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

By now, most people have seen “Pay with PayPal” buttons in online stores. In fact, if you’ve ever bought or sold anything online, you’ve probably used PayPal, not just as a buyer but also as a seller. 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 internet’s early days, many merchants accepted PayPal instead of credit cards.

PayPal has changed enormously since then. Its services have become more robust, and along with that, the charges for each service have become more complex. Not only that, but the latest changes PayPal has made to its pricing scheme have made determining your PayPal merchant fees — once a simpler matter — dependent on a number of factors.

So, how much does PayPal charge? It’s a tough question to tackle, so we wanted to gather all these numbers in one place to help PayPal merchants understand these different rates and charges. Read on to find out what you can expect to pay if you use PayPal’s various services. It’s OK to scroll past the information you don’t need to get to the parts that apply to you!

Is There A Fee To Use PayPal?

A PayPal account is free to set up. If you’re using PayPal to take payments, you’ll pay a fee for each transaction. Merchants can also get a business account and access additional paid services, either as a bundle or on an à la carte basis. There are no long-term contracts.

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: With PayPal’s recent pricing changes, determining your processing fees is much more complex than it once was. For ordinary US-based sellers using Standard credit/debit card acceptance, selling is 3.49% + $0.49 per sale when accepting PayPal digital payments and 2.99% + $0.49 per sale when accepting credit and debit card payments. Now, these fees will be different if you’re using Advanced credit/debit card processing, if you’re accepting QR code payments, if you’re an eligible charity organization, if you’re selling internationally, or if other factors come into play. See the PayPal Business Transaction Fees, Explained 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)

PayPal Business Transaction Fees, Explained

Whether you run a high-volume business or are having your once-a-year garage sale where you expect to sell many items, you’ll want to understand the fee structure in a little more detail. Below, we break PayPal’s fees into some major categories. If you run a physical store, you’ve likely already bought all the hardware you need, which is why we’re excluding hardware-related costs from this article.

PayPal Transaction Fees

PayPal once offered one predictable flat rate for processing online transactions. However, PayPal’s new pricing structure, enacted August 2nd, 2021, changed everything. While merchants will now pay different per-transaction rates based on a number of different factors, the most contentious part of these changes has been the increase in the fixed portion of the transaction fees charged (in most cases) from $0.30 to $0.49.

While this particular change won’t hurt sellers with high average tickets, merchants who see accept lots of small transactions will now pay substantially more in fees. In particular, video game streamers who receive lots of $1 tips are being hit hard. Now, people in these situations would stand to benefit from PayPal’s Micropayments plan in which the fixed portion of the fee is just $0.09. However, I am now seeing reports from users that PayPal is no longer offering the MicroPayments plan to those who receive donations, thus eliminating the one way streamers could mitigate the effects of the pricing change (short of switching payment methods entirely, which many are doing).

This begs the question: Why is PayPal suddenly making these changes? Could the upcoming (now postponed until 2022) interchange fee increases by Visa And Mastercard, which, according to a study by CMSPI, are set to generate $889 million in annual costs, be the driver of these changes? At this point, we can only speculate.

While PayPal’s merchant fees page has the full details, here is a summary of PayPal’s per-transaction fees (for US transactions made in US dollars):

Now, some explanation is in order:

• Standard Credit & Debit Card Payments: This refers to the default means of card acceptance available when you get a PayPal Business account. It gives you the standard payment options for your checkout page. Your buyers can pay with PayPal, credit/debit cards, Pay Later options, Venmo, and alternative payment methods. Seller protection (not Chargeback Protection) is included on eligible transactions.
• Advanced Credit & Debit Card Payments: These include the same payment options as Standard while also giving you the ability to customize your credit card fields. It’s also required if you want to add Chargeback Protection (more on that below), the Virtual Terminal, or if you want to upgrade your account to Payments Advanced (which is not the same thing as Advanced credit/debit payments) or Payments Pro. While Advanced credit/debit payments gives you access to a lower card processing rate than Standard, you’ll have to apply for it (which involves providing additional info about your business) and be approved by PayPal. Additionally, when you accept American Express, you’ll pay a flat 3.5% per-transaction rate instead of the rate listed above.
• Chargeback Protection: This is available to those who take Advanced credit/debit card payments, exempts you from having to pay the $20 chargeback fee when a buyer rejects or reverses a card charge. It comes in two forms:
  • Ordinary Chargeback Protection, which costs you an additional $0.40 per transaction and which requires you to provide proof of shipment or proof of delivery for physical goods or services in order to retain the transaction amount and avoid paying the chargeback fee.
  • Effortless Chargeback Protection, which costs $0.60 per transaction and which does not require you to provide proof of shipment/delivery unless the chargeback involves transactions where the item was not received by the buyer.
• PayPal Zettle: Merchants who sign up with PayPal for in-person payments are now onboarded to PayPal Zettle, rates for which are provided above. However, merchants who continue to use the PayPal Here mPOS app (PayPal’s legacy system for in-person payments) will continue to pay 2.7% per transaction (3.5% + $0.15 per keyed transaction), just as before.

