Introduction to PayPal Fees
When considering PayPal as your payment processor, it's crucial to understand the fees you may be charged. Every transaction is not created equal, and if your company is considered high-risk based on the goods or services you offer, such as a high risk merchant account, it can affect your processing fees and standing regarding the PayPal User Agreement.
How To Avoid or Reduce PayPal Fees
There are several strategies businesses can use to avoid or reduce PayPal fees:
Setup A Business Account: This can result in reduced fees and access to PayPal Working Capital. Even with a Paypal Business Account fees can be significantly higher than their competitors.
Request To Be Paid As "Friend or Family": This option avoids fees but offers no payment protection.
Apply For Lower Fees: Businesses earning more than $3,000 per month can apply for reduced rates.
Deduct PayPal Fees From Your Tax Returns: Ensure proper tax filing for online payment businesses.
Use a PayPal Alternative: Consider other payment processors that may better suit your business needs.
In-Depth Breakdown of PayPal Fees
When a transaction is processed through PayPal, the following fees occur:
Interchange Fee: A percentage of the sale amount determined by the issuing bank, plus a fixed transaction fee.
Assessment Fee: Charged by the card network associated with the cardholder (Visa, Mastercard, etc.)
Markup Fee: All other entities involved in the transaction through the network receive a portion of the sale.
Commercial Transaction Rates
Below are a few of the Paypal merchant fees. There are other tables that outline the Paypal credit card processing fees for donation payments, cryptocurrency, and other payment services that Paypal provides.
Standard Rate for Domestic Transactions
when you sell or buy goods or services Paypal refers to these as "commercial transactions"
Payment Type | Rate |
|---|---|
Alternative Payment Method (APM) | APM Transaction Rates Apply |
PayPal Checkout | 3.49% + fixed fee |
PayPal Guest Checkout | 3.49% + fixed fee |
QR code Transactions | 2.29% + fixed fee |
QR code Transactions through third party integrator | 2.29% + 0.09 USD |
Pay with Venmo | 3.49% + fixed fee |
Send/Receive Money for Goods and Services | 2.99% |
Standard Credit and Debit Card Payments | 2.99% + fixed fee |
PayPal Pay Later options | 4.99% + fixed fee |
All Other Commercial Transactions | 3.49% + fixed fee |
Receiving International Transactions
With these transactions the fee for receiving domestic transactions will need to be paid along with an additional fee calculated as a percentage of the transaction.
Payment Type | Rate |
|---|---|
All Commercial Transactions | 1.50% |
Fixed Fee For Commercial Transactions (Based on the Type of Currency Received)
Currency | Fee |
|---|---|
Australian dollar | 0.59 AUD |
Brazilian real | 2.90 BRL |
Canadian dollar | 0.59 CAD |
Czech koruna | 9.00 CZK |
Danish krone | 2.90 DKK |
Euro | 0.39 EUR |
Hong Kong dollar | 3.79 HKD |
Hungarian forint | 149.00 HUF |
Israeli new shekel | 1.60 ILS |
Japanese yen | 49.00 JPY |
Malaysian ringgit | 2.00 MYR |
Mexican peso | 9.00 MXN |
New Taiwan dollar | 14.00 TWD |
New Zealand dollar | 0.69 NZD |
Norwegian krone | 3.90 NOK |
Philippine peso | 25.00 PHP |
Polish zloty | 1.89 PLN |
Russian ruble | 39.00 RUB |
Singapore dollar | 0.69 SGD |
Swedish krona | 4.09 SEK |
Swiss franc | 0.49 CHF |
Thai baht | 15.00 THB |
UK pounds sterling | 0.39 GBP |
US dollar | 0.49 USD |
Fixed Fee for Transactions Done With QR Codes Based off the Type of Currency Received
Currency | Fee |
|---|---|
Australian dollar | 0.12 AUD |
Brazilian real | 0.50 BRL |
Canadian dollar | 0.11 CAD |
Czech koruna | 1.90 CZK |
Danish krone | 0.56 DKK |
Euro | 0.07 EUR |
Hong Kong dollar | 0.70 HKD |
Hungarian forint | 29.00 HUF |
Israeli new shekel | 0.30 ILS |
Japanese yen | 9.00 JPY |
Malaysian ringgit | 0.40 MYR |
Mexican peso | 1.79 MXN |
New Taiwan dollar | 3.00 TWD |
New Zealand dollar | 0.13 NZD |
Norwegian krone | 0.77 NOK |
Philippine peso | 4.40 PHP |
Polish zloty | 0.34 PLN |
Russian ruble | 6.90 RUB |
Singapore dollar | 0.12 SGD |
Swedish krona | 0.76 SEK |
Swiss franc | 0.08 CHF |
Thai baht | 2.90 THB |
UK pounds sterling | 0.07 GBP |
US dollar | 0.09 USD |
Other Commercial Transaction Fees
Activity | Description | Fee |
|---|---|---|
Campaign Fee For Store Cash Transactions | Paypal Transaction Fees = Cart Total - Store Cash Offers Applied by Paypal User | 8.00% |
Invoicing Transaction Rates
When you send a Paypal invoice as a payment request for sale of your goods and services to the customer and the customer sends payment through the invoice.
Standard Rate for Receiving Domestic Invoicing Transactions
Payment Type through an Invoicing Transaction | Rate |
|---|---|
PayPal Checkout, Pay with Venmo, or PayPal Guest Checkout | 3.49% + fixed fee |
Standard Credit and Debit Card Payments, Apple Pay, or other third-party wallets | 2.99% + fixed fee |
PayPal Pay Later options | 4.99% + fixed fee |
Receiving International Invoicing Transactions
For international invoicing, the fee for domestic invoicing applies and an additional fee based off of a percentage is added as well.
