Small business owners will face difficulties in their payments as online transaction platforms Paypal Holdings Inc (NASDAQ: PYPL) and Venmo decided to increase their transaction fees. These new changes will come into existence from July 20. So now, the small businesses have to think about whether they can manage the increase or they are going to face a terrible hit.
Online transactions have taken control over the business world. Customers and companies are using these processing vendors for payments. Small businesses are also running hoping on this. In addition, these platforms connect people all over the world.
By the end of this month, PayPal’s transaction fee will be 3.49% and 49 cents. And for Venmo, it will be 1.9% and 10 cents. So to make it more clear, if a transaction is made for $500, PayPal will charge about $18 from the seller, and with Venmos’s charges, the seller has to pay something under $10.
How Businesses Will Affect?
The increase in transaction fees will become a massive headache for small and local businesses because most of their payments are dependent on these platforms. Now they have to pay more from their pocket to meet PayPal and Venmo’s new changes.
The owner of Elevated Customs Inc, Caridad Marrero, said it wouldn’t be an issue to take the loss for these business owners. But it will push them to increase their selling prices, which they don’t want to. Small business people intend to provide services for low prices with unique quality.
Marrero further added their business also uses PayPal and Venmo as payment options for their customers.
Here is the comparison between PayPal, Venmo, and other vendors. Wallethub charges around 1.5% to 3.5% for a transaction. The merchants will pay a specific price based on numerous factors such as payment processor and card issuer.
The Bottom Line
Once these transaction fees start to apply from July 20, small businesses will decide how to handle this issue without facing any loss and not affecting the customers.