ST30B Doram Just to clarify for future reference. Do you select ‘Paying for an item or service’ and the fee is automatically applied? And presumably you are then covered? Or do you need a business account?
As far as I know, PayPal has two separate services, intended for two purposes:
Payment to Friends & Family is basically like paying cash (or paying by debit card, or by bank transfer). Once paid, the money is gone and you have no recourse if there is a problem (other than ask the payee to send you the money back). This is appropriate for situations where one doesn’t need protection. It’s okay for buying stuff only in situations where you don’t need protection (e.g. when you pick something up personally and had a chance to inspect it and see that everything is okay, or if you buy from someone you trust). If one pays this way and gets scammed, they won’t be able to get help from PayPal (but Rob1 says there is a way around this if you fund the payment with a credit card and do a chargeback on the CC payment. I can’t say anything about this because I never tried).
Payment for Goods & Services on the other hand, is the PayPal equivalent of paying with a credit card. It’s an insured payment, and PayPal takes the risk in exchange to a fee (paid by the payee, just like with CC payments). If something goes wrong (e.g. the purchased item isn’t received or is not as described), the payer can ask for their money back. If they meet the requirements, PayPal will return the money (usually they will try to recover this from the payee, but they will pay it even if they can’t).
When you send a payment with PayPal, you have an opportunity to choose between the two methods above (they ask what the payment is for, and you choose either F&F or G&S). Neither the payer nor the payee need a business account for that. If the payer chooses F&F - the payee receives the full sum sent and the transaction ends there with no option for recourse. If the payer chooses G&S - the payee receives the sum less the fee, which PP keeps for itself (all automated, no one has to do anything other than choose “payment for Goods & Services” when paying). In this case, the payer can ask for their money back if there is a problem (again, exactly the same as paying with a credit card).