PayPal Business Account Review
PayPal merchant services may not suit high-volume and high-risk businesses, but many sellers and customers will find PayPal easy and convenient.
PayPal At A Glance
- PayPal offers businesses a vast commerce ecosystem that combines payment processing with eCommerce and mobile point of sale functionality.
- Online sellers can use PayPal as their exclusive means of accepting payments or as a supplemental option. This isn’t possible with Square, Stripe, or any other processor.
- In many instances, online PayPal sellers will pay a fixed fee of $0.49 per transaction in addition to the percentage fee. This fixed fee is higher than that of PayPal’s competitors and hurts small-ticket merchants.
- Trusted by consumers
- Flat-rate pricing
- Multiple pricing plans are available
- Interchange-plus pricing available for some merchants
- Good for low-volume merchants
- Extensive integrations
- Good developer tools
- All-in-one payments system
- Account stability issues
- Inconsistent customer support
- Not suitable for high-risk industries
- The high $0.49 fixed per-transaction fee hurts small-ticket merchants
Table of Contents
- What Is PayPal For Small Business?
- Countries Served By PayPal
- Supported Payment Types & Currency
- Accepting Online Payments With PayPal Merchant Services
- PayPal Merchant Services Fees & Rates
- PayPal Business Products & Services
- Funding Options For PayPal Business Account Users
- Contract Length & Cancellation Fee
- Sales & Advertising Transparency
- PayPal Customer Service & Support
- PayPal Integrations & Add-Ons
- PayPal For Business Reviews & Complaints
- How Do PayPal Merchant Services Compare To The Alternatives?
- Is PayPal Right For Your Small Business?
- FAQs: PayPal Merchant Services
What Is PayPal For Small Business?
While PayPal is best known for its ubiquitous consumer digital wallet, sellers who use PayPal merchant services to do business get a robust suite of tools that let you sell anywhere, anytime, and with no monthly fees for most basic services. With numerous integrations on offer, you’ll have plenty of options for syncing PayPal with your current online store, accounting service, and/or shipping software. PayPal also provides its own mPOS app, PayPal Zettle.
With no contracts to sign and no early termination fees, PayPal’s all-in-one merchant services suite is a convenient and powerful commerce tool. Sadly, PayPal’s $0.49 fixed fee for most online transactions hurts its value proposition for small-ticket merchants. However, PayPal’s extensive functionality means that you’ll want to keep reading our PayPal business account review for the full story. If you like what you see, we can help you set up a PayPal business account. And if PayPal isn’t for you, we’ve highlighted some alternatives to PayPal at the end of this review.
Countries Served By PayPal
You can use a PayPal business account in over 200 countries and territories worldwide. That’s nearly all of them, so if you’re reading this, the odds are strong that you can process payments with PayPal. However, not all PayPal services are available everywhere. For example, PayPal Payments Pro is only available in the US, Canada, and the UK.
Supported Payment Types & Currency
PayPal supports the following payment methods:
- PayPal digital payments
- Credit and debit cards
- PayPal Credit
- Pay In 4
- Pay Monthly
- Pay With Venmo
- QR code transactions
- Apple Pay
- Bitcoin Cash
- Finnish Online Bank Transfer (Verkkopankki)
- iDEAL (the Netherlands only)
- Mercado Pago (Mexico and Brazil only)
- Multibanco (Portugal only)
- POLi (Australia and New Zealand only)
As for currencies, PayPal supports 25 of them:
- Australian dollar
- Brazilian real
- Canadian dollar
- Chinese yuan
- Czech koruna
- Danish krone
- Hong Kong dollar
- Hungarian forint
- Israeli new shekel
- Japanese yen
- Malaysian ringgit
- Mexican peso
- New Taiwan dollar
- New Zealand dollar
- Norwegian krone
- Philippine peso
- Polish zloty
- UK pound
- Russian ruble
- Singapore dollar
- Swedish krona
- Swiss franc
- Thai baht
- US dollar
Accepting Online Payments With PayPal Merchant Services
Setting up your PayPal business account means deciding how you want to accept payments online. This decision is more complex for would-be PayPal merchants than it once was because it involves a) deciding whether you want Standard or Advanced Credit & Debit Card Payments and b) deciding which of the three PayPal payment plans you want to sign up for.
Regarding the former:
- Standard Credit & Debit Card Payments: This is PayPal’s default means of accepting card payments. With Standard payments, you can offer PayPal’s standard payment options on your checkout page, so your buyers can pay with PayPal, debit and credit cards, Pay Later options, Venmo, and alternative payment methods.
