PayPal fee calculator will calculate the fee PayPal charges on a transaction. Whether you are a casual user with a personal account, a professional seller with a premier account, or a merchant/vendor with a business account, PayPal has a price structure for you when you send or receive money. 🤑 So, if you are asking, "Does PayPal charge a fee?" The answer is a definitive YES. The right question is: How much are PayPal fees? The PayPal fee calculator will help you demystify the fees and determine how much you will receive when someone sends an amount to you or how much they need to send to receive an exact amount.

If you are a seller, independent contractor, or freelancer using PayPal to receive payments, welcome to the PayPal goods and services fee calculator. This article will help you understand what are PayPal fees, so you can budget appropriately with this PayPal calculator, reduce the charges PayPal deducts from your invoice that can impact your revenue, and learn how to avoid PayPal fees altogether. 🥂

What is PayPal?

It's almost impossible not to have heard about or use PayPal at some point if you make online purchases or sales. PayPal is the most popular digital payment processing company that allows users to make and receive payments securely over the internet. Once you've set up your account and verified your identity, you can immediately start sending or receiving payments using your email address 📩 or mobile phone number. 📲

By not disclosing personal bank details and paying for goods and services without an extra charge, PayPal became a convenient payment option for many users. But something has got to give – receiving the money is where the fun ends. Sellers have to pay the payment processor a fee for every transaction they receive from their customers. 😒

Often, sellers try to pass the fee on to the customers by adding the fee amount into their bill, but a buyer can't be forced to pay it. Therefore, if you are receiving money via PayPal, especially international payments, you want to know how much PayPal charges, so you can keep an eye on your income and expenditure and still make your profits. 📈

PayPal account types

PayPal offers three types of accounts with features for specific users:

  • Personal account – the standard account for casual users. A personal account allows you to make personal transactions for free. You can fund the account, receive or send money to family and friends, and pay for shopping.

But if you want to use PayPal for selling goods or services 💰, you need to set up either a:

  • Premier account – that comes with extra features for use as a professional seller or merchant. You can receive online payments, accept debit or credit card payments 💳, and also get a debit card for your PayPal account; or

  • Business account – which allows you to operate under a company or business name. Business accounts have additional features to the premier account. It can grant up to 200 employees limited login access, accept bank transfers, use special features like Express checkout, and even offers the ability to set up a dedicated customer service email alias and phone number.

As these accounts come with special features to support your commercial transactions, PayPal charges a fee on the transactions whenever you receive customers' payments.

How much are PayPal fees?

If you are wondering "what are PayPal fees?" or "how much are PayPal fees?", you're not alone. The reason PayPal fees cause most people a headache is because they differ slightly across different payment types. 🤕

Determining how much PayPal fees depend on:

  • The funding source of the transaction – PayPal allows payments using different payment sources once linked to an account. You can fund a transaction from your PayPal balance, a bank account, credit card, etc.
  • Type of account – Is it a personal account or a commercial account?
  • The currencies involve.
  • The country you registered the PayPal account, and the country you are sending or receiving a payment.

How much PayPal fee you pay is determined by these factors, and the PayPal calculator 🧮 has already factored them into the equation.

Personal payments

The only transactions exempted from the PayPal fees are those between family and friends in the same country when you use the PayPal balance or your bank account.

However, if you use a debit or credit card, you will always pay a fee.

Commercial payments

Commercial payments involve buying and selling goods and services, or payments received when you use the "request money" feature on the PayPal platform. These transactions attract PayPal goods and services fees. PayPal charges a fee on all commercial payments at a standard rate which is a combination of a percentage-based variable fee, and a fixed fee depending on the currency.

Standard rate = variable fee(%) + fixed fee

The variable fee depends on the country. And if the transaction is domestic (between PayPal accounts registered as residents of the same country) or international transaction (between PayPal accounts registered as residents of different countries).

If it's an international transaction, PayPal charges additional fees. 😪

  • International transfer fee – an extra fee of 1.5% on the standard rate, and

  • Currency conversion fee – an FX 💱 fee of 3 – 4.5% on the transaction amount.

🌍 PayPal groups certain countries together when calculating international transaction rates. Also, transactions between residents in the European Economic Area (EEA) are treated as domestic transactions when applying fees. Hence, an international transaction involving the Euro (EUR), Norwegian Krone (NOK), Danish Krone (DKK) or the Swedish króna (SEK) is exempted from the International transfer fee.

If you are a merchant or a registered nonprofit organization, you can apply for a discounted rate on the money you receive instead of the variable fee.

  • Merchant rate – Once you meet the qualifying criteria for the merchant rate, you can apply for it. Usually, to qualify, your sales volume for three consecutive months must exceed $3,000 (or its equivalent in your local currency) per month through PayPal. The merchant rate is in multiple tiers, and you could enjoy a discount rate up to 1.0% less of the variable fee. But your sales volume must be consistent, or PayPal will revoke the privilege.

