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Paypal business account

Posted on 2014-03-06
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Last Modified: 2016-03-24
Hello guys,

it's been two weeks since I started to look for a precise answer.

The problem that I'm having with Paypal for the moment is that I want to open a business account with them and my trading routes are between the US and the UAE back and forth.

I'm based in the US and I sell and send US products to my customers in the the UAE.

I have bank accounts and buddies in both countries.

Now, the revenues that come from the UAE will be used to purchase products from here to send back to the UAE.

The dilemma is that I don't know what country I should open my Paypal account with.

I would like to open a US Paypal account since the currency is USD and products will be purchased from here plus that the account will be linked to my US bank account.

But I'm afraid that the transactions will look like an international transfer to my customers in the UAE rather than a transaction.

By the way, the Paypal account linked with my business will be used to pay from Paypal to Paypal only. No credit cards allowed since I got my UAE credit card terminal setup already.

What are your suggestions guys?

Appreciated in advance,

Phil.
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Question by:gxs
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by:John Hurst
John Hurst earned 250 total points
ID: 39911376
If you are in the US and export US products out of the US, it would be normal for the purchaser to pay in US dollars to your US account.

I would be inclined to use a US PayPal account.

You will want to keep accurate and detailed ledger transaction records so that if the transactions are reviewed, you can back them up.

Also, if the products are over $10,000 you may wish to rethink and have a foreign PayPal account for the foreign business.
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by:Gary
ID: 39911385
You should open the account where you are based but there is no disadvantage to a UAE account other than I would imagine taxes

But I'm afraid that the transactions will look like an international transfer to my customers in the UAE rather than a transaction
Are you invoicing or just transferring money - bit confused what the problem is here
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by:MajorBigDeal
MajorBigDeal earned 125 total points
ID: 39911423
Since you are exporting from the USA to the UAE, the money will flow from the UAE to the USA.  Since you are based in the USA and working in USD, and you presumably intend to use the remittances to fund additional purchases of you product in the USA then you need the account to be in the USA.

If you try to base your account in the UAE and transfer the money back to the USA that is going to be a problem logistically, and possibly legally as well.
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by:gxs
ID: 39911457
Thanks John for your reply.

Gary i'm confused too, you know it is an e-commerce websites and my team will issue invoices. Will there payment be a transaction or a an international transfer?

If customers are in the US sure it will be a transaction, but I don't know about the abroad thing.

Appreciated.
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by:John Hurst
ID: 39911463
You are issuing invoices. Will there payment be a transaction or a an international transfer?

Both.  An invoice is a transaction and you want accurate records of your products, sales invoices and accounts receivable.

The payment is an international transfer:  Wire transfer or bank draft (but not likely a cheque). That is why I mentioned $10,000. Banks track large transfers  (even in payment of an invoice).

If your total volume will exceed $100,000 in a year you may wish to speak to an Accountant.
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by:gxs
ID: 39911481
There will be a Paypal button in the website at the checkout page (pay using Paypal) and you know there are two sections in the merchant's Paypal page that the customer will be forwarded to. The first section is for the customer to login using his Paypal account and pay. The second section is to pay using a credit card which is disabled as I told you since I have my Credit card gateway already setup.

Logically, if my customers in the UAE pay to my US Paypal account, it is an international wire even if it is a transaction.

But in Paypal, merchant transactions are different from international transfers in the aspect of fees.

I'm just worried that my US Paypal account would refuse to accept payments from foreign Paypal accounts which will force my customers to do Personal international transfers. You got what I mean? Because of that i'm still considering opening a UAE Paypal account.

I know it is kind of vague to explain the problem but I hope you understand my point.
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by:Gary
ID: 39911533
I'm just worried that my US Paypal account would refuse to accept payments from foreign Paypal accounts
There is no reason this would happen unless there was suspicious activity on the account.
What kind of monies are we talking about here? I'm guessing either a few large amounts or lots of smaller amounts..???
Being in the US you have a lot more avenues available to you and I would suspect PayPal may not be the best payment provider for you. I'm not from the US but I know a little bit about how the market works over there.

Do you have a merchant account already? Can you get one?
I assume you have a business account? So a merchant account should be a fairly simple exercise.  What is it you are selling? (if you can tell us)
From the little you have told us I think this may be a better option for you. i.e. Merchant account and credit card processor.  Generally they work out cheaper than the commissions PayPal charge.
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by:gxs
ID: 39911566
We're talking about small amounts in large volumes <50k a year.

It is a Prestashop script selling electronics, clothes, misc. etc.

Me neither, i'm not an American citizen but I have been here for more than five years and lived in Boston, NY, PA, RI, VA.

I know Paypal is a pricy option but when you go international man, things get complicated.

In the GCC countries, Credit cards security is seriously top-notch and rigid. Since the fraud departments in GCC countries banks are weak unlike here, they tightened the security related to online transactions.

They even implement the triple shield feature on credit card transactions involving  SMS code verification, the bank's private page and a specific 4-digit online transactions setup pass.

You have to enter these credentials every time you purchase a product.

To top it even more, shipping companies such as Fedex, Aramex etc. started to provide Cash on delivery services to bypass the hassles. There is so much wealth in there that if things are loose, money will disappear into thin air.

Anyway, two years ago, Paypal worked its way out with GCC banks and linking credit cards, banks account became possible. So Paypal is becoming seriously a huge hit there when compared to the US flexible alternative payment solutions.    

Me personally, prefer a US Paypal account due to its low fees compared with the UAE one which is doubled in fees.

In regard to the merchant account, that's right. I don't have one yet but that's what I'm planning to do, opening a merchant account.

Now I believe you understand why I'm anxious about the entire thing.

Waiting for your responses,

Phil.

* GCC = Gulf Council Countries (similar to the EU in a way or another)
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John Hurst earned 250 total points
ID: 39912203
I understand what you are saying. Your volume is small, and you are working out of the US. So I recommend you have a US PayPal Account.

You need to keep accurate business records. So you need a financial system like QuickBooks or some counterpart, you need to issue proper invoices (which you can email), have accounts receivable, and use incoming cash to pay (clear) the accounts receivable.

I do not see anything wrong above, but as you point out, things are looser in other places. So you need to keep your own end clear, accurate and transparent.
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by:Gary
Gary earned 125 total points
ID: 39913723
Stick with PayPal US then, even when you get a Merchant Account you could still use them and get better rates.
https://www.paypal.com/webapps/mpp/merchant
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by:John Hurst
ID: 39914082
@gxs - Thank you and I was very happy to help. Good luck and since I am business owner, I am again happy to assist.
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by:gxs
ID: 39914085
Thanks for your help too John.

Sure thing we are keeping our records neat and arranged from balance sheets to income statements but you know that Paypal thing made things a bit complicated.

Hope you all have a good one.
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