- Advanced Credit & Debit Card Payments: Advanced payments give you the same payment options as Standard while also allowing you to customize your credit card fields. It’s also required if you want to enroll in Chargeback Protection, use the Virtual Terminal, and/or upgrade your payment plan to Payments Advanced or Payments Pro. Additionally, you get a lower credit/debit processing rate with Advanced card payments than with Standard card payments, and you now also have the option of opting in to interchange-plus pricing. However, the rate you’ll ultimately pay will depend on whether you get Chargeback Protection and if you sign up for one of PayPal’s more advanced subscription plans, which we’ll describe below. To use Advanced Credit & Debit Card Payments, you’ll need to specifically request it and supply PayPal with additional information about your business.
As for subscription plans, PayPal offers three options for web payments:
- PayPal Checkout (formerly Express Checkout)
- PayPal Payments Advanced
- PayPal Payments Pro
PayPal Checkout is an easy solution if you just want to add PayPal payment buttons to a website where you already accept credit cards or integrate with an eCommerce provider. To implement Checkout on your site, you may need a developer, but it won’t take a lot of work after that point. PayPal does the maintenance and upkeep for you. Plus, there’s no monthly fee.
Here’s what you get with PayPal Checkout:
- PCI Compliance: Because PayPal redirects customers to its site to complete the transactions, you don’t have to handle PCI compliance, as PayPal does that for you.
- Contextual Checkout Buttons: PayPal will use what it knows about your customer to display “smart” checkout buttons tailored to them. For example, Venmo users will see a Venmo checkout option. PayPal Credit will also appear as an option on eligible purchases.
- Localized Payment Methods: PayPal is in the process of adding localized payment methods for customers around the world. It’s already something we see with Stripe, so it’s not surprising to see PayPal implement it as well. In addition to existing support for SEPA Direct Debit (Germany), PayPal has added support for iDEAL (the Netherlands), EPS (Austria), Giropay (Germany), MyBank (Italy), and Bancontact (Belgium), and Mercado Pago (Brazil and Mexico), among others.
PayPal Payments Advanced
PayPal Payments Advanced (which does not refer to Advanced Payments as described above — yes, it’s complicated!) is more involved than PayPal Checkout as it gives sellers more control and customization with their payment process. Unlike PayPal Checkout, PayPal Payments Advanced will cost you $5/month.
Payments Advanced includes all the eCommerce integrations that PayPal Checkout offers but not the “smart” checkout buttons. Here’s what you do get, though:
- Hosted Checkout Page: If you’d rather keep your customers on your website throughout the checkout process, it’s worth looking at the Advanced plan. PayPal makes it easy for you to customize the design of your checkout. However, you do take some of the PCI burdens onto yourself in the process. PayPal makes it simpler with tools such as transparent redirects. At a minimum, you can expect to have to do self-assessments and quarterly scans to maintain your PCI compliance.
- Customizable Payment Buttons: With payment buttons, you can create an online shop where you can sell one item, or 10, or as many as you want. PayPal’s button builder tools allow you to customize the look of the buttons as well as how some aspects of the checkout process work (whether you want to go immediately to purchase or allow customers to add items to a cart). Nonprofits can also create donation buttons with the option to make one-time or recurring donations.
PayPal Payments Pro
PayPal Payments Pro is for merchants who want complete control over the entire checkout process. PayPal Payments Pro is the most customizable of PayPal’s online payment processing options, though it will cost you an extra $30/month. Payments Pro’s main advantage over Payments Advanced is that Payments Pro gives you access to the virtual terminal, which you otherwise have to pay $30/month for as a standalone charge.
- Virtual Terminal: If you want to accept payments over the phone, PayPal’s virtual terminal will let you key in card numbers from a browser window. However, $30/month is a pretty hefty price for this feature, considering both Square and Shopify offer it at no additional charge.
- Recurring Billing: Technically, neither PayPal’s Payments Advanced nor its Payments Pro plan includes recurring billing. It’s an add-on service that costs an additional $10/month. In my opinion, that’s fairly expensive, given that Stripe offers much better pricing and more flexible tools in this regard. Note that you get recurring billing for no additional monthly charge with PayPal Checkout.
For a visual reference detailing the three payment plans PayPal currently offers, see the following chart.
|Plan Name||Monthly Cost||Payment Buttons||Virtual Terminal||Hosted Checkout||Recurring Billing|
|PayPal Checkout||Free||Contextual (“Smart”) checkout buttons||Yes, for no additional monthly charge (Customer must have a PayPal account)|
|PayPal Payments Advanced||$5/month||Customizable payment buttons||Yes, for an additional $10/month|
|PayPal Payments Pro||$30/month||Customizable payment buttons||Yes, for an additional $10/month|
In addition to the above, PayPal offers a special payment plan for enterprise-level businesses called PayPal Enterprise. This plan gives you access to a full Braintree merchant account and offers an optimized processing engine to remove friction at checkout, a brandable web portal, granular data analysis, and more.
