PayPal processing fees have grown in complexity and are not easily understood by the average merchant. We'll explain exactly how much it costs to use PayPal and every potential fee you may encounter.
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania.
WRITTEN & RESEARCHED BY Jason Vissers Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania. Expert Contributor
Matt has been helping small businesses make decisions since 2017. He has written reviews and articles across many different channels but specializes in the point of sale, payroll, and small business insurance categories and has been quoted in articles for Fox Business, Forbes, and other publications. Prior to joining Merchant Maverick, Matt was a journalist and editor for 14 years for a pair of weekly newspapers. He is a graduate of the University of Oregon and currently resides in Gladstone, Oregon.
REVIEWED BY Matt Sherman Matt has been helping small businesses make decisions since 2017. He has written reviews and articles across many different channels but specializes in the point of sale, payroll, and small business insurance categories and has been quoted in articles for Fox Business, Forbes, and other publications. Prior to joining Merchant Maverick, Matt was a journalist and editor for 14 years for a pair of weekly newspapers. He is a graduate of the University of Oregon and currently resides in Gladstone, Oregon. Lead Staff Writer
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PayPal is a popular and convenient choice for merchants looking for all-in-one payment processing. However, PayPal processing fees are tough to summarize as they are dependent on a number of factors. We wrote this comprehensive look at PayPal’s merchant fees to help you understand the different rates and charges you may face when you use PayPal as your business online payment processor.
Read on to see what you can expect to pay if you use PayPal’s various business services.
Table of Contents
A PayPal account is free to set up. When you start accepting payments, you’ll pay a percentage fee ranging from 1.9% to 3.5% and a fixed fee of 5 to 49 cents for each transaction. Additional paid services are available through your PayPal business account. You can buy these services either as a bundle or on an à la carte basis.
If you’re an ordinary user with a standard account, PayPal charges very few fees.
Depending on the nature of your business and your future plans, you’ll want to understand PayPal’s fee structure in more detail. Below, we break PayPal’s fees down into some major categories.
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.
If you want more advanced payment features, PayPal does offer them, but they come with additional costs.
With the Advanced plan, for $5/month, you can keep the checkout process on your website rather than redirect to PayPal to complete a transaction. You’ll have to use PayPal’s hosted checkout templates for submitting data for sales and authorizations. By using one of these templates, you avoid the PCI-compliance burden of having credit card details pass through your servers. Instead, PayPal handles PCI compliance.
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.
If you want to sell subscriptions (software, gift boxes, etc.), PayPal offers 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.
This service costs $10/month + $0.05 per transaction, except the per-transaction fee is not applied with PayPal Checkout and Express Checkout transactions.
Here is a summary of PayPal transaction fees (for US transactions made in US dollars):
| Rate | Monthly Fee | |
|---|---|---|
| PayPal Digital Payments (PayPal Checkout, Invoicing, Pay With Venmo, PayPal Credit, Etc.) | 3.49% + $0.49 | None |
| Standard Credit/Debit Card Payments | 2.99% + $0.49 | None |
| Advanced Credit/Debit Card Payments | 2.59% + $0.49 | None |
| Advanced Credit/Debit Card Payments + Optional Interchange-Plus Pricing | Interchange + 0.49% + $0.39 | None |
| Payments Advanced | 2.89% + $0.49 | $5/month |
| Payments Pro | 2.89% + $0.49 | $30/month |
| Virtual Terminal | 3.09% + $0.49 | $30/month |
| PayPal Zettle POS (Card-Present) | 2.29% + $0.09 | None |
| PayPal Zettle POS (Manual Card Entry) | 3.49% + $0.09 | None |
| QR Code Transactions ($10.01 & Above) | 1.9% + $0.10 | None |
| QR Code Transactions ($10 & Below) | 2.4% + $0.05 | None |
Regarding PayPal’s interchange-plus pricing: This pricing option is now available for sellers who have been approved for Advanced credit/debit card processing. If you’re a higher-volume seller, you may find that you save on processing costs with this pricing option — and if you don’t, you can just revert to flat-rate pricing from your dashboard and your pricing plan will change back at the start of the next month. I have to note, however, that PayPal’s published interchange-plus pricing rate is still higher than the interchange-plus rates offered by most of our preferred merchant account providers.
Now, let’s discuss some additional factors that will affect your PayPal fees for credit card processing.
This is available to those who take Advanced credit/debit card payments. It exempts you from having to pay the $20 chargeback fee when a buyer rejects or reverses a card charge. It comes in two forms:
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.
PayPal offers its Micropayments plan to certain merchants with an average transaction size under $10 (I say “certain” because not all merchants will be accepted into the program, and PayPal doesn’t spell out how it determines who is eligible). These merchants will pay 4.99% + $0.09 for low-value transactions, with the lower fixed fee more than making up for the higher percentage fee.
PayPal also offers a nonprofit discount for online transactions to qualified 501(c)(3) nonprofits. The rate is 1.99% + $0.49 per transaction and applies to online transactions only. Our guide to using PayPal for nonprofits goes into further detail as to what PayPal can do for a nonprofit organization. PayPal is one of our highly recommended providers for credit card processing for nonprofits.
You can accept donations even if you’re not a nonprofit organization. These transactions will process at a rate of 2.89% + $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.
If you saw our pricing table and wondered what these terms referred to, here’s a brief explanation.
