How Much Does PayPal Charge? The Complete Guide To PayPal Credit Card Processing Fees

Most people have heard of the tagline “Pay with PayPal.” If you’ve ever bought or sold anything online, you’ve probably used PayPal, not just as a buyer but also as a seller. In fact, that’s how PayPal is set up — anyone can become a seller/merchant to sell just one item or a lot of items, and you can get started very quickly with almost no paperwork. PayPal made buying and selling so easy that in the early days of the internet, a lot of merchants took only PayPal and didn’t take credit cards at all.

PayPal has changed quite a bit since then. Its services have become more robust, and along with that, the charges for each service have become more complex. We suspect that it might be useful to our readers to gather all these numbers for a quick reference, and that’s what this article is for. Read on to find out what you can expect to pay if you use PayPal’s various services, and please feel free to scroll past the information you don’t need to get to the things that are pertinent to you.

Is There A Fee To Use PayPal?

Some PayPal services are free, but others are available only for a fee.

A PayPal account — whether personal or business — is free to set up. If you send money through PayPal, though, you might have to pay. If you’re a merchant taking payments through PayPal, then you’ll pay a fee for every transaction. Merchants can also upgrade to a business account and have access to additional services either as a bundle or on an à la carte basis. There are no long-term contracts for PayPal, so if you change your mind, you can cancel at any time.

What Fees Does PayPal Charge?

If you’re an ordinary user with a standard account, PayPal charges very few fees.

• Buying: Buying is free within the US.
• Selling: Selling is 2.9% + $0.30 per sale if you’re in the US. The fee is different if you’re an eligible charity organization or if you’re selling internationally. See the PayPal Credit Card Processing Fees section below for a more detailed breakdown.
• Transferring Balance: Transferring money out of your PayPal account is typically free unless you need an expedited transfer, in which case you’re charged the Instant Transfer fee (see below).
• Sending: Sending to friends and family within the US is free unless you’re taking the money out from a debit card, a credit card, or your PayPal Credit account. If so, you’re charged the same way as if you’re selling things through PayPal. To send money internationally, you pay:
  • A 5% transaction fee, with a minimum payment of $0.99 or a maximum of $4.99, and
  • A funding fee, but only if you’re funding the transaction with a debit card, a credit card, or PayPal Credit (the funding fee is the same as if you’re selling through PayPal)

For the details, see the current PayPal charges for regular accounts.

But if you run a real business or are having your once-a-year garage sale where you expect to sell many items, you’ll probably want to understand the fee structure in a little more detail. Below, we break PayPal’s fees into some major categories. We will assume that if you run a physical store, you’ve already bought all the hardware you need (see our Chip & Swipe Reader review and Chip & Tap Reader review). That’s why we’re excluding hardware-related costs from this article.

PayPal Credit Card Processing Fees

PayPal offers a predictable, flat-rate card processing payment structure to all merchants. If you have a standard PayPal account, you won’t have to worry about higher interchange for American Express cards, MCCs, or qualified vs. non-qualified transactions. Your exact rate will depend on the type of transaction. As well, the fees listed below are for US transactions made in US Dollars. Some percentages and fees differ if the transaction is in other currencies or if the sale occurred outside the US. See the PayPal merchant fees page for details.

Merchants who use PayPal’s mPOS app (called PayPal Here) or integrate with one of PayPal’s POS partners (such as Vend) will pay the following for in-person transactions:

• 2.7% per swiped, dipped or tapped transaction
• 3.1 + $0.30 per keyed transaction

For online transactions, including monthly subscription charges, donations, and digital invoices, PayPal charges the following:

• 2.9% + $0.30 per online transaction 

That’s it. Really. The simplicity of PayPal’s pricing is one of the biggest draws for merchants. You can predict fairly easily what your pricing will be. Plus, since PayPal deducts its fees before depositing funds in your account, you don’t have to worry about an end-of-the-month invoice or going over a limit and incurring additional fees.