PayPal Merchant Services Fees & Rates
All PayPal services come with no annual fee, no setup fee, no PCI compliance fees, and no cancellation fee. Except for a few optional software-related fees and advanced checkout options, you’ll only have to worry about payment processing costs.
PayPal’s pricing used to be very straightforward, even if those costs were a bit higher than most traditional merchant accounts. Unfortunately, the 2021 changes made to PayPal’s pricing and feature offerings make the job of explaining PayPal’s pricing considerably more difficult. I’ve outlined the current fees below, but you can also check out our guide to PayPal’s credit card processing fees. This article explains PayPal’s pricing structure in finer detail.
Overall, while PayPal’s new pricing scheme will result in many merchants — particularly those using PayPal Checkout as a means of accepting PayPal digital payments as a supplementary payment option — paying more in processing fees than they had previously, new merchants may find the lack of additional fees more cost-effective than an interchange-plus pricing plan (which sellers using Advanced credit/debit processing can now opt into).
PayPal’s transaction fees are as follows:
|Fee Name||Fee Amount|
|PayPal Digital Payments (PayPal Checkout, Pay With Venmo, PayPal Credit, Pay In 4, PayPal Pay With Rewards, & Checkout With Crypto) Sales||3.49% + $0.49 per transaction|
|Online Credit/Debit Sales (Standard Credit & Debit Card Payments)||2.99% + $0.49 per transaction|
|Online Credit/Debit Sales (Advanced Credit & Debit Card Payments)||2.59% + $0.49 per transaction|
|Online Credit/Debit Sales With The Payments Advanced Or Payments Pro Plans||2.89% + $0.49 per transaction|
|Online Credit/Debit Sales With Optional Interchange-Plus Pricing (Advanced Credit & Debit Card Payments Only)||Interchange + 0.49% + $0.39 per transaction|
|Chargeback Protection (Requires Advanced Credit & Debit Card Payments)||An additional 0.40% per transaction (0.60% per transaction if you get “Effortless” Chargeback Protection)|
|Swiped/Dipped/Tapped Mobile & In-Store Transactions||2.29% + $0.09 per transaction (2.7% per transaction for legacy PayPal Here users)|
|Keyed-In Mobile & In-Store Transactions||3.49% + $0.09 per transaction|
|Virtual Terminal Transactions||3.09% + $0.49 per transaction|
|PayPal Payouts||2% (max $1) using the online form, $0.25 per payout using the API|
|Chargebacks||$20 per chargeback|
|International Transactions||1.5% cross-border fee|
|Refund Fee||No additional fees are charged to make the refund, but the fees you originally paid to receive the payment are not returned to you|
|Instant Transfer Fee||1.5% of the transfer amount|
A Note Regarding PayPal’s Optional Interchange-Plus Pricing
If you’re approved for Advanced credit/debit payments, you now have the option of enrolling in interchange-plus (PayPal refers to it as “Interchange Plus Plus”) pricing. Interchange-plus pricing is more complex than PayPal’s standard flat-rate pricing, but it ultimately works to the advantage of higher-volume merchants selling upwards of $5K to $10K per month. Furthermore, PayPal uses “gross settlement” when charging these fees:
- No fees are deducted from a payment at the time of transaction
- Once a month, PayPal invoices you for the accumulated processing fees for the month and auto-debits those fees from your chosen bank account
Thankfully, you can easily go into your account settings and turn off interchange-plus pricing and revert to flat-rate pricing if you find that interchange-plus pricing isn’t saving you money.
Other PayPal Fees
PayPal sports a few more alternative rate offerings: a microtransactions plan, nonprofit discounts, and discounts for donations, more generally.
All merchants can apply to enroll in PayPal’s micropayments plan, though I’ve seen some reports of users being denied for it. This is particularly unfortunate for small-ticket merchants looking to mitigate the effects of the exceptionally high $0.49 per-transaction fixed fee. We’ll continue to follow the situation, but here is the micropayments rate that is still shown on PayPal’s official pricing page:
- Micropayments Rate: 4.99% + $0.09 per transaction
Qualified 501(c)(3) organizations that go through the verification process are eligible for a discount for online transactions:
- Nonprofit Discount Rate: 1.99% + $0.49 per transaction
PayPal doesn’t offer a nonprofit discount for in-person transactions. This nonprofit rate applies only to online sales or donations. Read our PayPal guide for nonprofits to learn more about what PayPal can offer for accepting donations.