Remember, 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 may be able to opt for the Micropayments Plan, though there is some speculation about whether the micropayments plan will be available going forward. PayPal also offers a nonprofit discount for online transactions to qualified 501(c)(3) nonprofits.

• Micropayments Plan: 4.99% + $0.09 per transaction
• Nonprofit Discount (Online Only): 1.99% + $0.49 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, 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 Zettle, 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 Advanced: With the Advanced plan, for $5/month, you can keep the checkout process on your website rather than redirecting to PayPal to complete a transaction. You’ll have to use PayPal’s hosted checkout templates for submitting data for sales and authorizations. The templates let you avoid the PCI-compliance burden of having credit card details pass through your servers.
• PayPal Payments Pro: The Pro plan, which costs $30/month, includes a virtual terminal to accept payments over the phone by keying in a card from a browser window. It also allows merchants to keep the checkout process on their website rather than redirecting to PayPal to complete a transaction. You won’t be using PayPal’s hosted checkout templates for this, so you won’t automatically be PCI compliant, and you’ll need to take additional steps to handle your PCI compliance. To this end, you can use the optional Transparent Redirect feature so all payment details are posted silently to the PayPal server when the buyer presses submit instead of going through your server. Also, with both Payments Advanced and Payments Pro, you’ll still be on the hook for the 3.5% Amex fee when you process Amex cards.
• Virtual Terminal: If you don’t care about the other Payments Pro features, you can get the Virtual Terminal on a standalone basis for $30/month. That’s pretty pricey for a virtual terminal, considering you’ll still pay higher rates than swiped/dipped/tapped transactions. Square and Shopify both offer free virtual terminals.
• 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 Checkout and Standard credit/debit acceptance at no additional charge, but if you have Advanced credit/debit acceptance 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 & Currency Conversion 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.
• 3-4% Currency Conversion Fee:  If PayPal has to convert the currency before it deposits the funds in your account, you’ll pay another conversion fee of 3-4%, depending on the nature of the transaction. 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 Merchant Fees

Let’s examine the other PayPal fees 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 and will be waived if you have Chargeback Protection. 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. This means that most refunds will cost you $0.49. 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.
• 1.5% 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 1.5% of the transfer value, capped at $15 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.
• PayPal Payouts: If you need to distribute funds to multiple parties, the PayPal Payouts feature (formerly known as Mass Payouts or Mass Pay) might be an appealing option. You have two choices: 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 are located outside the US, check PayPal’s table to find the exact amount.

How Much Does PayPal Charge For Businesses?

The amount you’ll pay in PayPal fees will depend on a variety of factors. Let’s conjure up some scenarios and see how much each theoretical merchant pays in Paypal fees.

Merchant 1: The Small Online Store Owner

Merchant 1 runs a modest online store called ToiletMemes.com. It sells jokey t-shirts, hats, and socks.

• They use PayPal Checkout to offer PayPal payment buttons as a supplementary payment method for customers who have PayPal accounts.
• They use no add-ons or paid features.
• Processing $800 in monthly PayPal transactions at the 3.49% + $0.49 rate with an average ticket of $14, they’re paying a little less than 98 cents per transaction.
• This comes out to about $55.92/month.

Merchant 2: The Sporting Goods Retailer

Merchant 2 sells sporting goods from both a brick-and-mortar retail location and online.

• The offline store makes use of two Standard Store Kits ($499 each).
• The online store uses PayPal Payments Pro ($30/month) to process payments and uses recurring billing ($10/month).
• The brick-and-mortar store processes $10,000/month at the 2.29% + $0.09 rate with an average ticket of $35.
• The eCommerce store processes $3,000/month at 2.89% + $0.49 with an average ticket of $28.
• A small portion of these transactions will be Amex transactions, Virtual Terminal transactions, and the like. They’ll process at a higher rate. Let’s just estimate that adds an extra $30/month in processing costs.
• When added together, all costs come to $464/month after an initial investment of $998 + tax for the Store Kits.

Are PayPal Processing 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. Sadly, PayPal’s recent rate hikes change the calculus a bit for low-volume online businesses, and not for the better.

However, 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 Advanced or Pro, you don’t even have to worry about PCI compliance (and with Advanced, you can get help). PayPal handles it for you, at no additional cost.

Apart from the issue of account terminations or funding holds, the 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. 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 makes sense for a lot of merchants, especially those with low-volume businesses that are just starting up and may want to accept PayPal as a supplementary payment method. For a closer look at PayPal and all its services, we recommend checking out our PayPal and PayPal Zettle 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. Our PayPal vs. Stripe article could prove helpful as well.

If you have any questions or comments, please leave us a comment! As always, we love hearing from you!

Common Questions About PayPal Fees

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