PayPal Processing 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, though you’ll have to pay for a credit card reader/terminal and any other POS equipment you need.
• 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 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.

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.

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 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.

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.

Here is a summary of PayPal transaction fees (for US transactions made in US dollars):

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.

Chargeback Protection

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:

• Ordinary Chargeback Protection costs you an additional $0.40 per transaction and requires you to provide proof of shipment or proof of delivery for physical goods or services to retain the transaction amount and avoid paying the chargeback fee.
• Effortless Chargeback Protection costs $0.60 per transaction and does not require you to provide proof of shipment/delivery unless the chargeback involves transactions where the buyer did not receive the item.

PayPal Here

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.

Micropayments

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.

Nonprofit Discount

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.

Donations (For Entities That Are Not 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.

Third-Party POS Integrations

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.

Other Common Merchant Account Fees

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

Standard VS Advanced Credit & Debit Card Payments

If you saw our pricing table and wondered what these terms referred to, here’s a brief explanation.

• 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, and Venmo. 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, accept recurring payments and local/alternative payment methods, or if you want to upgrade your account to Payments Advanced (not the same thing as Advanced credit/debit payments) or Payments Pro. While Advanced credit/debit payments give 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. Also, only merchants using Advanced payments are eligible to opt into interchange-plus pricing.

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.

• 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. (Note that PayPal is one of our top recommended providers for Canadian merchant services.)
• 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.

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.