If you’re not a nonprofit, you can still take online donations at a discounted rate, though your discount will be less significant:
- Donation Rate (if you’re not a non-nonprofit): 2.89% + $0.49 per transaction
Remember that with PayPal Checkout, you’ll pay no monthly fees, but if you prefer to keep customers on your page, use customizable checkout buttons, and/or use a virtual terminal, you’ll need either PayPal Payments Advanced or Payments Pro:
- Paypal Payments Advanced: $5 per month
- Paypal Payments Pro: $30 per month
PayPal Payments Advanced and Pro don’t include an option for Recurring Billing. If you want to offer subscription services, that will run you an extra $10 per month on top of the Pro plan. PayPal offers free recurring billing for PayPal Checkout users but not PayPal Advanced/Pro users.
Finally, PayPal offers its Payflow gateway on a standalone basis to process payments. It works with most payment processors. If you want to sell online but don’t want to use PayPal as your primary payment processor and your chosen processor doesn’t offer a gateway, Payflow is an option. Payflow supports two plans:
- Payflow Link: This pay-as-you-go option costs $0.10 per transaction with no setup or monthly fees. With Payflow Link, you embed a checkout form on your website that will redirect to the PayPal site to complete the transaction. Payflow Link also adds PayPal and PayPal Credit buttons.
- Payflow Pro: Payflow Pro costs $25/month, and there’s a relatively high $99 setup fee. Plus, you’ll still be paying the $0.10 per-transaction fee. The PayflowPro plan gets you a customizable checkout page that’s hosted on your website, with the ability to add PayPal and PayPal Credit options.
PayPal Business Products & Services
|Dynamic Currency Conversion|
|Recurring Billing & Subscriptions|
|Native POS & Card Reader|
|Appointments & Reservations|
Before we delve into the full range of PayPal products, know that PayPal is a third-party processor (also known as a payment service provider (PSP) or an aggregator).
The main difference between a third-party processor and a traditional merchant account provider is that instead of giving merchants their own merchant account, PSPs aggregate all their merchants into one enormous merchant account. One unfortunate side effect of this arrangement is that merchants bear an increased risk of account instability. Holds and terminations are all too common due to the risk management policies required for PSPs to function.
On the plus side, the underwriting process for getting approved for an account is much less thorough than it is with a merchant account provider, so you’ll be able to start accepting payments more quickly and with less information required.
Our PayPal vs. merchant accounts analysis examines the whole scope of the differences between these two divergent payment processing methods.
PayPal Tools For Small Business
- PayPal Commerce: Formerly known as PayPal for Partners, the PayPal Commerce Platform is a payments solution that lets you sell on marketplaces, crowdfunding platforms, and other platforms for merchants and fundraising teams. With its vaulting feature, you can securely store your customers’ credit card data to streamline the checkout process. This feature, along with channel billing agreements, is available on an approval basis.
- PayPal Zettle: PayPal’s Zettle mobile processing app is not the most feature-laden POS around, but it’s a solid choice for smaller sellers. It features a more robust inventory system and card reader than PayPal’s other mPOS system, PayPal Here (which is no longer available to new merchants but continues to operate for current PayPal Here merchants). The fact that your funds get deposited into your PayPal account along with the rest of your online sales is pretty nice. You don’t have to pay any subscription or software fees; you just pay the processing costs. Plus, the Zettle Reader 2 is a handy little mobile card reader.
- POS System Integrations: If PayPal Zettle isn’t well-featured enough for you, you can integrate PayPal into one of the company’s partners for POS solutions. You’ll still pay for the software subscription, but PayPal charges nothing except the transaction fees and hardware. See the Integrations & Add-Ons section below for a closer look at your third-party integration options.
- Online Invoicing: Consultants and contractors can use PayPal’s invoicing features for invoicing their clients for the same rate as regular web transactions. PayPal’s invoicing tools are strong, allowing you to add a tipping option to the invoice and even set up installments. Recurring invoicing is supported as well. Both the lifecycle status and the payment/refund status of an invoice are tracked. You can also create custom billing apps with PayPal Invoicing APIs.
- Payflow Payment Gateway: The gateway comes automatically bundled with PayPal’s online processing tools, so it’s not something many people will think about. However, your business can use PayPal’s gateway as a standalone product if you already have a credit card processor but want a new gateway. See the PayPal Merchant Services Fees & Rates section for more pricing information.
- Marketing Solutions: Honestly, PayPal’s “Marketing Solutions” makes me think of a pared-down Google Analytics with some PayPal tools thrown in. However, if most of your customers use PayPal, or you want to increase conversions on your site, it’s certainly worth looking at. The Marketing Solutions package is available with all of PayPal’s online processing options, including Checkout, and is now available outside the US as well. “Shopper Insights” lie at the heart of this package. Knowing your sales conversion rates, average purchase size, and shopper device type will help you refine your business practices.
