Estimated read time: 4 minutes, 40 seconds

If you run a small business, nothing beats the convenience and simplicity of a service like PayPal. One click of a button on a shopping cart page and a purchase is made. This is great for your customer and you.

But this convenience is somewhat deprecated when you look at your PayPal account and see a significant problem: fees. “How much does PayPal charge?” is an important question, especially if you do a high volume of sales. PayPal’s flat fees can eat up your margin in lots of small bites over time.

Read on as we take a deep dive into how PayPal and its fee schedule work, how you can lower the number of fees you pay to PayPal, and alternatives to the PayPal services.

The Anatomy of the PayPal Fee Schedule

First, here’s a quick recap of PayPal’s fee schedule, with additional notes about how PayPal works based on where you live, what kind of payments you transact over PayPal, and other issues.

What Percentage Does PayPal Take?

PayPal’s basic fee is 2.9% plus $0.30 USD per sale. This rate is the foundation of all PayPal seller fees that PayPal charges from within the US for nearly all transactions. 

There are also some special cases where the PayPal transaction fee is different, based on the transaction:

PayPal TransactionPayPal Percentage
Sales within the US2.9% plus $0.30 USD per transaction
Discounted rate for eligible charities 2.2% plus $0.30 USD per transaction
International Sales4.4% plus a fixed feed based on currency
PayPal Here© cardholder2.7% when swiped or 3.5% for manual transactions

Sending Money via PayPal Between Countries

To reiterate, it doesn’t ever cost money to make a purchase with PayPal (see our notes below.) The transaction rate for PayPal for international businesses is usually 4.4%, plus an amount based on the country’s currency in question. 

Sending Fees Using a Debit or Credit Card

If the transaction is funded from a PayPal Cash or PayPal Cash Plus account, the fee is waived. Otherwise, the fee for receiving cash to a typical Visa or Mastercard is the regular 2.9% of the transaction plus $0.30 USD. PayPal pricing and fees never apply to consumers.

Transferring Money to or from PayPal via a Debit or Credit Card

Transferring money from a US debit or credit account is usually instant. Still, there’s a transaction limit to take into account, and the transfer can take up to 30 minutes to clear. This is because the process is reviewed both by PayPal and by the bank which issued the credit or debit card. 

PayPal to bank transaction limits

  • Up to $5000 USD per transaction
  • Up to $5000 USD per day
  • Up to $5000 USD per week
  • Up to $15000 per month

Individual banks may also impose their own requirements or limits.

How to Reduce Your PayPal Business Fees

That 2.9% of every transaction can represent quite a large chunk of change in the long term. However, there are ways that you, as a business owner, can manage your PayPal fees. Here are just a couple of ideas:

Include PayPal Fees into Your Pricing

Some consumers may balk at this, but as a seller, it’s your right to structure your prices as you wish. Ethically, disclosing that PayPal fees are part of your pricing is the right way to use this approach.

Consolidate Payments 

Since the PayPal scheme is to charge a fee per payment, you can lower the impact of the flat fee portion of a PayPal transaction by bundling together several payments into one invoice and charging a customer all at once. 

Request “Friend” Payments

PayPal does not charge fees for payments sent as a friend. While this can be attractive, if you are caught doing this, then PayPal may terminate your account. This is why we do not recommend this strategy for any business. 

Carry PayPal Charges as a Business Expense on Your Taxes

Are you purchasing on behalf of a business? Paypal and other payment processing charges are deductible when purchased in relation to your business. If questions related to taxability, we recommend consulting your tax advisor. 

Withdrawing PayPal Funds with the Correct Method

No one wants to rack up numerous PayPal fees. Using the right method for withdrawing PayPal funds can help you avoid getting nicked.

Instead of using PayPal to directly transfer your fund from your PayPal account to your credit or debit card, you should instead transfer funds directly to your checking account. A bank transfer usually takes a few days to complete (as your bank wants to earn funds on the float), while a direct CC transfer usually involves a 1% fee and is instant, up to a usual limit of $10 USD.

Making Use of Alternative Payment Services

Payment services such as Amazon Cash, Apple Pay, UnionPay, iDeal, or Alipay have a lot to offer compared to PayPal, especially when it comes to better terms and fees. It’s in your best interest to present as many payment options as possible, but wouldn’t it be difficult to compile all these options and present them clearly on your site?

Luckily, FastSpring can help! In partnering with our full-service SaaS ecommerce platform, you can smoothly support over 20 currencies and instantly offer a diverse array of payment options for global merchant services, like the ones listed above. Basically, we designed our service to help you meet the needs of the modern, cross-border shopper.

Are you trying to Avoid PayPal fees? 

FastSpring is one of the fastest-growing ecommerce solutions. Let us help you lower your cost of doing business. We’d love to answer your online payment questions. Contact us to learn more about our full-service ecommerce platform.