Old Fashioned Bank Accounts Cost Your Business Time And Money – Why Not Use PayPal Instead?

Oct 14, 2016

JP Danko

JP Danko is a commercial photographer based in Toronto, Canada. JP can change a lens mid-rappel, swap a memory card while treading water, or use a camel as a light stand.

Old Fashioned Bank Accounts Cost Your Business Time And Money – Why Not Use PayPal Instead?

Oct 14, 2016

JP Danko

JP Danko is a commercial photographer based in Toronto, Canada. JP can change a lens mid-rappel, swap a memory card while treading water, or use a camel as a light stand.

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I have been using PayPal for almost all my business transactions for years now – however, I recently had to (briefly) open an old fashioned business bank account for a special project I was working on.

I was amazed at how expensive and useless a regular business bank account is compared to PayPal!

There were service charges for everything, on top of a monthly fee – and I couldn’t do half of the things I’m used to doing with ease with PayPal.

Now obviously, if you’re a large corporation, there are reasons why you might need an old fashioned business bank account – but for the vast majority of sole proprietor creative professionals and other small business owners, PayPal is a much more useful alternative to traditional banking.

Here are three reasons why I use PayPal for my business banking and not a old fashioned business bank account…


I am not associated with PayPal in anyway – I just genuinely think that PayPal is a great tool for running a small business with a few benefits over traditional banking that might not be immediately obvious. If you don’t agree – or prefer to manage your creative business another way – please leave a comment below and tell us about it!

1. Invoicing

Invoicing with PayPal is a breeze!

You can create, track and send invoices within PayPal – everything you need for invoicing is built-in.

But the best part is that clients can also pay their invoices electronically with one click using either their own PayPal account or with a credit card or bank account.

PayPal invoicing is by far the easiest way to invoice and collect payments from clients. PayPal currently charges 2.9% + $0.30 per transaction to process payments (plus a little more for global transactions, and a lot more for global credit card transactions) which can get pretty steep for big sales – but for day to day sales its totally worth the convenience (for my business anyway) – and about what you’d pay for a credit card processor regardless.

If you’re still sending stand alone invoices and collecting paper cheques from clients – or even asking for bank account e-transfers – do yourself a favor and try invoicing with PayPal.


2. USD Transactions

This is probably less of a selling point for US citizens, but I love carrying a US dollar balance on my PayPal account!

Think about how you have to deal with foreign currencies with a traditional bank: You deposit a foreign currency cheque and you get dinged on the exchange rate. Then if you buy something in a foreign currency and you get dinged on the exchange rate again – every time you exchange currencies you loose money.

With PayPal, you can send and receive money in most mainstream currencies. For example, even though I live in Canada I get paid in US dollars and I buy things with US dollars – no exchange.

As more and more merchants start accepting PayPal and other electronic point of sale payments, one day you could travel globally and never have to exchange currencies.

(Once you get used to working around borders with a single currency in the global digital economy it becomes kind of obvious how old fashioned the idea of national currencies are – US dollars are already the default global currency and it makes you wonder how long it will take before it becomes official.)

Finally, when I do want to transfer money to my personal bank account, I can wait until there is an optimal exchange rate, or just keep that money in PayPal.


3. Digital Economy Integration

As a creative professional, almost everything that I sell is delivered as ones and zeroes, so it makes sense that I get paid in ones and zeroes (as unnerving as I actually find the concept of your entire net worth represented by a number on a computer network – it reminds me of the clock on people’s arms from the movie In Time).


PayPal is seamlessly integrated with the digital economy – traditional banks are not.

All of the agencies I work for pay me through PayPal. When I sell something online, I get paid through PayPal. When I buy something online, I pay with PayPal. All e-commerce platforms are integrated with PayPal.

You could resist your global digital banking overlords – but that just makes life a lot more complicated.


What Do You Think?

Do you use a traditional bank for your business transactions? Why?

What do you like about PayPal for business? What don’t you like?

What other options are available?

Please leave a comment below and let us know!


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JP Danko

JP Danko

JP Danko is a commercial photographer based in Toronto, Canada. JP can change a lens mid-rappel, swap a memory card while treading water, or use a camel as a light stand.

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16 responses to “Old Fashioned Bank Accounts Cost Your Business Time And Money – Why Not Use PayPal Instead?”

  1. bronsen Avatar

    I have had a very very bad experience with Paypal, which colors my perception of their greatness: they where holding my income hostage.

    I stay away from them and rather not have something than having to use their services.

    1. TheInconvenientRuth Avatar

      Same here, had a registered, verified PayPal account, linked to my bank. Used it for 3 years without problems, paying for stuff online. Then it went badly wrong when I wanted to take money OUT… Sold some gear on eBay, got paid by PayPal, took me 4 months, half a dozen letters and a letter from my solicitor before PayPal was willing to transfer the funds to my bank. And then they sent the wrong amount, about 600 pounds short. No actual reason given. No explanation, no apology, they still have about 45 quid that I can’t be bothered to fight over anymore. Screw them.

      1. Kaouthia Avatar

        Purely out of curiosity, was it a personal account or a business account?