- PayPal Payouts: Want to pay employees or contractors via PayPal? The PayPal Payout feature allows you to send multiple payments at once rather than one at a time, using either a spreadsheet or the PayPal API. Plus, you’ll save money compared to PayPal’s standard rates. Check out the PayPal Merchant Services Fees & Rates section for more information.
- PayPal.me: PayPal sports a peer-to-peer payment tool in the form of PayPal.me. This app allows you to send and request payments to/from friends, family, customers, and clients. The other party doesn’t even need to have a PayPal account. While personal payments do not incur any fees, commercial payments are charged the same 3.49% + $0.49 rate as payments made via PayPal proper. Be aware that PayPal is watching to ensure you don’t pass off commercial payments as personal payments. If you have a PayPal Business account, PayPal will assume any PayPal.me link associated with your account is commercial by nature and will charge you accordingly.
- PayPal Developer Tools: PayPal has recently invested some notable efforts into improving its developer tools. These tools include PayPal Checkout for online sellers who opt not to implement an eCommerce integration. PayPal Here SDK is for those seeking to add PayPal payments to your own POS system. There’s also a White Label Wallet if you need a branded mobile wallet app that works at the point of purchase at in-person locations. Connect With PayPal is for merchants who want to allow customers to log into your website/app using their PayPal credentials. And finally, there’s the aforementioned PayPal Commerce Platform.
- Social Media Selling: If you don’t have a website and would prefer to sell items through your existing social media channels, you can create an embedded payment link and post it to your account on Facebook/Twitter/etc. A separate feature, “Checkout on Facebook and Instagram,” allows you to sell products from your Instagram page while letting you use the full ecosystem of Instagram Shopping tools.
- PayPal In 4: To compete with the likes of Klarna, PayPal has introduced its new pay later installment option, Pay in 4. This lets your customers pay for purchases in four interest-free payments, with one of those payments being a down payment due at the time of purchase and the remaining three payments being due every 15 days thereafter. The great thing about this feature is that you’ll still get paid the entire amount upfront. Purchases qualifying for Pay in 4 must be between $30 and $600. Check out our post on PayPal Pay in 4 to learn more about offering it to your customers.
- Shipping Discounts: When you create and use an online shipping label in PayPal, you’ll get access to USPS Commercial Base pricing along with UPS discounts — up to 45% off UPS Ground shipments and up to 55% off 2nd Day Air on eligible packages.
- Cryptocurrency Support: US users can now use PayPal to buy, hold, and sell Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. That’s all well and good, but merchants should know that customers can now use crypto to pay for purchases from PayPal merchants. Once this policy is enacted and a customer makes a purchase from your site using cryptocurrency, the crypto will be instantly converted to fiat currency, and the transaction will be settled like any other.
- QR Code Payments: PayPal merchants can now use QR codes to accept payments from customers in-store. Just generate a QR code online or in the PayPal Business app, display it by your register, and let customers scan the code to make their payment. It’s a nice contactless payment option, particularly in an era of heightened germ awareness.
What’s New With PayPal?
PayPal continues to innovate and regularly rolls out new features. The following features have been added over the last year.
- Zettle Terminal: When PayPal launched PayPal Zettle in the US, it brought its popular mobile card reader — the contactless + chip + PIN + NFC-capable Zettle Reader 2 ($29 for your first reader and $79 for subsequent ones) over from Europe. More recently, PayPal introduced the all-in-one Zettle Terminal, a device that combines the payment acceptance of the Zettle Reader with a touchscreen that runs the POS natively, eliminating the need to pair it with a smartphone or tablet. The standard version costs $199 while a version with a built-in barcode scanner costs $239. Finally, terminal kits with a printer and dock start at $269.
- Interchange-Plus Pricing: As mentioned in the Fees & Rates section, merchants who get approved for Advanced credit/debit payments now have the option of enrolling in interchange-plus pricing, which is great for high-volume merchants. However, PayPal’s interchange-plus rates are still higher than those of many merchant account providers.
- Apple Pay Acceptance: You can now accept Apple Pay payments through your PayPal business account.
- Pay Monthly: Along with Pay In 4, merchants can now offer their customers another buy now, pay later option: Pay Monthly. While Pay In 4 requires your customers to pay in four bi-weekly payments, Pay Monthly lets your customers spread out purchases over six, 12, or 24 months, with payment required on a — you guessed it — monthly basis.
Funding Options For PayPal Business Account Users
Money from PayPal transactions is available almost immediately in your PayPal account. You can then spend that balance anywhere that accepts PayPal online or transfer the funds to your bank account. Standard transfers typically take one to two business days and are cost-free.
