PayPal Merchant Fees and How to Reduce Them

There Are Ways to Cut Down on PayPal Fees Charged to Your Business

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PayPal is an online payment system that has revolutionized e-commerce, banking, and the financial world since its introduction in 1998.

As one of the first payment processors online, PayPal has the luxury of being one of the most popular and most widely used payment systems on the internet. It’s an easy way for people to pay for products and services online, transfer money to friends and family, get paid as a freelancer, and much, much more.

Key Takeaways

  • PayPal is a widely used payments platform that can be added to your website for an easier checkout process.
  • However, PayPal charges fees for each transaction based on how and where it is made.
  • There are some fees you can avoid and a couple ways to save on fees through PayPal.
  • Alternatives to PayPal may be a better fit or complementary to PayPal for your specific business needs.

However, you should be aware of the various fees that PayPal charges for its services—as well as some ways you can cut down on them.

An Overview of PayPal for Business

Once you have your business PayPal account set up, it’s a simple matter of pasting some code into your website so you have a PayPal “Buy Now” button on your site.


A seamless, quick checkout process makes it easy to order, which means more sales for you, whether you are selling digital information products like ebooks or physical products via drop-shipping.

But that convenience comes at a cost. PayPal merchant fees cut into your bottom line, and the amount can add up if you do a lot of sales or transactions—although there are ways to reduce the amount you pay. There also are alternative payment processing methods you might look at signing up for that reduce and/or eliminate certain fees.

There are a few levels to PayPal merchant fees. Here's a breakdown of what you can expect to pay depending on what level of service you use when taking PayPal payments.

Standard PayPal Transaction Fees

This is the most popular way to receive funds through PayPal, and it is a good fit for most online business owners.

Transactions with funds coming from inside the United States are charged a fee of between 1.9% and 3.49% of the transaction amount, plus a fixed fee of 49 cents. The fees vary based on whether the customer is a PayPal user, if they're buying through a button on your site, and other factors.


In a transaction where the funds come from outside the United States, an additional fee of 1.5% of the transaction amount is charged, plus a fixed fee based on the currency.

There is no fee to sign up, no fee to terminate your relationship with PayPal, and no monthly fees. You can accept payment through PayPal or from all major credit cards.

PayPal Micropayments

One way to reduce your fees—if you generally accept smaller payments—is to sign up for the micropayment process.


You must submit a micropayments application when you accept PayPal's user agreements to be accepted into this program.

If the customer is paying from an account in the United States, the fee is 4.99% of the transaction plus a currency fee of 9 cents. An additional 1.5% is charged on international transactions and the currency fee is based on the country you're receiving the payment from.

Going Pro With PayPal

With PayPal Payments Pro, there are no start-up costs or termination fees. But you do pay a $30 monthly fee to turn your computer into a virtual credit card terminal.

That’s the basic advantage there: it makes it easier for people to pay, and you can also take payments over the phone. You also keep the customer on your website during the checkout process. With standard PayPal, they are sent to the PayPal site.

Alternatives to PayPal

As you can see, the amount of money you pay in fees to PayPal can quickly add up, especially the more transactions you do.

The good news is that there are alternatives to PayPal that charge less in fees. And you might also want to explore these different online payment services for other reasons. For example, some of your potential customers might not use PayPal.


PayPal sometimes blocks accounts, so you may not want all your money in one place, just in case it happens to you and you need an alternative way to accept payments while you work things out with PayPal.


Stripe charges 2.9% per transaction plus 30 cents for each card swipe. An additional 0.5% is added when a card is entered manually. International cards would also incur an additional 1% fee and another 1% is added if the currency has to be converted.


Wise is also a great choice if you have a lot of international customers, as their fees are low and they have better currency exchange rates than other payment services, especially PayPal.

Google Wallet

Google Wallet is a good option as your customers don’t need the Wallet app to make payments. Plus, payments are automatically sent to your connected bank account. Best of all, Wallet doesn’t charge any fees.

Apple Pay

Apple Pay is another payment process that is growing in popularity and integrates with many shopping carts and payment processing services, such as Stripe.

The Bottom Line

PayPal is an industry-standard online payment system. Yes, PayPal merchant fees can cut into your profits, but it’s widely used by many consumers. You may need this option to make sure you don’t miss out on potential sales.

But there are ways to reduce your fees, and it’s always good to keep other payment options open. Giving your customers more than one way to pay is always a good thing.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. PayPal. "PayPal Merchant Fees."

  2. PayPal. "PayPal Payments Pro."

  3. Stripe. "Pricing & Fees."

  4. Wise. "Wise Business Fees: Only Pay for What You Use."

  5. Google Pay. "Enable Google Pay for Business."

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