  • Discounted rate for Nonprofits – You can sign up as a registered charity or nonprofit organization for discounted PayPal fee rates. PayPal offers Nonprofits the benefit of fee-less setup, statements, withdrawals, and cancellation.

But these rates all vary between countries and currencies, which adds another layer of complexity to the PayPal fee structure. And you have to apply and be approved for them.

Other additional fees

In addition to the fees already mentioned, using PayPal comes with some lesser-known fees 🧐 such as:

  • Withdrawal fee – charged when you withdraw your balance money into a credit or debit card, or a bank account outside the US;
  • Refund fee – charged if you refund a payment to a customer;
  • Credit card and debit card confirmation fee; and
  • Micropayments fee, etc.

The PayPal User Agreement page specifies these fees. But we're focused on the fees incurred from online transactions and how you can reduce or avoid them using the PayPal goods and services fee calculator.

How to avoid PayPal fees – calculate PayPal fees

PayPal is an exciting product, and it's one of the best for receiving online payments, but if you don't price your products and services correctly, the fees may soon be cutting into your profits when they add up! But once a problem is known, it is half solved. And now we know how PayPal charges fees. Here are some ways to reduce or avoid them whenever you are making or receiving payments! 😎

  1. Apply for merchants rates

    The merchant rate is a discounted rate that saves you up to 1.0% on the percentage-based variable rate PayPal charges per transaction. This discount added up can result in massive savings on fees.

    For instance, if you paid the standard rate in the US as the fee for every payment you receive from a customer abroad:

    Standard rate = 4.4% + $0.30

    For a $10,000 revenue, you would pay $440.30 in fees.

    But with merchant rate, PayPal grants you a discounted rate.

    Merchant rate = 3.9% + $0.30

    For that same $10,000 revenue, you pay $390.30 in fees. That is $50 saved.

    It may look little at first, but when you consistently earn between $3,000.01 to $10,000 in monthly sales as a merchant, for 12 months, the little $50 monthly, adds up to become $600 each year. That is a lot for fees, and you haven't even accounted for the lesser-known additional fees.

    The merchant rates get even better as your sales increase. So, it's a sure way to reduce your PayPal fees.

  1. Apply for Micropayments rates

    Micropayments are small online transactions that are less than $10.00 or equivalent in other currencies.

    Imagine two sellers: Seller 1 sells pens for $1 apiece, while Seller 2 sells smartwatches for $100 apiece.

    Under the standard rate for domestic transactions:

    Standard rate = 2.9% + $0.3

    Seller 1 fee: $1 * 2.9% + $0.30 = $0.33
    Seller 2 fee: $100 * 2.9% + $0.30 = $3.20
    

    After paying fees, PayPal would leave the two sellers with:

    Seller 1 = $0.67 = 67.0% of revenue
    Seller 2 = $96.80 = 96.80% of revenue.
    

    The seller who receives micropayments paid more in fees than the seller receiving macro-payments. The reason is because of the fixed fee. The $0.30 is 30% of Seller 1's revenue, while only 0.3% of Seller 2's revenue.

    This 'unfairness' is what PayPal's Micropayments fee category tried to solve.

    Unlike the standard rate, the micropayment rate charges a smaller fixed fee, plus 5% (or 6% for international transactions) of the transaction.

    Micropayment rate = 5% (6% for international transactions) + micropayment fixed fee

    The micropayment fixed fee varies with the currency involved.

Country Fee Country Fee Country Fee
Australian dollar 0.05 AUD Israeli new shekel 0.20 ILS Polish zloty 0.23 PLN
Brazilian real 0.10 BRL Japanese yen 7.00 JPY Russian ruble 2.00 RUB
Canadian dollar 0.05 CAD Malaysian ringgit 0.20 MYR Singapore dollar 0.08 SGD
Czech koruna 1.67 CZK Mexican peso 0.55 MXN Swedish króna 0.54 SEK
Danish krone 0.43 DKK New Taiwan dollar 2.00 TWD Swiss franc 0.09 CHF
Euro 0.05 EUR New Zealand dollar 0.08 NZD Thai baht 1.80 THB
Hong Kong dollar 0.39 HKD Norwegian krone 0.47 NOK UK pounds sterling 0.05 GBP
Hungarian forint 15.00 HUF Philippine peso 2.50 PHP US dollar 0.05 USD

Now, with the Micropayment rate for the US:

Micropayment rate = 5% + $0.05

Seller 1 new fee: $1 * 5% + $0.05 = $0.10

The new rates save him $0.23 in fees compared to the standard rate.

