What's the difference between friends and family or goods and services payments? (2024)

FAQs

What's the difference between friends and family or goods and services payments? ›

PayPal Friends and Family vs.

If you're making a commercial transaction or an online purchase from an unfamiliar seller, using PayPal Goods and Services is recommended. For transferring money to friends and family, PayPal Friends and Family is preferred.

In many locations, PayPal offers a 'Friends and Family' payment option for the everyday exchange of money between you and your friends and family. For example, when you send money as a gift, split a lunch bill, pay your share of living expenses, or something similar.

a personal payment to friends and family (“Sending to a friend”) a purchase for goods and services (“Paying for an item or service”)

When sending money via “friends and family”, if the person sending the money is using a credit or debit card then the payor is charged a 2.9% fee with the option to pass that fee on to the recipient of the money. If the payor is paying from their bank account, they can send money to anyone in the US for no fee.

You can change your funding source/payment by clicking Change next to “Paying for an item or service." or “Sending to a friend”. Click Continue. Review your payment and click Send Money.

When you send or request money through your personal PayPal account, you can choose whether it's a “Friends and Family” payment or a “Goods and Services” payment. Friends and Family payments are often used to pay back a friend, deliver money to family members abroad or send digital gift cards.

Purchases for Goods and Services

Choose “Paying for an item or service” when buying a good or service. You can use this type of payment when you pay for an item you won in an auction, buy merchandise online, download music, or something similar.

Friends and family rounds are a type of fundraising used by founders to grow their businesses. Founders ask their closest friends, family, and connections for investments in their business, in exchange for equity in the company.

However as it is a gift payment, there is also no buyer protection as no goods or services should have been exchanged. If he was not a close mate or family member you should never use that option as it enables the seller to evade paying his Paypal fees and negates your buyer protection at the same time.

How much is the G&S fee? ›

What about Paypal's Goods and Services Fee? If a payment is sent via the Goods and Services option, the standard USD $0.30 plus 2.9% fee applies to the seller (payment receiver). This payment type is used when you're selling an item or service to someone.

If you're using PayPal Friends and Family to send money within the US, you should have fees only when you pay with your card (or if you send in different currencies)¹: Paying with PayPal balance or a bank account: no fee. With Card: 2.9% + fixed fee. With Amex Send Account: no fee.

F and F is commonly used to describe the final settlement or payment arrangements between the parties involved in a particular financial transaction or agreement. This means that both parties must agree to pay or deliver goods and services in a timely, honest, and completed manner.

While sending money using the 'Friends and Family' option is fee-free, this method also carries a higher risk of scams when dealing with people you don't know. Using the 'Goods and Services' option, which includes purchase protection, is safer for all commercial transactions.

Within the United States (or within the U.K.), personal payments between friends and family are free via PayPal, as long as you're paying directly from your PayPal balance or bank account. If you're paying via debit or credit card, there's a “small charge” of 2.90% + a fixed fee.

If you decide to buy something or are the one who has an online business, the “goods and services” payment method of PayPal is your best friend. When you choose this option for your commercial transactions, the main benefit is that they are covered by PayPal's Purchase Protection.

Payment is the transfer of money, goods, or services in exchange for goods and services in acceptable proportions that have been previously agreed upon by all parties involved. A payment can be made in the form of services exchanged, cash, check, wire transfer, credit card, debit card, or cryptocurrencies.

Tax laws don't affect money sent as a Friends and Family payment. They only apply to payments that you receive for goods and services. This includes payments you receive through PayPal Checkout or were sent by the Buyer as Goods and Services payments.