When it comes to easy money transfers, nothing beats PayPal in terms of popularity. The process is very simple to send money to friends and family:
- 1.Both the sender and the receiver should have a Paypal account
- 2.If the payment is for personal use, there may or may not be fees depending upon the source of funds
- 3.If you have a Paypal balance enough to cover your payment, there are no fees for personal transfers and the transfer is immediate
- 4.If the funds are from a credit card, either the sender or the receiver will have to pay 2.9% + $0.30 USD in fees
- 5.If the funds are backed by a bank account, there are no fees whatsoever, but the money is sent as an eCheck
- 6. If you use PayPal to make a purchase or pay for a service, it is treated as a business use and there will be a fee
To avoid fees when using PayPal for personal use, obviously you don’t want to use your credit card as the source of funds. If you use a bank account, though there are no fees, but the receiver will have to wait for about a week to get the payment, which may not work for all circumstances.
The only way to avoid fees and do an immediate transfer was to keep a balance in the PayPal account. But I have my reasons for not keeping a balance in my PayPal account and there really wasn’t a way around this… until now!
Get Paid Everytime You Use Paypal To Send Money!
What if I told you you can send money via Paypal, fund it with a credit card yet not get charged any fees by either the credit card company or PayPal and actually earn cash back on your PayPal payment?
And the transfer is instant! No waiting a week to get the funds cleared.
Why I might never log in to PayPal to send money again!
Discover recently tied up with PayPal to offer a money transfer service for its members called Money Messenger. You can make a payment via this service wherever PayPal payments are accepted. The transfer is immediate and there are no fees either for the receiver or the sender for personal payments.
Just make sure you don’t keep a card balance! You would negate all benefits if you keep a balance.
Testing Discover/PayPal’s Money Messenger Service
I decided to take this for a spin! What if there is a catch? What if there are hidden fees? Only way to find out was to try it out!
1. Log in to your Discover account
To get started, you log in to your Discover account. You’ll find a new tab called ‘Send Money’
Once sent, my wife (the recipient!) got a notification from PayPal (not Discover) on the transfer. I got an email stating the money has been claimed. The transfer was instant. No fees or commissions either for me or my wife! The best part? I earn a cashback from Discover each time I use Money Messenger service! Not to mention, I got a free float on the money sent!
How can I get paid for sending money?
Though the service is powered by PayPal, it is enabled by Discover. You will need a non business Discover card to use Money Messenger service.
Just to be clear, are there any fees whatsoever for using this service?
Not for personal money transfers. Make sure you choose this transaction type when entering the payment information. Neither Discover nor PayPal charges a fee for using Money Messenger service.
Can I use this service to pay for purchases that accept PayPal payments?
Yes. The recipient gets paid through PayPal even though it is funded by Discover. But for purchases, PayPal charges a fee. You’ll still get a cashback from Discover!
How quickly does the payee get the money?
When I tried it, it was within a few minutes.
Does the recipient require a PayPal account?
Yes to claim the money!
Does the sender require a PayPal account?
No! You only need a Discover card! You make the payment or money transfer via Discover’s site, not PayPal’s!
Limitations of Discover’s Money Messenger Service
- You have a limit of $200 a day, $500 a month when using Money Messenger service
- Business cards are not covered by this service
This service combines speed and convenience without charging me a dime and actually earning me a cashback! What’s not to love?! The daily and monthly limit is a little underwhelming, but for larger transfers I shouldn’t be using PayPal anyway!
I like the approach Discover took by partnering with PayPal rather than re-inventing this service. It gets access to PayPal’s huge user base instantly. Visa has its own micropayment service called PayClick which is undergoing trials in Australia and scheduled to be rolled out here in the US sometime this year. MasterCard has the MoneySend service which is very similar to PopMoney.
Believe it or not, I only have 3 credit cards in my wallet and one of them is Discover. Here’s why:
- With discover I get cash as rewards, not expiring points or miles!
- Bought an HDTV recently? I’m sure the salesman would’ve pushed for an extended warranty! When you pay with Discover you get extended warranty protection for free!
- 5% cashback on revolving categories. This month for instance, if I use Discover to pay for gas, hotels or restaurants, I get 5% cash back
- I’m thinking of getting an iPad. If I buy it from Apple, the cost including taxes would be around $530 for the base model. If I buy it using Discover from BestBuy.com (online), I get 5% back which cuts the cost to $505! I bet you can’t find me a better price! One of the clever ways with which you can use this card!
- Protection against theft or damage on your purchases for 3 months (90 days)
- Frequent travelers will love this one! if your flight gets cancelled or delayed by 6 hours or more, you are covered for food and lodging for upto 3 days at $250 a day!
- There are other benefits like bill pay, travel insurance, concierge service etc., which I don’t use but worth knowing it is there if I ever need it!
- No annual fee in case you were wondering. I don’t sign up for cards with annual fees
- And finally: HOWTO earn reward points AND get cash back with no fees
It would take a lot of convincing to sign me up for a credit card! I wouldn’t get or recommend this card if I didn’t think the rewards outweighed the effort.
But remember, if you keep a balance, no rewards card is worth it. Your best reward in that case would be paying off your balance in full.