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payouts-with-paypal.md

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Instructions on how to safely connect to PayPal.

Payouts with PayPal

There are two ways you can process expenses using PayPal: using PayPal Adaptive Payments or PayPal Payouts.

PayPal Payouts

{% hint style="info" %} This feature is not supported for independent collectives. If you are an independent collective we recommend using Wise for payouts. {% endhint %}

For hosts that are using PayPal, this integration can be used to automate expense payment by providing a one-click solution for paying expenses using PayPal Payouts.

After connecting your PayPal account, you'll be able to schedule expenses submitted using PayPal as a payout method for mass-payout without needing to reauthorize with PayPal every $2,000 USD. Expenses scheduled for payout also have a higher limit (up to $20,000 per expense) and cheaper fees, you can schedule expenses for payout up to your existing PayPal balance.

How does it work?

The new payment process is asynchronous, meaning that expenses are now scheduled for payout and dealt with by a scheduled worker. This worker runs once every hour, this means that at the turn of the clock we'll bundle the scheduled expenses and pay them in a single request to PayPal.

After being processed by the worker, the expense is marked as in Processing and individually tracked. We'll make sure its status is up-to-date on our platform, bear in mind that in the case the recipient doesn't have a PayPal account, they have up to 30 days to create and accept the payment.

If the payment is successful, the expense is marked as Paid, and in case something goes wrong during this process the expense will be marked as Error so you can try it again or process it manually.

Fees

What are the fees involved?

The fees are charged by PayPal and its value will vary with the currencies being and value being transferred. You can read more about it here.

Who pays for the fees?

These fees are paid by the collective the expense was submitted for. This means that transactions in PayPal will display the fees but that value will also be deducted from the collective balance in our platform as a payment processor fee.

An expense submitted to Open Collective Engineering paid using PayPal.

Limitations and Prerequisites

  • A PayPal business account with:
    • Access to PayPal Payouts.
    • A confirmed identity, email, and bank account linked to your PayPal business account.
    • Sufficient funds in your PayPal business account.
  • Payments should respect the fund amount you have accounted for in the platform.
    • You can't pay expenses if the budget accounted for the collective is not enough to cover the transfer expenses.
  • The host is still responsible for managing funds in PayPal.
    • Expenses are paid with your PayPal Balance.

Connecting to PayPal Payouts

{% hint style="info" %} PayPal Payouts is currently in beta test, if you're interested in testing this feature, please contact us. {% endhint %}

If you're already in the beta test group, you can follow these instructions:

  1. Create a new PayPal app

    • Open PayPal's Developer page and Log In.
    • In My Apps & Credentials page, select the Live environment, and click in Create app.
    • Name this App after Open Collective, this way you'll always remember where this token is being used.
    • App Type: Merchant
    • Click Create App.

2. In App settings, make sure the following boxes are checked:

  • Accept payments (if you wish to enable payments with PayPal)
  • Payouts (if you wish to enable expenses payout with PayPal)
  • Customer Disputes
  • Transaction Search

3. Now, copy the necessary information to Open Collective.

  • Open a new tab and go to Open Collective.
  • Open your Host collective settings page and click on the Sending Money option in the menu.
  • Copy and paste Client ID and Secret in the respective fields.
  • Click Connect PayPal

Done! Next time you pay for an expense submitted with PayPal and you select the automatic method, your expense will be marked as Scheduled for Payment and processed using PayPal Payouts!

Reducing Risks

In order to reduce risks related to having an active API token that is able to create and fund transactions, we strongly suggest you:

  • Keep just enough balance in PayPal to pay your expenses.
    • This can be achieved by calculating the amount needed for the current payment cycle and transferring it beforehand.

Adaptive Payments

{% hint style="danger" %} PayPal deprecated Adaptive Payments for quite some time already, maintaining this feature has proven to be a challenge and this is why we're also deprecating Adaptive Payments on our side.

Please migrate to PayPal Payouts if you're currently using it as we can no longer guarantee the future operation of this feature. {% endhint %}

Adaptive Payments are the easy way and it is automatically enabled for everyone.

From your host dashboard, you can connect your PayPal account and pre-approve up to $2,000 USD in payouts. Make sure that you are connecting the PayPal account connected to the same bank account as your Stripe account.

On the host dashboard, expenses that have been approved and have a sufficient budget will show a "pay" button. With just one click you can pay the expense. After paying out $2,000, you'll need to re-authorize with PayPal (this is a security feature).

For single payments larger than $2,000, make a manual payment

Disconnect from Paypal

  1. Click on the admin button on the top right-hand side of your fiscal host page.

2. Go to your Fiscal host settings

3. Click on Sending money

4. Disable Paypal