for goods and services
The change stops this method for sellers who use a PayPal account to run a business. They are now subject to additional transaction fees.
With this new change, US corporate accounts will no longer be able to accept personal payments without a fee.
People who use a PayPal account to manage a company account also need to create a personal account to receive money without fees from friends and family.
The company appears to have changed the rules to clamp down on misclassified purchases. In the announcement, it said the amendment would bring consistency across the platform and remove confusion about eligible payments for buyer and seller protection.
In the same announcement, the company also said that the transaction fee structure for goods and services may change beginning later this month.
US sellers currently pay 2.89% plus $0.49 per transaction. But starting July 28, that changes to 2.99% with no additional flat fee.