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paypalpaypal-adaptive-paymentspaypal-rest-sdk

What is the best way to pay out users so that the receiver pays fees?

I am setting up a monthly automated backend process that will transfer money from a central account to thousands of PayPal accounts. The transactions will vary anywhere from $50 to $10,000. The key requirements here are:

  1. Receiver must pay the fees
  2. No user input required. By this, I mean this process should run without any kind of action on my end (I've noticed that some PayPal integrations require a redirect, approval on the sender side, etc.).

Here are the possible ways I see that you can send money using PayPal:

  • Mass Pay
    • Uses classic SOAP APIs. Sender must pay fee, so not an option
  • Payouts API
    • Uses new REST APIs. Sender must pay fee, so not an option
  • AdaptivePayments
    • Uses classic SOAP API. However, you can force the receiver to pay the fees.
  • Rest API Payments

So, it seems like AdaptivePayments or REST API Payments are the only options that could work (there could be more, though). I'd obviously prefer to use the more modern REST API, especially for a new project, but if the functionality that I want to achieve is not possible, then I supposed I will have to use the classic Adaptive Payments option. Any insight would be greatly appreciated.

Solution

  • The only option that allows you to force the receiver to pay the fee is Adaptive Chained Payments, but that would not work for your situation. The type of payment you would be sending would be an Implicit Simple payment, which only allows the sender to pay the fee.

    So, your best option would be to use the MassPay API, primarily because of the fee. For US payments, the fee is 2%, capped at $1 which is a significant saving over sending a regular payment at 2.9% + $0.30.

    If the fee is that important, you could program it to reduce the amount you send by 2% or $1, whichever is higher.