What are the PayPal fees? Everything you need to know as a business owner.
PayPal is one of the most popular online payment gateways in the whole world. With over 377 million users across the globe in 2020, this American company has become the biggest eCommerce payments provider offering secure and quick transactions.
Both business and personal users are catered for with PayPal. For example, you can use PayPal as the payment gateway for your eCommerce store or as a personal user, you can easily transfer money to family, friends and companies.
Plus, as a freelancer or micro business, PayPal can help you reach new clients anywhere in the world, get paid via credit card or a PayPal account.
If you’re considering PayPal for your business, read on, as, in this article, we cover PayPal fees.
Calculating PayPal Fees
Pricing your products and services correctly to make a profit requires in-depth knowledge of what it takes to create and sell.
One cost often overlooked is that of the payment gateway, and if you get the fee calculation wrong, you stand to lose profit, so let’s get started with the frequently asked question:
How much will PayPal charge me to receive money?
If you are a business user and want to get instantly paid by your customers, you have the possibility to create your merchant account on PayPal. It will certainly make payments quicker and more secure for you and your clients.
However, to benefit from instant payments, you need to pay extra fees calculated based on the number and the value of the payments you receive.
Fortunately, the charges offered by the company are competitive, and their policy is also apparent, so you don’t have to fear hidden charges.
The standard rate for receiving domestic transactions (when both sender and receiver are registered as US residents) depends on the value of a transaction.
In standard online commercial transactions, the rate amounts to 2.9% of the transaction amount, plus a $0.30 fixed fee.
How much PayPal charges corporate users?
Each PayPal transaction is charged with two different fees: a percentage-based fee and a fixed fee based on a transaction currency.
When both sender and recipient are registered as US users, the percentage-base fee of 1.5% and the transaction fee is 0.3 for all transactions, including:
- online commercial transactions
- in-store commercial transactions
- PayPal’s buy now, pay later (BNPL)
- QR code transactions
If you are based in a different country, the charges may slightly differ. You also need to be careful when it comes to international transactions. The percentage fee in such cases is 4.4%, and the fixed fee depends on the sender’s country.
How do I calculate PayPal fees?
Let’s suppose you issued an invoice for $100, sent it to your client and asked them to pay using PayPal.
How much is the PayPal fee for $100, and how much will you actually earn?
In such a case, the percentage-based fee, plus a fixed fee, amount to $3.2; therefore, you will earn $96.80. To calculate the fees, you need to work out some formulas and enter relevant data, which can be complicated.
Why should I use a PayPal fee calculator?
A PayPal fee calculator will remove all doubt regarding the fee, and thus, using it means your business avoids miscalculations which can cost your business profit.
As we know time is money so use online resources like calculators to do the hard work for you.
Payment gateways like PayPal are ideal for digital businesses. However, understanding the fees is vital to maximising your profit.
First-quarter 2021 Statista shows PayPay with 392 million active users and growing. Now you have a basic understanding of how PayPal’s fees are calculated, and you can use a free online calculator to do the hard work for you before sending your clients’ their invoices.