PayPal also offers alternative payment plans. Merchants with an average transaction size under $10 can opt for the Micropayments Plan. PayPal also offers a nonprofit discount for online transactions to qualified 501(c)(3) nonprofits.

• Micropayments Plan: 5% + $0.05 per transaction
• Nonprofit Discount (Online Only): 2.2% + $0.30 per transaction

If you integrate with one of PayPal’s partner POS systems (such as Vend), you may be eligible for special discounts (presumably volume-based) or other promotions. If you’re interested in the possible discounts, be sure to ask about them when contacting the partner POS systems.

PayPal doesn’t charge merchants any PCI compliance fees, account maintenance fees, customer service fees, or termination/account closure fees.

PayPal Monthly Fees

While most of PayPal’s services are “free” because your per-transaction cost covers paying for the service, there are a few software services that have a monthly fee.

For eCommerce, if you arrange for your own domain and web hosting, you can implement PayPal’s “buy” and “donate” buttons with no additional costs. You can send digital invoices for free and only pay the transaction cost when the invoice is paid. For physical stores, access to PayPal’s mPOS app, PayPal Here, is also free. However, if you opt to integrate PayPal into a POS app, invoicing software, or another platform, you’ll be responsible for those software costs. PayPal doesn’t charge anything for the use of the integration.

If you want more advanced payment features, PayPal does offer them, but they come with additional costs:

• PayPal Payments Pro: The Pro plan from PayPal has two advantages. One, it includes a virtual terminal to accept payments over the phone by keying in a card from a browser window. Two, it allows merchants to keep the checkout process on their website rather than redirecting to PayPal to complete a transaction. This does come with a couple of concerns. For one, you’re not automatically PCI compliant, and you’ll need to take additional steps to handle your PCI compliance. And secondly, $30/month for a virtual terminal is pretty pricey, considering you’ll still pay higher rates than swiped/dipped/tapped transactions. Square and Shopify both offer free virtual terminals. Also, opting for PayPal Payments Pro and the virtual terminal will mean a few different transaction fees to worry about:
  • 3.5% American Express Fee: Any Amex cards will process at the higher 3.5% rate if you’re on the Pro plan.
  • 3.1% + $0.30 Virtual Terminal Fee: Any transactions processed through PayPal’s virtual terminal processes at 3.1% + $0.30, plus an additional 1.5% for cross-border transactions.
• Recurring Billing: If you want to sell subscriptions (software, gift boxes, etc.), PayPal does offer a set of recurring billing tools. Recurring payments are available with PayPal’s Express Checkout Option at no additional charge, but if you have PayPal Payments Pro and want advanced tools, it will cost you $10/month. This doesn’t apply to “donate” buttons, which have their own option for donors to choose between a one-time or recurring donation.
• Advanced Fraud Protection Services: This service costs $10/month + $0.05 per transaction, except the per-transaction fee is not applied with PayPal checkout and Express Checkout transactions.

PayPal Foreign Transaction Fees

Part of the attraction of working with PayPal is that it has such a huge international reach. You can use this one platform to buy and sell to 96 countries and in 24 different types of currencies. Selling internationally, though, does involve paying some additional fees. These are typically calculated on a per-transaction basis.

• 1.5% Cross-Border Transaction Fee: For US merchants who accept online payments from buyers out of the country or in-person transactions involving a card from outside the US, PayPal charges a 1.5% cross-border fee on top of the percentage charge of the existing transaction fee. That means, for example, that a US merchant accepting a Canadian card at a POS terminal will pay 4.2% of the transaction value to PayPal.
• 3.0% Currency Conversion Fee:  If PayPal has to convert the currency before it deposits the funds in your account, you’ll pay another 3.0% conversion fee. Whether you have to pay the conversion fee depends on the customer’s bank and whether it will handle the currency conversion (usually at a cost to the customer). One easy way to get around this is to require your customer to pay in your native currency.

