A Brief Introduction About the Paypal Billing Agreement
PayPal is an international payment platform where payments can be received or made globally. To transact on PayPal, the buyer and the seller need to enter into a billing agreement with PayPal. For regular payments received from customers through credit cards or PayPal, sellers can have automatic billing or subscription services. The amounts received through customers vary each month as customers buy different items having a different value. It is also possible for the buyer to pay a set fee to the seller for access to online games or magazines.
In order to activate the automatic billing feature, the seller needs to first click on the ‘Merchant Services tab,’ then choose ‘create buttons’ and lastly ‘Automatic Billing.’ The customer can enter the maximum amount they want to be charged and details regarding their credit card. The terms of automatic billing must be set. Apart from the seller’s information, varied billing durations can be entered for monthly billing. The buyer has the flexibility to choose the duration of the billing.
What Is Paypal Billing Agreement
This agreement is entered into between the buyer or seller and Paypal. This enables both parties to decide the duration of the billing as well as the maximum amount that can be charged against a credit card.
How to Enable Billing Agreement in Paypal
Billing agreements would be required by the seller for receiving recurring payments through PayPal for goods and services provided. A billing plan needs to be activated by entering customer and payment information, tax information, and shipping fee.
Where to Find Paypal Billing Agreement ID
To find the PayPal billing agreement id, you need to sign in to your PayPal account. Click on profile followed by ‘My Money.’ Next, click on ‘My Pre-Approved Payments’ and then Update. To locate the id, you need to select the Merchant’s name.
Who Takes the Paypal Billing Agreement – People Involved
When a buyer or a seller wants to transact through PayPal, they need to take the Paypal Billing Agreement. Through the billing agreement, the buyer can set the upper limit of payment and the credit card details. This will enable the seller to charge the buyer as and when something is purchased.
Purpose of the Paypal Billing Agreement – Why You Need It
PayPal facilitates transactions between buyers and sellers of goods and services through their online payment platform. PayPal has many features like Automatic Billing, where either the seller or the buyer can enter the maximum amount that can be charged against the credit card as well as the credit card details.
The seller does not need to invoice the buyer every time something is purchased. The seller charges the buyer’s account until the maximum limit chargeable through the credit card is exhausted.
The buyer has the option to cancel a billing agreement, subscription, or automatic recurring payment. For this, the buyer needs to go to the settings on the PayPal portal and then click payments. Next, click on ‘Manage pre-approved payments’ and select the name of the merchant’s name or email id. To remove the merchant, the buyer has to click on cancel.
Setting up a PayPal business account does not attract any charges, but the different features offered by PayPal are chargeable. The seller will receive a payment within 48 hours if the buyer leaves feedback. If you are sending an item that can be tracked online, then the tracking number should be included along with the PayPal transaction details. Payment will be made when three days have passed after the delivery of the item.
Contents of the Paypal Billing Agreement – Inclusions
The Billing agreement PayPal outlines the various options available to the seller and buyer for transacting on PayPal.
The agreement will extract information from the active billing plan to prepare an agreement that will facilitate recurring payments through PayPal or debit card payment towards goods and services.
It is possible to customize the plan by replacing the existing merchant preferences, tax particulars, and shipping charges.
PayPal has a billing agreement resource where you can create agreements. The agreement should have the start and the end date. There should be a difference of 24 hours between the current date and the start date, as it could take the agreement 24 hours to be activated.
The details of the agreement, including the terms and conditions between the buyer and the seller, need to be stated. The details of the customer or payer should be incorporated into the agreement. If the shipping address is different from the default address, then it must be mentioned.
There are default merchant preferences in the agreement such as cost of setting up the agreement, the URLs that the customer can use for approving or canceling the agreement, the upper limit of failed payments allowed, whether the outstanding balance will need to be paid in the following billing cycle and penalty for failed initial payment by the customer.
The charge models which relate to the tax information and shipping fee can also be modified according to the agreement between the buyer and the seller — the currency in which the transaction will be carried out, and the payment frequency needs to be mentioned.
