Oct 19, 2007

[Finances] UnionBank and PayPal Philippines

Use your UnionBank cards with PayPal today!

Ever since news broke out that PayPal Philippines now accepts payments, many of my friends have been asking me about ways of taking advantage of this new service. One item that always comes up is the UnionBank Eon CyberAccount so after explaining the concept to several people already, I figured I might as well put all this research to good use by documenting all this in a blog entry.

So here's what you need to know:

1. So are UnionBank and PayPal now working together? - No, this is not a business partnership of any kind. PayPal Philippines allows you to enroll credit cards and debit cards associated with the major brands like Visa and Mastercard. The UnionBank Eon card counts as a Visa debit card, thus it's compatible.

2. So I don't need to get a UnionBank account to use PayPal? - Again no, you just need a compatible Visa or Mastercard credit or debit card. Other banks have started to offer ATM cards that double as debit cards like ChinaTrust (through Visa) and BDO (through MasterCard). If you already have a Visa or Mastercard credit or international debit card, then you can just use that with PayPal instead. Be sure to check the status of your card with your bank.

3. Do I need a separate savings account? Is the UnionBank Eon card something like BPI Express Cash? - No to both. BPI Express Cash cards are practically like load wallets more than debit cards since they don't rely on an international union like Visa or MasterCard in order to function as an international debit card. They are dependent on other accounts to load new content into it. The UnionBank Eon is interesting since it is in fact a savings account. UnionBank is marketing it as a "CyberAccount" given that it's not tied to any particular branch and you do your transactions mostly online or over the phone.

4. How is the UnionBank Eon CyberAccount different from regular savings accounts? - One, it doesn't have a maintaining balance. While it promises higher interest, you cannot earn interest unless you maintain an Average Daily Balance (ADB) of Php10,000. After that it only earns 0.5% interest per annum. Also, it requires a Php350.00 annual fee to cover related expenses for it being a Visa Electron card. You can also issue "CyberChecks" which do not require you to own a checkbook and these checks can be delivered to the intended recipient. You must have at least one transaction per year to avoid penalties and at least one transaction in two years to avoid account closure due to dormancy.

5. Can I use the UnionBank Eon CyberAccount with my existing savings account in another bank? - Yes, the UnionBank CyberAccount allows for interbank transactions with a P10.00 per transaction fee. Your current bank receiving the funds transfer from UnionBank may charge other fees.

6. What other fees are associated with this account? - The UnionBank CybertAccount only allows 3 free ATM transactions per month. Beyond the third withdrawal at a UBP ATM, there is a P10.00 charge per transaction. For any withdrawals made at non-UBP machines within the Philippines, it costs P12.00 per transaction. You have a maximum daily withdrawable limit of P20,000 including payments made to merchants. If you use the CyberCheck option, it costs P10.00 for any checks that the payee must pick up at a UBP branch or for checks that will be delivered to the recipient it costs P50.00 within Metro Manila and P60 outside of Metro Manila.

7. What do I need to open a UnionBank Eon CyberAccount - You will need to appear in person at any UnionBank branch with at least two (2) valid IDs and the accomplished application form that can be found on the website. You will need to appear in person at the branch and you will be called when your card is ready for pick-up. Be ready to pay the Php350.00 annual fee.

7. But I can receive PayPal payments for free, right? - No it isn't entirely free. It's only free to use PayPal to make payments, but to receive payments there are various fees. If you have a Personal (free) account, it is free only if the payment is made using PayPal Balance / Transfer / InstantCheck. To withdraw funds from your PayPal account, you must withdraw a minimum of $10.00 USD and you will be charged a $5.00 USD transaction fee for withdrawals made in the Philippines. For payments made using credit / debit cards, you cannot receive this with a Personal Account and will need to upgrade to a Premier or Business Account and will still be subject to a 2.4-3.4% transaction fee plus $0.30 USD. There are additional fees associated with currency conversion plus a 2.5% spread above the wholesale exchange rate charge that PayPal is made to pay that they will retain.

I hope this answers everyone's questions and how we can't all be 100% excited about PayPal offering its services here. We're subject to higher rates than in the US or Canada and still cannot directly enroll savings accounts with PayPal and are forced to use credit or debit cards. Still, it's a better alternative compared to other services as long as you expect higher volume transactions.

If you have other questions, feel free to leave them in the comments and I'll do my best to find the answers for you.

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