If you need your funds within minutes, PayPal offers an instant transfer option. It will cost you 1.5% of the transfer volume, which is on par with what Square charges for the same service.
Whether you’re doing a standard transfer or an instant transfer, your debit transfer limits are as follows:
- $50,000 per transaction
- $100,000 per day
- $250,000 per week
- $500,000 per month
If you’re transferring funds to your bank account, there is a $25,000 per-transaction withdrawal limit.
PayPal Business Debit Card
PayPal also has its very own debit card for businesses, the PayPal Business Debit Mastercard. The card gives you fast access to cash from your PayPal account — no waiting for a funds transfer.
You can spend your balance at any store that accepts cards or withdraw money from any ATM with a Mastercard, Maestro, or Cirrus acceptance mark. It also simplifies accounting because you don’t have to use your personal accounts to make business purchases or constantly shuffle funds around.
PayPal Business Cashback Mastercard
PayPal’s new credit card offering, the PayPal Business Cashback Mastercard, offers an unlimited 2% cash back on all purchases. There’s no annual fee and no foreign transaction fee, and you can get free cards for your employees. There’s also a consumer version of this credit card that offers 3% cash back when paying with PayPal at checkout (2% otherwise), but you won’t get free employee cards.
PayPal Working Capital
If you need a quick influx of cash and don’t want to deal with a loan, PayPal merchants are eligible to apply for PayPal Working Capital. It works like a merchant cash advance where you pay back the financed amount by deducting a small portion of each day’s transactions processed via PayPal.
Check out our PayPal Working Capital review for more details.
PayPal also offers a simple short-term loan service to merchants regardless of their payment processor. LoanBuilder requires a credit score of at least 620, but the application process is pretty simple. Here is our LoanBuilder review.
Contract Length & Cancellation Fee
PayPal merchant services are contract-free and have no early termination fee. Though this is standard with PSPs like Square and PayPal, we love to see this from merchant services providers.
The pay-as-you-go model is ideal if PayPal is your starter option, as you always have the option of upgrading to a merchant account later. However, if the rates work for you (particularly as just a secondary option), PayPal will also scale with your business.
Sales & Advertising Transparency
Thankfully, PayPal is quite upfront with its sales and advertising. The rates — numerous as they are — are listed in plain sight, so there’s no hidden agenda. PayPal has gotten better about disclosing pricing and fees such as its chargeback fee, which used to be hidden in the fine print.
However, don’t think that everyone can process with PayPal just because anyone can open an account. It simply isn’t true, and I think it plays a considerable role in complaints against PayPal. There’s a specific list of PayPal-prohibited businesses, which I encourage every prospective PayPal business account user to check out. You’ll also be under scrutiny as soon as you start processing. If PayPal decides you present an unacceptable risk, it will terminate your account.
Check out our guide on how to prevent holds, freezes, and terminations.
PayPal Customer Service & Support
|Dedicated Support Representative|
|Knowledge Base or Help Center|
|Videos & Tutorials|
PayPal has many different customer service channels. Depending on your question or problem, any of these options may resolve the issues you might have:
- Community Forum: If you want insights and advice from other PayPal merchants, the community forum is a good place to start.
- Knowledgebase: PayPal’s self-help resources are pretty extensive, both for consumer users as well as merchants. You’ll find a vast array of questions and answers in the searchable database, which should cover most of your needs.
- Phone/Email: Any PayPal customer service review must note that PayPal’s phone support is quite inconsistent (see Negative PayPal Reviews & Complaints). Sometimes you’ll get a rep who knows what they’re doing; other times, you won’t. My advice is to avoid calling if possible. Answers to the most common problems can be found with just a little bit of searching. Between the knowledgebase, community forum, and quick answers sections, you should be able to find a solution.
- Social Media: PayPal is active on Facebook, but if you want help on social media, you’re better off taking to Twitter, where you can send a tweet to PayPal and get some assistance that way.
- Resolution Center: Through PayPal’s resolution center, a merchant can communicate directly with a buyer to resolve a transaction problem. You can also use it to attempt to report unauthorized account activity, resolve an account limitation, and ask PayPal to investigate a transaction problem.
One compelling benefit of using PayPal is the sheer volume of users. Whenever you encounter an error or a problem, Google it, and the odds will be good that you’ll find a solution from another merchant who has already dealt with the same issue. However, when it comes to account issues such as funding holds, you’ll need to talk to someone over the phone. If need be, you can go through the BBB (read more about that in the PayPal For Business Reviews & Complaints section).
