I have been hiring my old client to do work for me-how's that for a story... He hired me to do work for him and then he got fired but I still work for others in the same company so when I'm swamped who better to call on? I did what he instructed me to do so he knows exactly what I need. He hasn't gotten a new job for a few reasons; one being he's over 50 and has MS (although it hasn't been too much of an issue) and no one's going to hire him in this market. He lost his house and is living in his brother's basement, etc.
So I've been putting him to work but he has no bank account so I pay him cash. He does a lot of eBay stuff and he suggested that instead of me withdrawing cash I could pay him thru his PP account. I don't do anything on eBay at all so I would be setting up an eBay account just for this situation.
Is it worth it? What are the pitfalls and advantages?

paypal charges a fee?

so he would either get less than the total bill or you'd have to pay more than the total bill.

I've gotten paid this way a couple times.

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Never underestimate the predictability of stupidity

You don't need an Ebay account to use Paypal, just an e-mail address. You can specify the payment as a gift and they don't take out fees

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Mr645
You can specify the payment as a gift and they don't take out fees

...but that's only true if the funding source is either an existing pp balance or bank transfer. Transferring the funds from a CC will incur fees that either are paid on top of the amount you "gift" by the sender, or deducted from that amount by the recipient. As the sender, you would decide who pays the CC fees in that case.

Why doesn't he have a bank account?

It does seem odd that he does not have a bank account. How does he get his money out of PayPal? The usual way is to transfer the money out to an associated bank account.

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Janit
It does seem odd that he does not have a bank account. How does he get his money out of PayPal? The usual way is to transfer the money out to an associated bank account.

He probably buys stuff off ebay. Still that's a bit of a red flag for me. How does he pay his medical bills? Paypal?

I can't think of a legitimate reason not to have a bank account unless you're hiding something, or massively overparanoid.

A friend of mine has no bank account to hide assets from an ex-wife. Apparently she took him for everything, including a large chunk of alimony but no child support. I can't really judge that situation as I did not know him while married nor have I met her.

But - he continues to live without a bank account. He does a lot of cash "under the table work" as a tile guy. He shares a house and pays his room-mate cash for rent and utilities. He has no car payment and goes to the Verizon store to pay his bill.

So it is totally possible...

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“Live your life, love your life, don’t regret…live, learn and move forward positively.” – CR Johnson
Loving life in Lake Tahoe, CA

He's probably hiding from debt collectors. I honestly can't figure out how he's using PayPal without a bank account. Credit card?

I wouldn't use PayPal, personally. I wouldn't want to be entangled with him in any way, even such a tenuous one.

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"Stop thinking about art works as objects, and start thinking about them as triggers for experiences." ~ Brian Eno

>How does he pay his medical bills?

Cash. Works out payment with the doc. You'd be surprised how much less you can pay for medical costs if you pay cash.

>I can't think of a legitimate reason not to have a bank account unless you're hiding something, or massively overparanoid.

Since he is basically off the radar after the loss of his job and house and his issues with his MS he feels comfortable where he's at. He lost most of his eyesight for a few months which is not uncommon with MS. It has since come back almost 100% -also not uncommon-and since he couldn't work when he couldn't see he needs money to pay bills.
I'm not making judgements; he wants to live this way and we are friends and he is very helpful when I need help. I still list payments to him on my taxes and he knows if the IRS comes knocking he'll have to deal with it.

I was not trying to judge either. If that's what works for him then more power to him. He will have to accept the positives and negatives of this approach.

Most people have answered the original question; if you ask me, continue to pay him in cash. While he may not have a traditional bank account, paypal isn't exactly off the grid either, if that's his goal.

Funny how the same people who whine and piss and moan and complain about how their bank is screwing them automatically assume that if you DON'T use a banks services, you must be up to no good.

To the original question;
I don't see any real problem with it... as long as you keep an eye on the fees.
He's probably got his PayPal account set up to hold his balance, and probably a PayPal credit card which draws on that balance (I THINK that's the way the PayPal card they keep advertising works... I keep ignoring the ads, so I'm not sure).

If you sign up for a PayPal account, I would suggest opening a separate checking account at your bank/CU to link it to... Extra layer of fraud protection down the line...

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Paul F.
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A sword never kills anybody; it is a tool in the killer's hand. - Lucius Annaeus Seneca c. 5 BC - 65 AD
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Good is the enemy of Excellent. Talent is not necessary for Excellence.
Persistence is necessary for Excellence. And Persistence is a Decision.
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Eureka, CA

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Paul F.
Funny how the same people who whine and piss and moan and complain about how their bank is screwing them automatically assume that if you DON'T use a banks services, you must be up to no good.

To the original question;
I don't see any real problem with it... as long as you keep an eye on the fees.
He's probably got his PayPal account set up to hold his balance, and probably a PayPal credit card which draws on that balance (I THINK that's the way the PayPal card they keep advertising works... I keep ignoring the ads, so I'm not sure).

If you sign up for a PayPal account, I would suggest opening a separate checking account at your bank/CU to link it to... Extra layer of fraud protection down the line...

Thanx for the advice; sounds good. BTW, he said he'd pay the fee.

paypal is much more like a bank than some realize...

Maybe he never takes money OUT of PayPal. He could just use his credit balance to buy stuff from those who accept PayPal.

No, he pays his brother rent from his PP account-maybe his bro has a PP account too!