Part of PayPal’s draw is that it has such a huge international reach. You can use this one platform to buy and sell to 96 countries and in 25 different types of currencies. Selling internationally, though, does involve paying some additional transaction fees.
Let’s examine the other PayPal fees you might come across.
Chargeback fees are pretty standard, although merchants generally want to prevent chargebacks from happening in the first place. 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 merchant fee table for details.
In the event of a refund, PayPal will not refund the transaction fee you originally paid to receive the payment. This means that refunds will essentially cost you 1.9-3.49% + $0.09-$0.49 of the amount you were paid, depending on the original transaction 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 with a minimum fee of 50 cents, 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 is a useful feature for distributing funds to multiple parties. You have two choices here: using PayPal’s API to handle the command or uploading a spreadsheet. Some definite advantages come with using payment processing APIs because you can use them to create a custom payment processing setup.
Which method you choose affects how much you pay. If you upload a spreadsheet through PayPal’s website, you’ll pay 2% per transaction, capped at a maximum of $1. You’ll pay a flat fee of $0.25 per payment if you opt for the API. It’s a great way to distribute payments to contractors 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.
The amount you’ll pay in PayPal fees will depend on a variety of factors. Let’s conjure up two scenarios and see how much each theoretical merchant pays in Paypal fees.
Merchant 1 runs a modest online store called ToiletMemes.com. It sells humorous t-shirts, hats, and socks.
Merchant 2 sells sporting goods from both a brick-and-mortar retail location and online.
Merchant 3 runs a café in the city, selling mainly coffee and pastries. The café has no online component.
All told, PayPal isn’t the cheapest processor around. This becomes ever more apparent with higher processing volumes. There are countless alternatives to PayPal out there in the payment processing industry, but let’s choose three leading providers for comparison: Square, Stripe, and Helcim.
Square is one of our favorite all-in-one processors. Given Square’s extensive and deep feature set, we actually recommend it over PayPal in many business circumstances, as you’ll see in our Square vs PayPal comparison. Cost-wise, Square’s online rate of 2.9% + $0.30 per transaction beats that of PayPal in most instances. Small-ticket sellers, in particular, will save on processing with Square due to its lower fixed per-transaction fee (30 cents vs. PayPal’s 49 cents).
Plus, Square, unlike PayPal, offers a virtual terminal or recurring billing for no monthly cost. For online sellers, Square offers remarkable value.
For in-person transactions, however, PayPal’s rate (2.29% + $0.09) beats that of Square (2.6% + $0.10). Businesses that are mostly or entirely in-person will save on processing with PayPal.
Stripe Payments specializes in online payment processing, and is a particularly strong choice for businesses needing a custom payments solution. In terms of cost, Stripe’s online rate (2.9% + $0.30 per transaction) is the same as that of Square, so the same pricing analysis described above applies here for online transactions: you’ll save on processing with Stripe in most instances, particularly if your average ticket size is small.
As for in-person payments, Stripe’s rate is 2.7% + $0.05 per transaction — a higher percentage than PayPal, but a lower fixed rate. The higher your ticket volume, the more you’ll save with PayPal. The lower your ticket volume, the more likely it is that any cost differences will be small enough to be inconsequential. However, Stripe’s POS capabilities are significantly less comprehensive than those of PayPal.
See our Stripe vs PayPal comparison piece for more.
Helcim, unlike PayPal, offers full merchant accounts, giving you greater account stability. Cost-wise, Helcim charges no monthly fee and offers interchange-plus pricing, which is our favorite pricing model for credit card processing fees. With interchange-plus pricing, unlike flat-rate pricing, it’s not easy to summarize exactly what you’ll pay on a per-transaction basis, but the end result is that you’ll most often pay less than you will with PayPal’s flat-rate pricing. Furthermore, Helcim’s published interchange-plus rates are lower than PayPal’s interchange-plus rates for Advanced checkout users.
Furthermore, Helcim offers volume discounts on processing to merchants selling more than $25K per month. In short, Helcim offers cheaper payment processing than PayPal, and this disparity will only grow as your sales volume grows. Of course, you’ll have to undergo a stricter underwriting process to be approved to use Helcim, and your account will come with fewer built-in services included. That said, you can fill these feature gaps with third-party integrations.
PayPal isn’t the cheapest processor out there — especially not for larger businesses that handle more than $10K/month in credit card transactions. These businesses may be eligible for merchant accounts with volume discounts.
For low-volume businesses, PayPal may offer more competitive pricing because of the lack of monthly fees and low in-person transaction fees, though the relatively high 49-cent fixed per transaction fee has turned off many small-ticket merchants.
However, the real value of PayPal is the massive consumer trust and convenience.
Plus, the barriers to entry are minimal — you don’t need much 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.
If you’re still on the fence about PayPal, our PayPal review contains a full feature rundown. And whether you’re looking for help creating a PayPal business account or you want to avoid the account terminations and holds that can occur with third-party processors like PayPal, Square, and Stripe, Merchant Maverick’s resources can help you every step of the way.
Jason has been writing about small business software platforms, services, and financing since 2015. Jason’s expertise has been featured in Yahoo Finance, Time/NextAdvisor, Home Business Magazine, CreditCards.com, GoBankingRates, TheLadders.com, and other publications. He has a bachelor’s degree in Political Science from San Diego State University and currently lives in Philadelphia, Pennsylvania.