Additional percentage-based Fee for International Invoicing Transactions
Payment Type through an Invoicing Transaction | Rate |
|---|---|
All Payment Types through Invoicing Transactions | 1.50% |
Fixed Fee for Invoicing Transactions Based on the Currency Being Received
Currency | Fee |
|---|---|
Australian dollar | 0.59 AUD |
Brazilian real | 2.90 BRL |
Canadian dollar | 0.59 CAD |
Czech koruna | 9.00 CZK |
Danish krone | 2.90 DKK |
Euro | 0.39 EUR |
Hong Kong dollar | 3.79 HKD |
Hungarian forint | 149.00 HUF |
Israeli new shekel | 1.60 ILS |
Japanese yen | 49.00 JPY |
Malaysian ringgit | 2.00 MYR |
Mexican peso | 9.00 MXN |
New Taiwan dollar | 14.00 TWD |
New Zealand dollar | 0.69 NZD |
Norwegian krone | 3.90 NOK |
Philippine peso | 25.00 PHP |
Polish zloty | 1.89 PLN |
Russian ruble | 39.00 RUB |
Singapore dollar | 0.69 SGD |
Swedish krona | 4.09 SEK |
Swiss franc | 0.49 CHF |
Thai baht | 15.00 THB |
UK pounds sterling | 0.39 GBP |
US dollar | 0.49 USD |
Alternatives to Using PayPal Payments
While PayPal may be suitable for businesses in their early stages, there are several reasons to consider an alternate payment method:
- PayPal accounts can be frozen due to various factors.
- Seller Protection policies don't cover digital goods.
- Significant chargeback fees may apply.
- Customer service can be difficult to reach.
For high-risk businesses, specialized payment processors like PayKings offer tailored solutions. These providers can often offer pre-approval for high risk merchant accounts with competitive rates. Including options for a cbd merchant account.
Conclusion
While PayPal is a popular choice for many businesses, it's essential to understand its fee structure and potential limitations, especially for high-risk merchants. If you're in industries like ecommerce merchant account providers exploring alternatives is crucial. By exploring alternatives and understanding ways to minimize fees, businesses can make informed decisions about their payment processing solutions that best fit their needs and risk profiles.
Frequently Asked Questions
Yes Paypal has fees. These fees vary depending on the type of transaction and the currency involved in the transaction.
There is not a direct fee to purchasers for paypal purchase protection. However, sellers indirectly fund this service with the transaction fees they pay.
PayPal charges a fee to cover the costs of processing payments, maintaining security, and providing customer support. The fees help PayPal operate its platform and offer services like fraud protection, dispute resolution, and international transactions.
Main Reasons for PayPal Fees:
Payment Processing Costs – Every online transaction involves processing fees from banks and card networks (Visa, Mastercard, etc.), which PayPal passes on to users.
Business Revenue Model – PayPal makes money by charging businesses and sellers for receiving payments.
Fraud Protection & Security – PayPal invests in fraud prevention, encryption, and buyer/seller protection programs.
Currency Conversion & International Transfers – PayPal charges extra for converting currencies and sending money across borders.
Here are some of the fees you should be aware of if you're using Paypal:
- Paypal Seller Fees
- Paypal International Fees
- Paypal Fees for Receiving Money
- Paypal Fees for Sending Money
- Paypal Business Fees
- Paypal Fees to Cash Out
As you can see, there are Paypal processing fees for just about everything and these fees can be higher compared to alternatives. Above we give specific costs for specific transactions to help you calculate Paypal fees and we offer suggestions on how to avoid Paypal's charges.
It is free to open a PayPal account or PayPal business account. It is also free to send transactions to friends and family. However, businesses have PayPal transaction fees. As a business, you can't avoid paying PayPal fees. For companies in the USA, PayPal's standard fixed fee is 2.9% + $0.30 per transaction. This fee combines different charges and adds PayPal's fee. The parties involved in the transaction (issuing bank, credit card association, merchant bank, and payment processor) each receive a percentage of the sale, known as the "interchange".
International transactions follow a different fee structure. If you need to send or accept PayPal payments internationally, those transaction fees will be charged according to this structure: 4.4% on the transaction and then a fixed fee based on the currency. That fee is known as a currency conversion fee.
It's also important to note that while there are PayPal transaction fees, there is no Paypal Charges to transfer money from your PayPal account to your linked bank account. This means that you can easily transfer that money into your bank account after making business transactions. If you choose to use a check or debit card transfer, you will pay fees: $1.50 for a check and $.50 for a debit transfer. More specific Paypal charges can be found elsewhere on this page.
Yes, Paypal fees are tax-deductible for business owners and freelancers. If you use Paypal for business transactions such as selling products or services then the fees are considered a business expense.
Avoiding Paypal Personal Fees
- Use "Friends and Family" Transfers – Sending money to friends/family in the same country using your PayPal balance or linked bank account is free. Avoid using a credit/debit card, as it incurs a fee.
Avoiding Paypal Business Fees
- Use Alternative Payment Methods – Consider other payment processors such as PayKings especially if your business is considered high risk for lower fees.
- Encourage Customers to Use PayPal Balance or Bank Transfers – Payments from a PayPal balance or linked bank account have lower fees than credit/debit card payments.
- Apply for a Micropayments Fee Structure – If you receive many small payments (under $10), switching to PayPal’s micropayments plan may reduce overall fees.
Avoid Paypal Withdrawal Fee
- Use Standard Bank Transfers – Transferring money to your bank via standard withdrawal (1-3 days) is free, while instant transfers have a fee.
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