PayPal Integrations & Add-Ons
PayPal integrates with a vast number of software platforms, from online store builders to accounting applications, shipping tools, and email marketing software. There are just way too many to write out, but here’s a quick primer on the options available:
There’s a clear benefit to having so many integration options: You won’t have to worry about whether your shopping cart is compatible or not because it most likely is. The same goes for major accounting applications, such as QuickBooks Online and Xero. Plus, there’s no shortage of well-known, robust POS solutions for retail stores and restaurants. PayPal also integrates with some more specialized solutions as well.
PayPal For Business Reviews & Complaints
Positive PayPal Reviews & Testimonials
Though you’ll find plenty of negative comments in PayPal customer reviews, there are plenty of positive comments from merchants (and even some developers). Considering tens of millions of merchants are using PayPal globally, this shouldn’t be too much of a surprise. Here’s a sample of positive chatter in PayPal for business reviews:
- Easy Setup: Most PayPal for business reviews — particularly from business owners — rave about how easy it is to set up a PayPal account.
- Widely Accepted: PayPal has an extensive user base, making it a trustworthy payment option for everyone. If you’re just getting your business off the ground, starting with something such as PayPal is a good choice. The name recognition and trust associated with PayPal (especially with its buyer protections) can be a serious asset in the early days of operation.
- Almost-Instant Access To Cash: Your PayPal transactions clear almost immediately, so you can spend the money in your account as soon as you have it — provided the place where you’re spending it accepts PayPal, of course. If you want your money anywhere, don’t overlook the PayPal Business Debit card. It works like a debit card, but it deducts directly from your PayPal account.
- Multiple Products/Services Under One Roof: PayPal offers you everything you need to process online or mobile payments (e.g., payment gateway, payment forms, virtual terminal, invoicing, micropayments, recurring billing, developer tools, etc.). It truly is a solution that will grow with you.
- Transparent Pricing: Every PayPal payment review notes that pricing-wise, what you see is what you get with PayPal. There are no setup fees, annual fees, cancellation fees, or downgrades for sellers.
Negative PayPal Reviews & Complaints
PayPal is an enormous, globe-bestriding company. Like all such big companies, it receives numerous complaints. The greatest difficulty with quantifying a negative PayPal account review is the fact that PayPal is also a consumer product. That means a good chunk of the complaints — thousands upon thousands of them — come from consumers, not merchants.
I will say that the department handling BBB complaints is full of real people writing the responses and explaining where the problem occurred. If you go through the BBB, the odds are good that you can probably get whatever help you need — it just might take a little while, and you should try going through PayPal’s customer support first.
The BBB is a leading source of information about how a company deals with complaints, but I do check out a few other review sites for more details. For the most part, the same trends persist: a mix of consumer and merchant complaints. Of the merchant complaints, one single complaint predominates:
- Withheld Funds, Freezing Of Accounts, & Termination Of Accounts: If PayPal notes any suspicious behavior on your account, it may implement a hold on a certain percentage of your funds, freeze your account, or even terminate your account. Usually, a red flag on your account comes with a request for documents, such as bank statements, photocopies of your IDs, purchase orders, invoices, and more. PayPal uses that information to determine what to do with your account. One of PayPal’s criteria to flag an account is a sudden spike in processing volume. It also doesn’t like seeing merchants sell goods below cost (an unfortunate tactic used by a LOT of new eBay sellers) or merchants selling vague, mysterious products. Anything that indicates an unsustainable business model might be grounds for account termination.
That said, this isn’t a problem unique to PayPal. Other aggregators, including Square and Stripe, have a similar reputation. Such is the nature of the “come as you are” business model. Getting an account with minimal history is easy, but there’s an inherently higher risk because you’ll be under scrutiny once you get started. However, the lack of transparency in this process is the hardest part to defend.
To that end, PayPal faces a federal lawsuit filed by three PayPal users who had their funds seized and accounts terminated without explanation (and when pressed by one of the plaintiffs, PayPal gave multiple, contradictory explanations). Now that PayPal finds itself having to defend its practices in federal court, we’ll see if PayPal makes any changes as to how it handles these cases. Thus far, the answer seems to be no.
In addition to the withheld-funds issue, here are some other common complaints found in many a PayPal business account review:
- High Transaction Fees: PayPal’s transaction fees are higher than a traditional merchant account. Visa’s wholesale rates for an eCommerce transaction are between 1.5% and 2.4% + $0.10 per transaction. At 3.49% plus $0.49 per PayPal Digital Payments transaction and 2.99% + $0.49 per Standard online credit/debit card transaction, PayPal’s rates are over that amount, even when you factor in a merchant service provider’s markup. However, merchant accounts aren’t always accessible or even viable for low-volume merchants. For those merchants, when you factor in the various costs that a merchant account often generates, PayPal usually breaks even or comes reasonably close. Plus, you don’t have a contract to worry about, and some PayPal merchants can now opt in to interchange-plus pricing.
