PayPal friends and family: how it works, fees, and much more

PayPal is currently the most widely used payment system utilized by businesses and individuals. However, the PayPal friends and family services provide additional conveniences that further enhance the user experience.

If the buyer is someone you know, you can choose the Paypal Friends and Family option. However, if you buy something from a seller you don’t know, always choose the ‘Goods and services’ option.

With the ‘Friends and Family’ option, you don’t have to pay any commission. Therefore, you should use this option for business transactions. When making a purchase, it is important to exercise caution to ensure the security of your payment while buying goods or services.

PayPal Friends and Family: How It Works, Fees, and Much More

What is Paypal Friends and Family?

PayPal “Friends and Family” is a convenient service specifically designed for secure money transfers between friends and family members.

It allows a network of close people to send and receive personal money. PayPal also works with a different algorithm when used for commercial payments or business transactions.

However, after July 28, 2022, users only can receive money into their personal PayPal account through Friends and Family. To receive business payments securely and conveniently, individuals can utilize PayPal’s Goods and Services (G&S) function.

How to Send Paypal Friends and Family?

To use this option, PayPal users do not need to change the way they interact with the payment platform.

Before sending money to a relative or friend, PayPal asks the user to select the purpose of the transaction: ‘Send money to a friend’ or ‘Pay for a product or service’. Depending on what is selected, PayPal’s F&F option may or may not be available.

Depending on this, the payment solution automatically adjusts the transaction to the correct money transfer protocol.

The Ultimate Guide: How to Send Money to Friends and Family on Paypal?

You don’t need to be a techie or do anything on the platform to transfer money to a friend or relative. All that is needed is to follow simple instruction and don’t miss any of these steps:

  • Select “Send and request”.
  • In the “Send Money” section, provide recipient details such as their name, email address, or phone number.
  • Choose “Send to a friend”.
  • Enter the payment amount and include a note if needed.
  • You might be prompted to select a bank checking account for payment.
  • Finally, you have one last chance to check if all the data is correct before you click the ‘Send’ button to send the money.

Paypal Friends and Family Fees

In the US (or UK), personal payments between friends and family are free through PayPal if paid directly from your PayPal balance or bank account. If you pay by credit or debit card, you will be charged a ‘small fee’ of 2.90% plus a flat fee.

There is a Paypal friends and family fee for international payments. This fee is charged by the sender and is 5% of the amount transferred, but never exceeds $4.99. The minimum international fee is $0.99.

Fee for sending $1,000 to EUR $4.99
Exchange rate mark-up $40 (4%)
Total cost to send $1,000 to EUR $44.99

Paypal Friends and Family Limit

If your PayPal account has already been authorized, the limit is $60,000 per transaction, although you can send up to $10,000. PayPal sets no limits on the total amount or number of transactions you can send daily, weekly, or monthly using PayPal Friends and Family.

With PayPal Friends and Family, you have the freedom to send unlimited transactions without any set limitations on the total amount or frequency. As an example, for transactions within the US, you can even send $10,000 to the same recipient twice in a single day.

There are other restrictions on transfering money to international recipients that depend on the destination countries and the recipient’s PayPal account status (authorized or unauthorized). If you don’t have a PayPal account, you can only send up to $4,000 once.

Security and cost-effectiveness are paramount when choosing the best way to send money to India, for instance. PayPal offers an extra layer of protection with the Buyer/Seller Guarantee.

Can Friends and Family Use PayPal Payments to Buy Things From Strangers?

The global healthcare crisis has accelerated the proliferation of digital payments, making the industry more important than ever, PayPal CEO Dan Shulman said in an interview on CNBC.

In the past, the answer to “Can Friends and Family Use PayPal Payments to Buy Things From Strangers?” would have been affirmative, but in practice, that’s not the case.

This payment method used to be attractive to merchants as an alternative to “goods and services” because of the lack of fees, but scammers can use this method to take the money and get away with it, knowing that you will have no way to report the fraud to PayPal.

The system doesn’t know you’re a friend or family member. If you list someone as a friend or family member, they assume you’ve vouched for them and therefore aren’t entitled to additional protection.

Therefore, PayPal has decided to limit payments to friends and family so that payments made by your business are covered by PayPal Purchase Protection. This will protect you from potential damage or loss when making payments to your business.

Is it Possible to Fall Victim to Fraud Using PayPal Friends and Family?

PayPal, a company that processes over 20 billion transactions annually, is leveraging artificial intelligence to detect and prevent payments associated with criminal activities. In an email to Fortune, CEO Aaron Karchmer stated that the objective is to establish a safer platform for customers and contribute to a safer digital world for all.

While the service is generally safe, it is important to be aware that there may be individuals who attempt to exploit others. Learning how to recognize and avoid frauds can make your PayPal transactions safer and more enjoyable.

When making purchases online, merchants often request consumers to select a personal payment option, such as credit card, PayPal, or other available options, to complete the transaction securely and conveniently. This is to avoid incurring any fees as well as to avoid tax reporting rules. Not only does this violate PayPal’s terms and conditions, but it can also lead to the merchant trying to trick the customer.

Does PayPal Compensate for Unauthorized Payments?

PayPal Friends & Family transactions are not inherently protected by PayPal (you have to select this option when sending money), so if something goes wrong when you buy something using PayPal’s F&F option, the buyer has no recourse.

PayPal’s purchase protection ensures the privacy of most financial information by prohibiting its sharing with the seller, providing added security for transactions.

All transactions are securely encrypted and constantly monitored to ensure full protection, regardless of the origin or destination of the purchased goods. It’s important to note that this protection does not apply to PayPal’s friends and family (F&F) transactions, as it is not a core component.

This means that unless you are transferring money to a trusted and legal friend or family member, you are not protected if something goes wrong.

PayPal Friends and Family (F&F) is a feature designed exclusively for users to send money to their own family and friends, and not for transactions involving the family and friends of other PayPal users.

With PayPal F&F, a user has the option to request a purchase to be sent as a gift to a ‘friend’ at a different address, allowing for convenient gifting. However, the recipient can complain to PayPal that the items were not delivered and receive a refund.

Bottom Line

PayPal Friends and Family is a convenient and secure option for making prompt payments to friends and family for personal transactions with added assurance of transactional safety. While it may be tempting for some users to exploit the free payments for buying or selling, it is important to note that this may come with certain risks. Therefore, it is crucial to use this feature responsibly in order to safeguard your money.


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