        I had issues with a personal account probably about a decade or so ago and they ended up shutting it down (fortunately I had no funds held hostage – and it was my own fault).

        I’ve had a business account with PayPal for the past seven or so years now, though, and haven’t had a problem with it at all.

        1. TheInconvenientRuth Avatar

          Personal. I sent copies of bills, statements, letters from the bank, from eBay, PayPal invoices I paid, everything they “required” to validate the transfer and they still flat out refused without explanation. I had over 150 ‘buyer’ transactions with them prior that somehow required none of this since my initial verification of the account. They’re happy to take your money, but get antsy when they have to pay out…

          1. Kaouthia Avatar

            Yeah, I think that’s the biggest problem with PayPal. There just seems to be no accountability. At least, not to their customers.

            I don’t know where I’d be without PayPal, to be honest. Even though I’ve had no problems with my business account so far, I do wish there were a better option.

  2. Theuns Verwoerd Avatar
    Theuns Verwoerd


  3. Cédric Hauteville Avatar
    Cédric Hauteville

    I don’t know how this works across the pond, but in Europe, banks have to protect your money to some extent, so that if the bank goes bust, you don’t lose everything.

    As Paypal is technically not a bank, they’re most likely not bound by this (a cursory search in the user agreement doesn’t show anything about account balance protection.)

    So the money on your paypal account is marginally safer than the cash in your pocket.

    I like Paypal, but I personally wouldn’t leave large sums of money on it for an extended period of time.

    1. JP Danko Avatar
      JP Danko

      That’s a good point – I agree you don’t want to treat PayPal like your savings account. I transfer all my PayPal cash to my personal savings bank account once a month – except for a small float that I keep in PayPal USD for gear purchases.

    2. Ashwin Kalbhor Avatar
      Ashwin Kalbhor

      As a matter of fact PayPal actually has a banking license in Europe which means that all the regulations applicable to banks are applicable to PP in Europe too. (http://www.infoworld.com/article/2660971/techology-business/paypal-granted-banking-license-in-europe.html)

      1. Cédric Hauteville Avatar
        Cédric Hauteville

        Good to know, thanks for the info.

  4. Wally Kilburg Avatar
    Wally Kilburg

    I use Paypal sparingly but do agree that their invoicing is a nice feature. I had very bad experiences with them so I’m a cautious user. My bank does charge me but my account is an interest bearing account so the minor fees (less than a Paypal transaction) are deducted from that. Its less than a dollar per month. They provide me with my company credit card, give me cash back on purchases, and as mentioned its under federal protection. I also use Square for times I’m in the field and someone pays me, although I still accept checks (fraud is covered by my bank) and account transfers for large sums. I can do three account transfers per month free. I have yet to run over. With their statements, its easy to plug in and reconcile my account weekly. They provide an app so my deposits and all work is online. I never go into an office. I don’t find having a bank to be any problem.

  5. Shachar Weis Avatar
    Shachar Weis

    Because paypal is not a bank and can (and will) screw you over, hold your funds, freeze your account without notice or reason. They basically can do whatever they want. Just search for paypal horror stories.

  6. Simon Wells Avatar
    Simon Wells

    2.9% with PayPal compared to 0.6% with proper card processor. PayPal will almost always side with the customer if there is a dispute.

  7. suruha Avatar

    I use Paypal for any online purchases I make. I don’t have a business, I’m retired. There are some things I prefer to pay for online, like my utilities, that require a bank account or credit card. Paypal is not a choice for them. With a bank account, I can transfer any Paypal funds to my bank account to use them or to go get cash out. So, I have to maintain a bank account. I wonder, if you relied only on Paypal, how would you get money out if you just needed some cash? I guess you would have to have a Paypal card and go to an ATM? I just don’t see how I can not have both. It sucks because I do have to pay service fees every month. When you live on Social Security Disability income, every penny you get – you need!
    Nice piece you wrote here! Thank you!

  8. David Lewis Avatar
    David Lewis

    Don’t get me wrong, there are certain advatages to paypal over a traditional bank account, but I wouldn’t recommend not having a traditional business checking to any business. That being said, it is also smart to talk over your options with a business banker rather than just sliding into whatever account is easiest. Generally a banker can tell you how to save on fees and help you maximize cash flow. I happen to know of a business checking that has no monthly fee. The reality of the world is that there are fees everywhere, somebody has to pay for the checking account, somebody has to pay for paypal, etc. I think the previous comments on here are a perfect example of of your article, you have 1 experience with a product and it isn’t a good one, that doesn’t mean it isnt a good product, it just means you had a bad experience.
    That being said, banks are incredibly regulated. Paypal isn’t. What does that mean for the end user? You can predict what a bank is going to do, but paypal doesn’t play by the same set of rules. And I will state this again, Paypal isn’t bad, and it has a valid use, but it isnt a replacement for a business checking account. (or other banking services)

  9. Robert Mynard Avatar
    Robert Mynard

    I offer both paypal and direct bank transfer to my clients and they nearly all go with the direct deposit to avoid paying the paypal surcharge.