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If I am about to receive multiple $5 donations that would sum up to over a million dollars per month, would it be wise to use a PayPal account?

I can't confirm my nonprofit 501(c)(3) status and I don't care to because transaction fees are the same for over $100K/month, but would there be anything I should be cautious of?

closed as primarily opinion-based by Dheer, Nathan L, JoeTaxpayer Jun 23 '15 at 17:11

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

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    You can't confirm your status as a 501(c)3? But Don't the donors care? Doesn't the IRS care? – mhoran_psprep Jun 23 '15 at 10:12
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    Is handling over a million dollar a month still in scope for personal finance? – Philipp Jun 23 '15 at 11:06
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    @DavidRicherby Looking at the "What topics can I ask about here" section of the help center says that questions about corporate and small business finances are off-topic. When you handle $1 million as a non-profit organization you are in that area. – Philipp Jun 23 '15 at 15:34
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    @Philipp you must still be careful with PayPal, my company uses them and PayPal can freeze your withdraws whenever/why-ever they feel like it. – SnakeDoc Jun 23 '15 at 16:33
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    Personally I wouldn't trust PayPal to hold $1 let alone $1M – Flexo Jun 23 '15 at 16:39
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It is not wise.

I think that if your charity gets $1M/month (or even $100K/month) in donations, it would be prudent to have a (good) accountant oversee your operations, and use a proper FDIC-insured banking system.

I'm aware of a company who was using PayPal for retail sales and got stuck with hundreds of thousands of dollars on their PayPal account and could only withdraw hundreds (500, in fact) every day. It took some time for them to recover the money, and with some pressure too. Admittedly, the company used PayPal incorrectly, but have you read their terms and conditions? Not sure if using them "correctly" is even possible.

You can use e-check, merchant accounts (Square for example will ACH-deposit to your bank) for credit cards, etc.

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    +1 for Not sure if using them "correctly" is even possible. – Andy Jun 23 '15 at 7:18
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    @IneedHelp right, it was 500/day, not 500/month. Still, they couldn't withdraw the money for many many years at that pace, they had to use their lawyers to resolve this with PayPal. Not a situation you want to find yourself in. – littleadv Jun 23 '15 at 8:20
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    Paypal's EULA is to finance the labor equivalent of a XIX century coal mine work contract. You have almost no guarantees, and since it is not a bank, it is not subject to bank regulations. – Mindwin Jun 23 '15 at 13:30
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    Beware that Paypal can change terms on you as well whenever they want. I got burned by that back in the early days. As a result Paypal is now firmly on my list of companies I try not to deal with at all. – Brian Knoblauch Jun 23 '15 at 15:01
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    On the topic of Square vs traditional merchant accounts, here's an interesting post on warning signs to watch out for in banks' merchant agreements (and reasons why Square may have the advantage): davidmalki.tumblr.com/post/120645714068/… – recognizer Jun 23 '15 at 15:57

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