Buy Gold and Silver With PayPal?

Author: Ian Davis - Bullion Manager

Published: 18 Dec 2018

Last Updated: 10 Oct 2019

According to PayPal:

PayPal allows any business or individual with an email address to securely, conveniently and cost-effectively send and receive payments online. Our network builds on the existing financial infrastructure of bank accounts and credit cards to create a global, real-time payment solution. We deliver a product ideally suited for small businesses, online merchants, individuals and others currently underserved by traditional payment mechanisms.

Why Is Paypal Popular?

Using PayPal as a payment platform means you only enter your credit card details once when using PayPal to buy items online. In the dark days of http and insecure websites this was much more of a benefit but these days with SSL encryption and secure websites information entered into your browser is safer than ever! Buyer protection is paramount according to PayPal and the option to enter trading disputes usually concludes in favour of the buyer as we discuss later. The PayPal software is integrated into many auction websites including eBay and even many bullion dealers' checkout pages which means it can be convenient as you don’t need to scramble for a card to checkout on each site. PayPal is also "free" to use for a private customer as it is businesses that carry the price and are charged fees on each transaction. You might think great it’s free to use but don't be fooled, nothing in the world is free and companies will be recuperating the costs through higher product costs or via the grey area of handling fees, discussed below. 

Why We Do Not Accept PayPal

Firstly, we are far from being a fan of any payment system that charges a percentage on the total sales amount. For gold and silver which is traded on very narrow margins down to 1% or 1.5% if we were to transact using PayPal who charge a 2.9% fee, we would destroy any profit margins we made. PayPal would also pocket a hefty amount especially if we are talking about a 1kg gold bar which retails at from £1,492.53 and for what exactly? Personally, I don’t believe charges should be a percentage of the total but rather a charge per transaction as selling a t-shirt, car or even an aeroplane doesn’t require varying amounts of resource and effort from PayPal. I stand to be corrected on this statement if anyone has insight on why higher value transactions require a higher handling fee. When I've pressed PayPal to offer us a flat fee per transaction they refuse to entertain it. Presumably as they make too much money charging a percentage rate. 

We believe in charging customers for what they are paying for and this includes products, storage, shipping and insurance if required. Using PayPal, we would be forced to either make a blanket price increase, restrict which products you can buy on PayPal or charge an above the odds handling fee! Don't think for a minute you are getting a "free" PayPal service on any purchase you make online, this is simply sales hype from PayPal!

Handling Fees

At best the Paypal transaction rate for retailers is 2.9% and a further 20p for every transaction. Clearly given the market we operate in and our low premiums keeping prices constant and accepting Paypal is a death sentence for the business. Paypal do not allow retailers to charge a surcharge for the use of the system (like credit cards) but do allow a "handling fee" which is a grey area allowing retailers to impose their own fee for a PayPal transaction.

That said we see it impossible that you can get the best gold and silver deal if you opt to pay using PayPal as you will undoubtedly pay the handling fee or most likely higher product costs as business try to mask the surcharge, they would otherwise charge you.

Potential for a Buyer Scam

So, in this instance a scammer would pay for goods from a bullion dealer who would then ship these often the same day. These goods will be delivered as per usual to the scammer who would then initiate a PayPal dispute. To minimise charge-backs PayPal is likely to side with the buyer (which is one of the reasons PayPal has a reputation for buyer protection) who will then debit the bullion dealers PayPal account and transfer this back to the buyer. The buyer now has the gold and silver coins plus the original money and the dealer has lost everything! This is especially problematic with any graded and collectable coins where condition is subjective and chargebacks even more likely! This is not a PayPal only issue and is the main reason we have refused to take credit cards over the years. 

If we were to apply say a £500 cap to PayPal this would minimise the risk to us as a dealer but considering we complete deals in the hundreds of thousands PayPal is simply not an acceptable payment method weighed against the risks.

Potential Selling Scam

In this case the buyer is at risk from dodgy bullion dealers who, trust us, certainly do exist! A buyer will transfer the money to the seller who will immediately remove the said amounts from their PayPal account and either ship the wrong items or none at all. Naturally the buyer logs a dispute with PayPal who only have remit to retrieve money should the amount be in the seller’s PayPal account. When they do try to retrieve it they find it is no longer there and usually inform the buyer they rule in their favour. PayPal should be able to pursue the money beyond their own systems but we are unaware of how lengthy this process is and/or if it even ever happens before the claimant loses the will to live!

We would highly recommend you research your bullion dealer of choice and even review their company accounts if you are investing some serious money! You can find all our accounts published on Companies House and the fact we have traded for over 50 years should provide re-assurances that buying gold and silver from Chards is safe........we cannot vouch for other dealers!

Conclusion

PayPal certainly has its place on lower value items but do expect to pay over the odds as businesses recoup costs via product prices themselves or via "handling" charges. If you find a good deal for gold and silver (or even anything) on an auction site or elsewhere why not contact the company direct who will often be able to offer a much better price direct. If they don't offer a better price, we argue they are not worth their salt and are ripping you off!

We may look to implement PayPal in the future but for now we encourage customers to come direct to our safe and secure site where you can take advantage of no-nonsense low premiums and honest pricing.

Further Reading

You may wish to view all of our articles on our gold guide

You may wish to view all of our articles on our silver guide

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