It’s safe to say that most people using online payment methods are familiar with PayPal. Known for its swift and seamless transactions, the nature of PayPal is appreciated by millions. Taking things one step further, the payment platform has launched a Friends and Family function to make payments even more simple.
In this guide we’re divulging the details of the new function, exploring how it works and the fees they charge. We’ll also take a look at how Tap can help you take this one step further. After all, who doesn’t want to know a more convenient and secure way to send money to your loved ones?
How does the PayPal Friends and Family feature work?
The PayPal Friends and Family feature works by enabling users to send money to their friends and family without any fees.
According to the website, users need to have a PayPal account and select the "Send Money" option when wanting to make use of the function. Then, choose the "Sending to a friend " option, entering the recipient's email or phone number, and the payment amount.
Once confirmed, the funds are transferred securely, and the recipient can receive the money in their PayPal account. It's a straightforward and convenient way to share money with loved ones, making transactions fee-free (if conducted with GBP) and creating a closer connection within your inner circle.
Note that the transactions are only fee-free if they are done without a currency conversion and you use your bank account or PayPal balance. If you execute the transaction using a debit or credit card or to another currency, a fee will be applicable (see below).
PayPal’s Friends and Family vs. Goods and Services
When using PayPal, it's important to know the differences between PayPal's Friends and Family feature and the Goods and Services feature.
Friends and Family is best for casual, non-commercial transactions, like sending money to family or splitting the bill with friends, as it's mostly fee-free. However, it lacks buyer and seller protections.
Goods and Services, on the other hand, is for commercial transactions, offering added security, buyer protection, and seller protection. These payments are subject to a fee, incurred by the seller of the item you’re purchasing.
The pros and cons of using PayPal Friends and Family
The advantages of using the feature
Firstly, fee-free transactions make it an economical choice for sending money to loved ones or splitting expenses with friends. The Friends and Family feature allows users to save on unnecessary fees, maximising the value of their transfers.
Secondly, PayPal ensures enhanced security measures, safeguarding users' transactions through encryption and fraud prevention tools. This instils confidence in users, knowing their funds are protected from unauthorised access.
Lastly, the convenience and speed of PayPal Friends and Family make it an attractive option for quick and seamless money transfers, ensuring that recipients receive the funds promptly.
The limitations of the feature
While PayPal Friends and Family offers numerous benefits, it also has certain limitations and requires responsible use.
Firstly, it's important to be aware of the restrictions on payment types allowed in Friends and Family transactions, as certain purchases, such as for goods or services, should be conducted through the Goods and Services option for added protection. Using PayPal Friends and Family for business-related transactions violates PayPal's terms of service, potentially leading to account limitations.
Secondly, following best practices ensures secure transactions, such as only sending money to people you trust, verifying recipient information, and keeping communication open.
As mentioned above, it’s important to note that when sending funds to friends and family in other currencies there are fees involved. This fee is 5% of the amount being sent (a minimum of £0.99 and a maximum of £2.99). Then, there’s an additional 3% charge on the currency exchange that senders are liable for. We explore these fees in a comparison table below, using a clear example.
Tap’s money transfer solution
Tap is a fully regulated fintech platform, offering a similar money-sending service, streamlining the process of converting currency and sending funds abroad. From the app, these funds can be sent to any bank account, whether an individual, a municipality bill, or a business account.
Whether you’re sending funds to a friend overseas for their birthday or paying an electricity bill from your holiday villa, Tap provides a secure and fool-proof transfer option.
When your transaction involves a change in currency or external bank account, there will be a small charge determined by the account that the sender holds. Note that at Tap there are several tiered accounts, ranging from Essential to Prestige. You can learn more about the Tap accounts and how they work here.
Based on the account options, the following fees will be incurred when sending money to an outside bank account (i.e. a non-Tap user) and completing the currency conversion:
Essential: €2.00 (+ exchange markup of 1.99%)
Plus: €1.50 (+ exchange markup of 1.49%)
Prime: €1.00 (+ exchange markup of 0.99%)
Premier: €0.75 (+ exchange markup of 0.75%)
Platinum: €0.50 (+ exchange markup of 0.5%)
Prestige: €0.25 (+ exchange markup of 0.25%)
Sending money abroad fee comparison: PayPal vs Tap
Taking these fees into account, let’s compare expenses of sending funds from one platform to another friend’s bank account (note that all transactions between Tap users are free, so if your friend has a Tap account you can wave the initial row).
*Please note that these prices are based on current exchange rates and may differ. The original fee structure is worked out in EUR, so to make this table easier to understand we have converted the fee to GBP for you.
Tap2Tap payment solution
With the Tap2Tap feature, you can enjoy fee-free and limitless money transfers, offering instant and secure transactions without any restrictions. The real-time payment network supports fiat currencies, that’s GBP, EUR, and USD. All you need to do is have a positive balance and the recipient must simply have an account.
For example:
Say you want to send ￡50 to your mom for Mother’s Day. If you both have Tap accounts, this transaction is free of charge. You simply need to have the available balance and execute the transaction using the Tap2Tap feature.
If your mom lived outside the country and required a different currency, Euros for example, you can still send her the money incurring a small fee (mentioned above). This fee structure is determined by the Tap account that you have (outlined above).
How to use the Tap2Tap feature
Making use of Tap’s free transactions is easy. All you need to do is create an account and load the currencies you wish to use. In order to send the instant payments, the recipient of the funds must also have a Tap account.
In order to open a Tap account, you and your recipient will need to:
- Download the Tap app
- Create an account
- Complete the KYC identity verification process
You will then need to load your account with EUR or GBP. Then simply open the wallet you wish to transfer the funds of, select Send, and choose the relevant option.
Final thoughts
In conclusion, PayPal Friends and Family provides a convenient way to send money to loved ones, but it's essential to be aware of the associated fees and limitations. While it offers fee-free transactions within the UK, international transfers and debit/credit card payments incur charges. Additionally, the lack of buyer and seller protections makes it best suited for casual, non-commercial transactions.
To take money transfers to the next level, Tap offers fee-free and limitless transactions within the same currency to other Tap users. It also provides an efficient and cost-effective solution to sending money abroad. By making informed choices and utilising the Tap app, users can enjoy seamless and economical money transfers.
References:
- PayPal: What's the difference between Friends and Family or Goods and Services
- PayPal fees
- Tap Connect Network, please read alongside the Terms and Conditions
- Tap account options
- All of the above is subject to customers’ passing an identity verification process.