How to Draft the Paypal Billing Agreement Points to Consider While Preparing the Agreement
This agreement can be drafted by referring to a template online. eBay billing agreement PayPal is a facility whereby the buyer authorizes eBay to charge their PayPal account, depending on the purchases made by them.
While drafting this agreement, the following points need to be considered:
- The agreement should be programmed using HTTP status codes in such a way that it should show error messages like Account restricted, address-invalid, or bill amount greater than the outstanding balance should appear when the entry is invalid
- The type of agreement: Whether it is monthly, weekly or yearly
- You should determine the maximum billing amount, the frequency of withdrawing money or occurrences and amount range for the agreement
- The shipping address must be correctly entered including the recipient name, default address line 1 and line 2, city name, the state and country code (depending on the country)
- The PayPal id must be entered in the plan details which should also include the plan type (fixed or infinite), the status of the plan (read-only), the date and time the plan was updated
- Payment should include the PayPal Id, the frequency at which the customer is charged (weekly, daily, monthly, yearly), the currency used and charge models (tax information and shipping fee)
Negotiation Strategy
When it comes to negotiations between the parties to the PayPal billing agreement, the buyer can select the seller depending on the terms and conditions offered, including payment frequency, shipping charges, and tax information. If the buyer is dissatisfied with the seller, then they can choose another seller.
Benefits and Drawbacks of the Paypal Billing Agreement
The benefits of the PayPal billing agreement are as follows:
- The interests of both the buyer and seller on PayPal are protected. The buyer provides a limit to the payment that can be made to the seller as well as the seller. The seller can charge the payments against the id of the buyer for the purchases made. The buyer will not be overcharged, and the seller is assured of payment for all purchases made by the buyer
- Flexibility in payment as the frequency of payment (daily, monthly or yearly) are specified in the agreement
- The buyer can cancel the seller if they feel they want to change to a different seller
The drawbacks of the PayPal billing agreement are as follows:
- The buyer or seller will not honor the payments or supplies, respectively. The seller may default in supplying the right quantity at the right time, thus causing losses to the buyer. The buyer may not make the payment and will disrupt the income flow of the seller
- Neither party to the agreement can take legal recourse if there is a breach of contract by the other party
- The buyer will not have any flexibility in payment and will have to accept whatever payment frequency is offered by the seller
What Happens in Case of Violation of Paypal Billing Agreement
If there is any violation of any clause of the agreement, the following remedies are available to both parties:
- Money Damages: If the buyer or seller in PayPal suffers from any financial losses, then they will claim money damages from the other party. The damages could be partial or total. In case of a total breach, the compensation would be the amount receivable under the contract, including losses incurred. If the loss is partial, then the injured party can claim a replacement
- Restitution: This remedy is resorted to when the party who has violated the agreement is incompetent, and the contract becomes void. The injured party would have to be restored to the original position in terms of money and property they owned before entering into the contract
- Rescission: Where any party has entered into the agreement due to fraud or influence, the contract is canceled. Neither the buyer or the seller has any further contractual obligations towards the contract.
- Reformation: While the contract is canceled under rescission, under reformation the contract which involved fraud or influence, would be drawn afresh by the court so that it is fair to both the buyer and seller in such agreements
- Specific performance: When the contract is at an advanced stage, then the buyer or the seller will not accept money damages and instead insist that the other party complete the agreement.
When entering into a PayPal billing agreement, it is important for both the buyer and the seller to look at the options being offered in terms of payment flexibility and charge terms. The buyer should exercise caution by limiting the amount of payment that the seller can charge. The frequency at which the payment will be made must also be specified by the buyer when entering the agreement.
The buyer can opt for the automatic billing option when there are varied purchases being made every month. With this option, the buyer can decide how much they want to be charged and also provide credit card information. The seller can charge the PayPal account of the buyer without raising an invoice every time a transaction takes place.
It is important that the contact information of the buyer be properly entered into the billing agreement to avoid sending the assignments to the wrong address and having to pay the penalty. If the buyer feels that they want to change a seller, they can cancel the present seller and opt for a new seller.