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PayPal offers a convenient, safe way to pay and get paid online. Customers can pay any way they choose, including through bank accounts, credit cards, PayPal Smart Connect — a line of credit you can use to make PayPal purchases — or available account balances. It’s available in 202 countries and 25 currencies, and it has more than 325 million accounts.
Of course, this convenience comes at a price, so keep reading to find out what you need to know about PayPal fees.
According to its website, it won’t cost you a cent to open a PayPal account or to download mobile app. PayPal charges fees only for the following transactions.
PayPal also charges both merchant fees and consumer fees, and they are quite different. Let’s take a look at them both:
PayPal’s fees vary depending on what type of transaction you are making, whether it’s domestic or international, what type of currency is being used and more. PayPal allows free payments directly from bank accounts but charges 2.90% plus 30 cents for debit and credit card payments. Below are some other relevant fees the business charges consumers:
PayPal charges merchants for using its platform for commercial transactions — see below for typical prices:
So, if you’re a freelancer running a business, you might be wondering something along the lines of, “How much does PayPal charge for $1,000?” If you invoice a client for $1,000 and the client pays you via PayPal, you’ll get $964.61 — you’ll pay 3.49% of the transaction, or $34.90, plus the fixed 49 cent fee.
PayPal charges fees for buying and selling cryptocurrencies.
Sending and receiving donations via PayPal will also involve fees. You’ll pay 2.89% per domestic transaction plus 30 cents, but if your nonprofit is designated a 501(c)(3), you can sign up for discounted fees. International donations will cost you an additional 1.50% each.
Using a debit or credit card will incur PayPal fees, too. If you take a contactless debit or credit card payment using the PayPal Here mobile application and a card reader, you’ll pay a fee of 2.70% for each transaction — or 3.50% plus $0.49 if the card is entered manually. When you accept debit and credit cards via your website you’ll pay between 2.59% and 2.89%, plus $0.49 per transaction.
Visa, Mastercard and Discover card payments that you accept via PayPal’s Virtual Terminal will cost you 3.09% plus 49 cents per transaction.
There are lot of ways to avoid those pesky fees PayPal charges. Consider the following:
If you receive a commercial payment, say from a client, you’ll be charged a fee of 3.49% plus $0.49. That fee, however, applies only to money you get in exchange for goods or services.
If that client sends you money via the “Friends or Family” option PayPal offers instead, you won’t be charged a thing — nor will the client if they use their PayPal balance or a bank account, or a combo of both.
If you’re being paid by someone frequently, the PayPal fees can quickly add up. Consider asking to get paid less often.
For example, if you have someone paying you every week, maybe ask that they pay once a month. So, instead of paying $0.49, plus 3.49% of the transaction weekly — or, if you’re being paid by someone outside the U.S., 4.99% plus a fixed fee that varies depending on the country the funds are coming from — you’ll be paying that once per month.
The percentage of the full amount will be the same, but you’ll end up paying less in fixed fees, which adds up over time.
PayPal offers a credit card called the PayPal Cash Card, which works like a debit card for your account and enables you to access money immediately without paying any fees.
Because you can be charged to access your money from PayPal, you should do one of the following.
Maybe you didn’t know that you can deduct PayPal merchant fees on your tax return — but you can, just like you can deduct bank fees. Just add up how much you paid in PayPal fees for your business throughout the year and include that amount on your Schedule C.
Compared with other payment processors, PayPal is a breeze for consumers and businesses to use. Although there are fees involved, there are several workarounds for avoiding them.
If you’re in the market for a payment processor, make sure you find the one that best supports your particular business. Look at fees, of course, but also take into consideration ease of use and website integration. Whichever you choose, keep in mind that as your business grows, it’s simple to reassess and change processors if one fits your needs better.
Editorial Note: This content is not provided by PayPal. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by PayPal.
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Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all available deposit, investment, loan or credit products.
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