Is PayPal Free? Why Does PayPal Charge a Fee? PayPal is one of the largest online payments systems, with 227 million active accounts around the globe. It’s also a popular option for accepting payments among online sellers.
But as with any payments system, you’ll need to factor transaction fees into your pricing and the cost of running your business. Ahead, learn how to calculate PayPal fees, what cut PayPal takes, and how PayPal fees work with Shopify Payments.
Is PayPal Free?
PayPal fees are the costs associated with using the platform to process payments and send or receive money. Fees are applied either as a percentage of the transaction amount or as a flat fee, depending on how you’re sending or receiving money.
Why Does PayPal Charge a Fee?
PayPal is a publicly-traded for-profit business that generates income by charging fees. PayPal uses cash generated from fees to maintain a high level of services, pay its employees, and introduce innovative payment methods. PayPal’s shareholders are generally rewarded through a higher stock price when fee revenues increase from quarter to quarter.
How Much are PayPal Fees?
PayPal’s fees vary by domestic vs. international, payment type, currency received, payment method, and consumer vs. merchant fees. PayPal is free for online and in-store consumer transactions without currency conversion. For commercial transactions for merchants, PayPal charges fees that are a percentage of the amount (ranging from 1.90% to 3.49%) plus a fixed fee per transaction.
The fixed fee per transaction depends on a price schedule for the country’s currency received. We don’t include a discussion of any currency conversion fees for international transactions that may be international payments or international currency receipts.
Payment options selected will result in different PayPal fees. PayPal offers branded debit cards and prepaid cards. PayPal Credit gives its customers special financing purchases of over $99.
PayPal periodically updates its fee schedules for consumers and merchants.
To quickly determine PayPal fees, try using a PayPal fee calculator.
How Do You Avoid PayPal Fees?
You can use strategies to avoid PayPal fees, but in some cases, you’ll be required to pay them. See some suggestions on how to avoid international PayPal fees that may also apply to U.S. domestic PayPal transactions.
How Does PayPal Classify Domestic and International PayPal Fees?
Domestic PayPal fees apply when the sender and receiver are registered with or identified by PayPal as residents of the same market. The sender and receiver are residents of different markets for international PayPal transaction fees.
Quickly Calculate Fees with PayPal Fee Calculator
Is saving time and reducing human error your top priority? Try our PayPal fee calculator to see the fees associated with your business transactions instantly.
Calculate the total amount of money you’ll receive after fees, or the fees themselves, for any domestic or international transactions with our calculator.
PayPal Merchant Fees
PayPal charges merchant fees, called commercial transaction fees, for payments received from customers in a business transaction. Merchants using PayPal range from small businesses to large enterprise companies.
Additional fees for payment processing charged by merchant services companies acting as the payment processor may apply. PayPal also has several other fees, including a chargeback fee.
PayPal merchants use a business account with a linked bank account called a merchant account and eligible linked debit cards or credit cards to withdraw and transfer funds received out of PayPal.
PayPal’s Goods and Services Fee
PayPal merchant fees for commercial transactions vary based on the payment method, which PayPal calls the Alternative Payment Method (APM). Commercial transactions include selling goods or services but may include other types of commercial transactions.
PayPal Payouts applies to PayPal payments to freelancers, independent contractors, affiliate programs, and mass payments to vendors.
Merchants apply to PayPal to use Micropayments pricing for lower amounts of goods and services transactions.
The PayPal domestic merchant fees for receiving commercial transaction payments by Alternative Payment Method are shown in the table below. Add 1.50% to the domestic percentage of merchant fees for all commercial international transactions excluding American Express transactions through PayPal.
The fixed fee for U.S. dollars currency received transactions is $0.49 and can be much higher for international currencies.
How much does PayPal take in fees?
It’s free to create a PayPal business account, but it takes 3.49% of the transaction amount plus a fixed fee of 49¢ in the US for checkout payments and invoicing. This is 2.99% plus 49¢ for credit and debit card payments and money transfers. Other fees for US-based merchants break down as follows:
PayPal fees for sending money
PayPal charges 2.99% of the total transaction amount when sending or receiving money in exchange for goods and services. This is free, or 0%, for consumer-to-consumer transactions.
When it comes to sending and receiving money for donation purposes, PayPal charges 2.89% plus 49¢ per transaction via the Donate button or PayPal checkout for donations. Listed PayPal fundraisers have a 2.99% fee, while unlisted fundraisers have none.
PayPal Payouts, an option to send money to multiple people at once, has a 2% transaction fee.
PayPal transaction fees
The two core PayPal transaction fees are:
- Credit and debit card payments: 2.99% + 49¢
- Online checkout: 3.49% + 49¢
Fees associated with in-person transactions via the PayPal Here card reader are 2.7% for card present, in-store, and QR code transactions. Manually keyed in payments have a transaction fee of 3.5% plus 49¢. The same rates apply for charity transactions.
The point-of-sale (POS) system PayPal Zettle has a transaction fee of 2.29% plus 9¢ for invoicing and card present payments, as well as 3.49% plus 9¢ for card not present transactions.
Payflow Pro is PayPal’s optional payment gateway. Using it comes with a transaction fee of 10¢ per instance. Monthly fees also include $25 for Payflow Pro, $10 for recurring billing, and $10 for additional fraud protection services (plus a 5¢ to 10¢ transaction fee).
PayPal consumer fees
Generally speaking, consumers don’t have to pay any fees to send money, pay for products or services, or donate money to causes they care about. However, if you want to use a credit card instead of a linked bank account or debit card to send money, you’ll have to pay 2.9% plus 30¢ to do so. International transactions have an additional 5% fee, with a minimum of 99¢ per sale, and maxing out at $4.99 each).
Receiving donations as a consumer may also come with a cost. PayPal charges 2.89%, plus a fixed fee of 49¢ for US-based users for using the PayPal checkout Donate button. Listed fundraisers pay 2.99%, while unlisted fundraisers pay nothing. Receiving international donations comes with an additional 1.5% fee.
Withdrawals are free for consumer users, though there’s an option to pay 1.75% extra for instant payout, or $1.50 to receive a paper check in the mail.
PayPal business fees
While it’s free to create a PayPal business account, there are potential fees in addition to the ones listed above. Chargebacks, for example, are $20 per instance for US-based sellers. And dispute fees are $15 per instance—$30 for high volume disputes.
Expedited withdrawals and money transfers may also incur fees. It’s free to withdraw money to your business bank account, but it may take up to three business days. Instant transfers have a 1.5% fee.
Above is information about Is PayPal Free? Why Does PayPal Charge a Fee? that we have compiled. Hopefully, through the above content, you have a more detailed understanding of PayPal Free. Thank you for reading our post.