Other PayPal Costs

While PayPal does charge a few extra fees related to payment processing, they aren’t many. But these are the ones that you might come across:

• $20 Chargeback Fee: Chargeback fees are pretty standard, and if a customer files a chargeback against you, PayPal will assess a $20 fee in addition to withdrawing the funds to cover the transaction amount. The $20 fee is for transactions made in USD. The amount is different if the transaction was made in another currency. Refer to PayPal’s table for details.
• Refund Fee: In the event of a refund, PayPal will refund the percentage-based fee from the transaction to you but keep the fixed fee. For most in-person transactions, that means you’ll pay nothing. However, refunds on keyed transactions or online or invoiced transactions will cost $0.30. PayPal can be a bit confusing about how this works in its transaction summaries, but be aware that you will pay a fee for most refunded transactions, albeit a small one.
• 1% Instant Transfer Fee: If you’d like to move your PayPal balance to a bank account immediately, you can do that — for a fee. PayPal charges merchants 1% of the transfer value, capped at $10 per transfer, but your funds will be available typically within 30 minutes (so long as your bank’s system isn’t incredibly slow). You’ll have to connect an eligible debit card to support instant transfers as well. However, if you prefer to have instant access to funds without paying a fee, don’t forget that PayPal offers a business debit card that’s linked to your PayPal balance, too.
• Mass Payouts: If you need to distribute funds to multiple parties, PayPal’s Mass Payouts feature might be an appealing option. You have two choices here: using PayPal’s API to handle the command or uploading a spreadsheet. Which method you choose affects how much you pay. If you opt to upload a spreadsheet through PayPal’s website, you’ll pay 2% per transaction, capped at a maximum of $1, which is pretty reasonable. You’ll pay a flat fee of $0.25 per payment if you opt for the API. This is a great way to distribute payments to contractors, for example, or manage marketplace payments if you use PayPal’s platform. Note these payments are in USD only, so if you want to pay in another currency, or if you’re located outside of the US, check PayPal’s table to find the exact amount.

PayPal Fees FAQ

Below are some miscellaneous questions we’ve seen asked about PayPal (or other processor’s) fees. We consolidate them here for your convenience.

Are PayPal Merchant Fees A Good Value For Small Businesses?

We’ve talked pretty extensively about the cost of using PayPal, but we haven’t talked about value. Value is so much more than just the actual physical cost. Value encompasses convenience, customer service, and other extra factors that could easily justify paying more than the absolute lowest prices.

PayPal isn’t the cheapest processor out there — especially not for businesses that handle more than $10,000/month in credit card transactions. Larger businesses may be eligible for merchant accounts with volume discounts. For low-volume businesses, PayPal does often offer more competitive pricing because of the lack of monthly fees. The flat-rate pricing, especially for in-person transactions, can mean cost savings over interchange-plus.

But the real value in PayPal is the massive consumer trust and convenience. Just about everyone recognizes the PayPal name, and with 200+ million consumer users around the world, it’s safe to say a lot of people have PayPal accounts. The barriers to entry are minimal — you don’t need a huge amount of technical experience to implement PayPal for in-person or online payments. As long as you aren’t using PayPal Payments Pro, you don’t even have to worry about PCI compliance. PayPal handles it for you, at no additional cost.

Apart from the issue of account terminations or funding holds, the only other consistent complaint about PayPal is its customer service, and reports vary. Some merchants say they’ve never had a problem with customer service. Others say that their support reps have been downright unhelpful when they’ve called in. Fortunately, PayPal offers extensive self-help resources, so you should be able to deal with most technical issues without having to contact PayPal directly.

PayPal isn’t right for everyone. But it is a really good option for a lot of merchants, especially low-volume businesses that are just starting up. For a closer look at PayPal and all its services, we recommend checking out our PayPal and PayPal Here reviews.

If you’re not sure PayPal is right for you, take a look at our Square vs. PayPal article, as the two companies are relatively similar in their business models and offerings.

Thanks for reading! If you have any questions or comments, we’d love to hear from you, so please drop us a comment!