Again, like the merchant rate, you have to apply for the micropayment rate.

⚠ It is important to note that if you upgrade to the micropayment rate, the rate will apply to ALL commercial payments received into your PayPal account, irrespective of the transaction amount.

This rule means PayPal will not use the standard rate for transactions that are not micropayments. Therefore, if you receive a payment of $100, you'll pay fees based on the micropayment rate, which is $5.05, instead of the standard rate's $3.20.

🛠 To avoid this situation if you receive both macro-and micropayments from customers: you should maintain two separate accounts. One account for receiving micropayments with micropayment rate. And another for receiving any payments from $12 and above at the standard rate. 😏

From $12 (or it's equivalent in other currencies) and above, the standard rate charges lesser fees than the micropayment rate.

  • Micropayments for Digital Goods Fees – PayPal designed this fee pricing category to help people who receive digital goods payments but do not want to maintain two different accounts for routing the macro and micropayments. Suppose you apply and qualify for Micropayments for Digital Goods; in that case, PayPal automatically routes it through the standard commercial payment fees and the Micropayments for Digital Goods fees. You are charged whichever rate results in a lower amount for the transaction.

  1. Accept payments in one currency

    When you receive payments in currencies other than your local currency, or the currency PayPal registered your account with as default, you get charged a currency conversion fee. You cannot overlook the PayPal currency conversion fee. It can be as high as 4.0% of a transaction amount! 😬

    And there is also a high chance of FX loss because PayPal will not necessarily use the mid-market rate for conversion. In the end, you pay a hefty cost in currency conversion fee, international transfer fee, and still lose in FX rates.

    You can avoid the currency conversion fee when you accept payments in only one currency. Choose a primary currency by going to your PayPal profile > My Money > Currencies. 💲

  1. Receive payment less often.

    PayPal charges fees per transaction. That means you will be charged fees 100 times if you receive payments 100 times. You can drastically reduce the number of fees if you can receive payments less often.

    Of course, it's always better to have money around to avoid cashflow problems. But if you have customers or clients you regularly do business with, an excellent way to reduce the fees you pay for every transaction is to accept your payments in bundles. If your business can withstand it, request that customers pay you at an agreed interval instead of receiving lots of small payments. The total fee you will pay for receiving $100 ten times a month from abroad will be much higher than the fee you will pay if you receive $1,000 once a month. 🙃

  1. Account for PayPal fee in your payment request

    You can pass on the PayPal fees by adding them to the bill amount you request from a customer or client. This method doesn't really "reduce" the PayPal fee, but at least you're not the one paying it. For example, if you need $100 from a customer, request $105 instead. That way, by the time PayPal deduct fees, your revenue, and profits are not affected. 😉

  1. Accept payment under the family and friend option

    This method is not advisable for commercial payments. 🤫 PayPal does not charge a fee for personal payments. If you send or receive payment through the family and friends’ option, PayPal considers it a personal payment, and there is no buyer protection for such transactions.

    Fees always apply to international transactions, transactions with currency conversion, and transactions using a debit or credit card. It goes against PayPal's terms of service to pay for goods and services using this method. 🤐

  1. Consider alternative payment methods

    PayPal is very convenient for both sender and receiver, but it's always great to have options. 💡 There are other payment platforms you can explore to avoid PayPal fees altogether. Some of these alternatives charge cheaper payment fees compared to PayPal and maybe worth a look. 🙂

Pros and Cons of using PayPal

PayPal may have a lot of benefits, but it also constitutes challenges to users besides its fees. If you are considering using PayPal, then here's a brief overview of the benefits and demerits 🤔 of using PayPal to process your payments.

Pros:

  • PayPal is safe, private, and secure. 🔐
  • Sending and receiving money between friends and family is practically free.
  • Anybody can use PayPal because of its easy-to-use interface.
  • PayPal offers special packages and discounts to users, businesses, and nonprofits.

Cons:

  • Customers and clients must also use PayPal, and they must pay via their PayPal balance or connected bank to avoid most fees.
  • PayPal charges all payments using a card.
  • You cannot enjoy PayPal's full benefits if you are outside the US or receive mostly international payments.
  • PayPal often freezes users' accounts 🚫 for different reasons; usually, to protect customers. But this is usually inconvenient for most users because it can be without warning.
Disclaimer The PayPal fee calculator uses the information you provided to estimate your PayPal fees for a transaction. The estimated fee may differ from the actual fee PayPal may charge at the time you carry out the transaction.
Oghenekaro Elem
Transaction details
Transaction type
Standard online transaction
Sender currency
U.S. Dollar (USD)
Your currency
U.S. Dollar (USD)
Amount being sent
Fixed fee
Variable fee
%
Result
PayPal fee
You receive
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