Paypal Says No More Personal ‘Friends and Family’ Payments to Business Accounts

Paypal Places Firewall Between Personal and Business Paypal Accounts
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Paypal has announced that Paypal business accounts will no longer be able to accept or receive personal (‘friends and family’) payments transactions, and that no Paypal account will be able to send friend and family transactions to Paypal business accounts. This is effective next month, July 28, 2022.

This is going to hit small businesses particularly hard, as many small businesses use Paypal for their business, and many of those small businesses – particularly sole proprietors – use a single Paypal account for all Paypal transactions, business and personal. After all, when you send money through Paypal you always have to tell Paypal whether it is a ‘friends and family’ or a business transaction. In fact, that is one of the hallmarks of Paypal, that “are you paying friends and family, or a business?” choice at the time of making the payment. Now, apparently, Paypal has decided that they don’t trust you to classify your payments, so your ability to send a ‘friends and family’ payment to a Paypal business account is being terminated, and all transactions to any Paypal business account will be classified as ‘business’

Paypal Places Firewall Between Personal and Business Paypal Accounts Uncircled

So, why is Paypal doing this? So far they’re not saying, the email announcing it to their account holders just went out about an hour ago. However, it doesn’t take a math wizard to recognize that if all payments made to a business account are classified as business, they will all be subject to Paypal taking a cut, unlike payments that are classified as personal payments.

And, oh yeah, their cut for “send or receive goods or services” (i.e. business) payments is going up to 2.99%.

Terms of Paypal Rate Hike and Doing Away with Personal Transactions to Business Accounts

Here’s the actual wording, from the Paypal policy update page:

“We’re making changes to certain agreements (listed below) that govern your relationship with PayPal. These changes will take place automatically on the corresponding effective date(s) shown below.

Please carefully review the notices below and familiarize yourself with the upcoming changes. By continuing to use our services after the changes take effect, you agree to be bound by those changes. Otherwise, no further action is needed from you to accept such changes. However, if you would prefer to decline them, then you will need to close your PayPal account prior to the applicable effective date, as described in the user agreement.

Amendments to the PayPal User Agreement and the PayPal Balance Terms and Conditions Effective July 28, 2022:
U.S. business accounts will not be able to receive personal transactions from U.S. PayPal accounts. U.S. PayPal accounts will not be able to send personal transactions to U.S. business accounts.

The rate for the “Send/Receive Money for Goods and Services” payment type will be 2.99% (with no fixed fee). This pricing change will result in fee increases for some transactions. You can preview the Merchant Fees page that will be effective on July 28, 2022, following such changes.”

Email Sent by Paypal Announcing (But Not Explaining) the Changes

We’re making some changes to our legal agreements that will apply to you. There is no action needed from you today, but if you would like to learn more, you can find details about these changes, when they apply and what you can do if you want to decline the changes on our Policy Updates page. You can also view these changes by visiting, clicking ‘Legal’ at the bottom of the page and then selecting ‘Policy Updates’.

If you have questions about any of these changes or your account, please don’t hesitate to get in touch with us.

Thank you for being a PayPal customer.



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8 thoughts on “Paypal Says No More Personal ‘Friends and Family’ Payments to Business Accounts

  1. Seems you can no longer send money to friends abroad either. I’ve tried to send some dollars from here in Germany to a friend in the US but I was FORCED to make it a business transaction even though neither of our accounts are business and we’ve had transactions in the past.

    I’m going back to wire transfer and direct debit, it’s fucking ridiculous

  2. It’s not the fees I’m concerned about, it’s that PayPal now places a month-long hold on all money sent.

    1. That hasn’t been true for us. We’ve had a business account with Paypal for years and they very, very rarely hold the funds that we receive at all; it’s in our account and available to us the instant that it’s sent. From whom did you hear that they were putting a hold on sent funds?

  3. Paypal seem to be getting more predatory with every passing year. I look forward to when I can ditch them altogether and switch to something like Venmo, or Wise.

  4. This really really stinks! I have my business set up as a partnership and I PayPaled myself all the time with friends and family. It’s going to be really awful if I can’t send money without getting charged a fee. I’m not buying anything, I’m sending money from myself to my business PayPal. Guess I will have to stop using PayPal altogether and find something else to use.

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