- Inconsistent Phone-Based Customer Service: Most merchants will rarely have to call PayPal’s customer service line. This is for the best. PayPal business account reviews often note that the quality of service on the helpline can be inconsistent. Some reps are more knowledgeable than others. The good thing is that PayPal has a whole slew of other service and support options (e.g., the knowledgebase, forum, email, etc.). Barring any account-related problems, chances are you can find your answer without having to call in.
- Chargebacks: Chargebacks are the bane of existence for any merchant who sells online. They’re also bad for your account stability, no matter what company you process with. A lot of chargeback-related complaints found in PayPal merchant reviews seem to come from sellers on eBay or merchants who aren’t happy with how a chargeback was resolved. PayPal does offer some limited seller protections for online transactions, but you should brush up on what is and is not covered (eBay sales, for example, aren’t covered).
Many of the complaints about PayPal posted to the BBB are ultimately resolved to the aggrieved party’s satisfaction.
How Do PayPal Merchant Services Compare To The Alternatives?
There are many alternatives to PayPal competing for your business. Let’s see how PayPal measures up against three of the best payment processors in the industry: Square, Stripe, and Helcim.
Square Vs. PayPal
Square is one of the best all-around payment processors you’ll find. In our Square vs PayPal comparison, we note that Square’s POS capabilities surpass those of PayPal by a good margin. Square offers both a basic free POS and a number of industry-specific POS options with both free and paid versions, along with greater POS functionality in terms of both hardware and software options. PayPal does offer a lower in-person processing rate, though.
As for online sales, Square doesn’t offer the international sales capabilities of PayPal, nor does it offer comparable multichannel sales support. If you need either of those things, PayPal has Square beat. However, most online merchants will save money with Square due to its (generally) lower online processing fees. Plus, Square offers its own eCommerce website builder for making your own online store, which PayPal does not. Finally, unlike PayPal, Square allows CBD sales, provided you are approved for the Square CBD program.
Stripe Vs. PayPal
Stripe Payments is a long-time favorite of ours in the field of online payment processing. In the battle of Stripe vs PayPal, Stripe’s developer tools and APIs are second-to-none, making it ideal if you want a custom payments solution for your online business. Plus, Stripe’s online processing rate is the same as that of Square, so you’ll likely save on processing with Stripe over PayPal. Being such a powerful tool for online payments, Stripe may be overkill for small businesses that lack developer support, but businesses with complex online sales needs will likely prefer Stripe to PayPal.
As for in-person POS, Stripe is only just now catching up, and its brick-and-mortar sales capabilities lag behind those of PayPal.
Helcim Vs. PayPal
So far, we’ve compared PayPal to two of our favorite third-party processors, but we also wanted to compare it to one of our favorite providers of full merchant accounts, Helcim. The primary advantage Helcim has of PayPal is that Helcim gives you the security and stability of a full merchant account. This means you’ll be considerably less likely to face an account hold or termination due to factors beyond your control. Due to this, Helcim’s strong online sales/recurring billing features, and the fact that Helcim’s interchange-plus pricing (which comes with volume discounts) is lower than PayPal’s flat-rate pricing or its interchange-plus pricing, larger online sellers in particular may prefer Helcim to PayPal.
POS-wise, it’s a closer call, as both Helcim and PayPal have strong, if not spectacular, in-person sales capabilities. However, Helcim still has an advantage here in terms of the processing rate — for higher-volume sellers, anyway. Occasional & low-volume sellers may prefer the easy simplicity of PayPal.
Is PayPal Right For Your Small Business?
PayPal is a strong payment option for new businesses, and you should definitely consider it as a backup form of payment if you sell online. Of course, it functions quite well as your primary payment option as well. Setting up a PayPal business account is quick and painless, the platform is easy to use, it’s widely accepted, and consumers trust the brand name. If you own a brand new business and need to accept payments quickly, PayPal is a good solution.
That said, as your business grows and you exceed $10K in monthly revenue, it may be more worthwhile to pursue a traditional merchant account because the processing costs will be lower. Have a look at our merchant account comparison chart if you’re considering going this route.
Unfortunately, while PayPal is at its most useful when you’re a smaller online merchant just starting out or you only sell occasionally, the high $0.49 fixed per-transaction fee has the most impact on precisely these sellers, which is the primary reason we’ve given PayPal a score of just 3.5 out of 5 stars.
FAQs: PayPal Merchant Services
We've done in-depth research on each and confidently recommend them.
We've done in-depth research on each and confidently recommend them.