PayPal Pricing For Merchants in 2022 and 2023

PayPal Pricing For Merchants in 2022 and 2023
By alphacardprocess January 10, 2023
PayPal is regarded as one of the leading payment processing solutions out there. However, the presence of multiple pricing tiers makes it challenging for merchants and sellers to understand the exact pricing they will have to pay. The profit-based business model of PayPal is known to generate income by charging fees for providing payment services and online payments between merchants and consumers. As a leading payment service provider, the convenient payment processing services of PayPal are available at some cost to business owners. The volume of payments that merchants are processing with determine the fees that they incur. Therefore, it is imperative for merchants and businesses to understand the exact amount they will have to pay for payment processing with PayPal.

PayPal Fees for Sellers

Seasoned business owners are usually not surprised by the fees charged by PayPal. It is because there are no additional charges for the buyers. At the same time, buyers also do not need an additional account on the platform to ensure payments. Still, as a merchant or seller, you are expected to pay a specific amount of fees for every transaction. Some of the common PayPal account fees that you might have to encounter as a merchant are:
  • Transaction Fees: The transaction fee is regarded as the most well-known fee charged by PayPal. It is applied when you are selling the products as well as services either online or in-store. There are different types of rates for every type of transaction. You might also refer to the transaction fees as the payment processing fees.
Currently, you will get access to four different types of transaction fees or payment processing fees that are applied for sellers. They are divided by whether or not the transaction is taking place inside the United States of America. Then, the same is categorized by whether the transaction is online or offline. For online transactions within the United States of America, there is a transaction fee of 2.9 percent of the total transaction amount applied on the merchants. Additionally, there is the involvement of a fixed fee depending on the currency used for making the payment. For sales that are executed outside the United States, the rate subsequently rises to 4.4 percent along with currency fees. In-store sales executed within the United States have a slightly reduced fee of around 2.7 percent along with the currency fee. For in-store sales that are executed outside the United States, the rates rise to 4.2 percent. While you can experience some variations due to currency changes, most of the fees are around 30 cents USD. For complex transactions, you can make use of a dedicated fee calculator to obtain the accurate measurements.
  • Balance Transfers: PayPal is available with two distinct ways to ensure the transfer of earnings from the respective PayPal balance to any bank account. There is the presence of a standard account transfer capability from the PayPal account to any other linked bank account or even a checking account. There is no fee for withdrawing any amount. Funds from the respective account balance are deposited typically the next business day.
There is also the provision of a faster method or route for ensuring direct deposits with the help of Instant Transfer. Instant Transfers help in depositing your overall earnings to the linked debit card or bank account within minutes. If you wish to leverage the benefits offered by Instant Transfer by PayPal, you will have to incur a fee of one percent of the total amount transferred -up to the maximum fee of $10. If you make small-sized bank transfers on a regular basis, the fee could eventually add up. If you wish to save money on the overall PayPal fees, it is recommended to request Instant Transfers quite less often and instead use the standard method to transferring your payments.
  • Virtual Terminal Fees and PayPal Payments Pro: PayPal offers access to the opportunity to sign up for the feature of PayPal Payments Pro. It serves to be a dedicated payment gateway that enables you to accept payments through the website. The solution of Virtual Terminal by PayPal will convert your computer system into a virtual credit card terminal. This implies that you can go ahead with accepting payments at the respective retail locations.
Both solutions of payment gateway and virtual terminals will serve to be useful. However, fees for these solutions will vary depending on the location. Therefore, it is imperative for merchants to understand which fees will apply. Currently, the fees for leveraging the services of PayPal Payments Pro are 2.9 percent plus $0.30 for every transaction for the transactions that are made in the United States. For transactions that are made outside the United States, the fees are 4.4 percent plus a fixed fee. The fixed fee will differ from one location to another -just like the standard fees. There is a unique fee structure for transactions on Virtual Terminals. Domestic fees are fixed at 3.1 percent plus $0.30. At the same time, international fees are fixed at 4.6 percent plus $0.30.
  • Mobile Card Reader Fees: For most retailers, it is crucial to ensure the processing of payments -irrespective of the location. The utilization of mobile card readers makes it possible to accept credit card payments in remote locations or while on the move.
PayPal offers access to a dedicated mobile app service for ensuring this capability. There is the absence of any annual fees, monthly fees, or even startup costs. There is only the presence of transaction fees that you need to consider. Acceptance of international credit cards is no hassle. However, there is the presence of an additional 1.5 percent fee as the extra-border fee. There is also the provision of the currency conversion fee of 2.5 percent if the customer goes ahead to pay in some different currency.
  • Chargeback Fees: At some point of time, you are expected to process a chargeback request from the cardholder. With PayPal, you are expected to pay the chargeback fee depending on the currency in which the payment was made. There is a fixed fee for every payment instead of depending on the same-day currency exchange rate. You can go through the list of fees on the official website of PayPal -all of which remain in the range of $20 for every chargeback.
It is important to note that the chargeback rates of PayPal can be hefty. Therefore, you should aim at minimizing the chances of a customer requesting the chargeback.
  • Refund Fees: Requests related to customer refunds can take place more often when compared to chargebacks. In the given cases, there will no fee charged by the platform towards processing the refund. However, you will also not receive any refund on the seller fees.
  • Other Fees: Most sales on the platform tend to be straightforward. Therefore, it is easier to understand your PayPal fees. It is important to be cautious of international sales. This is because these are linked to an additional charge of 3.0 percent for ensuring currency conversion. This is on top of the 1.5 percent increase on fees related to foreign transactions in comparison to domestic sales.
The international sales fee of PayPal can catch you off guard if you are not typically processing international payments. PayPal users are also expected to be charged for the process of Amex or American Express cards. The usage fees of American Express cards can be higher than other types of transaction fees. It stands at 3.5 percent. The existing non-standard fees for credit cards and debit cards do not apply to other payment methods. Gift cards, Visa, PayPal credit, PayPal prepaid Mastercard, and Mastercard are not affected. PayPal merchants or sellers can also come across fees for card verification and uncaptured authorization transactions. Uncaptured authorization is the process in which you tend to authorize a card but there is no occurrence of any transaction. Transactions related to card verification will ensure that the credit card remains in good standing before the occurrence of any transaction. These fees tend to be small -at around 30 cents for every transaction. However, these fees could eventually add up in case you are capable of processing a higher volume of sales.

Tips to Avoid PayPal Fees

Some of the useful strategies that can help in minimizing the overall fees are:
  • Having customers pay less frequently: PayPal is known to charge the per-transaction fee along with a percentage fee. Therefore, fewer transactions will imply fewer per-transaction fees.
  • Offering another form of payment: It becomes less expensive to accept checks, ACH transfers, or cash.
  • Observing if you can deduct fees in the form of business expense: It will cost you to pay towards accepting credit cards. However, it could be deductible.


Before using PayPal and its payment processing services, it is imperative for merchants to know about different pricing plans as it will help you to streamline your operations and have an idea on what types of fees you will be charged to accept cards in a variety of different scenarios.