A key foundation in running your own business is determining how you will collect payment from your customers or clients. Among all the free payment systems online today, PayPal is one of the most well-known and popular. Yet “free” is more of a relative term, as using PayPal inevitably involves fees being deducted from your payments.

If you’re trying to decide whether or not PayPal is the right avenue for you to receive money from your clients or customers, here is everything you need to know about PayPal fees.

PayPal Account Types: Personal vs. Business

PayPal offers two types of accounts to their customers: a personal account and a business account. The account you use will depend on your specific needs, but if you’re using PayPal for business purposes, then you will need to set up a business account.

Personal Account

A personal account is only meant to be used for transactions between friends and family members. Because these accounts are meant for gifting money or repaying a friend for lunch—not billing a customer for a product or service—personal accounts are not subject to additional fees beyond credit card processing! In the past, PayPal users could take advantage of this fee-free receipt of funds by marking specific transactions as “personal,” but as of July 28, 2022 you can only use this feature with a Personal account.

Business Account

As a single business owner selling products or services and billing clients via PayPal, you will need a business account. With a business account you can send invoices under your company name and accept debit, credit, or ACH (bank transfer) payments for a competitively low fee. Business accounts can also add up to 200 employees to the account with limited access, set up a customer service email address, and access additional features such as PayPal Checkout to create a more streamlined customer experience.

Because we’re looking at PayPal from a primarily business perspective, we will be focusing the remainder of this article on PayPal fees for Business accounts.

An Overview of PayPal Fees

When you use PayPal to either invoice your clients or collect payment from an integrated invoicing tool, you should be prepared for any fees that might accrue and be withdrawn from your payout. As the recipient of funds, you are responsible for all PayPal fees. These fees for receiving money are typically a fixed fee plus a percentage of your transaction total. They also vary by payment type, currency received, payment method, and whether the transaction is domestic or international.

If you issue a refund to a customer or client, you will be refunded for the percentage fee, but PayPal will not return the fixed fee to you. Fortunately, this is usually a relatively small fee of around $0.49 or less.

Payment Processing Fees

Fees will vary depending on your specific type of PayPal payment. You can use the following table to determine the fees for any given transaction (current as of August 15, 2022):

Payment TypePercentage of Amount FeeFixed Fee (USD*)Standard Invoicing3.49%$0.49PayPal Checkout/Guest Checkout3.49%$0.49QR Code ($10 and below)2.40%$0.05QR Code ($10.01 and above)1.90%$0.10QR Code (via third party integrator)2.29%$0.09Venmo3.49%$0.49Send/Receive Money for Goods and Services (via Personal account)2.99%No fixed feeCredit or Debit Card2.99%$0.49Other Commercial Transactions3.29%$0.49Store Cash8.00%No fixed feeDonations2.89% (+1.50% for international transactions)$0.49Charity1.99% (+1.50% for international transactions)$0.49Alternative Payment Methods (APM)2.59%$0.49PayPal BalanceSee Terms and Conditions for complete list of associated feesSee Terms and Conditions for complete list of associated feesPayPal Here (in store, card present, or QR code)2.70% (+1.50% for international transactions)No fixed feePayPal Here (keyed transactions)3.50% (+1.50% for international transactions)$0.15PayPal Online Card Payment Services (Advanced Credit + Debit Card Payments)2.59%

Additional Fees Apply$0.49PayPal Online Card Payment Services (Advanced + Pro)2.89%

Additional Fees Apply$0.49PayPal Online Card Payment Services (Virtual Terminal)3.09%

Additional Fees Apply$0.49Payflow Pro (Payment Gateway)No transaction percentage fee, but additional fees apply$0.10PayPal Zettle (card present + QR code)2.29%$0.09PayPal Zettle (keyed transactions)3.49%$0.09PayPal Payouts2% up to maximum fee capNo fixed feePayPal Payouts (using API)No transaction percentage$0.25Micropayments4.99% (+1.50% for international transactions$0.09

*Visit PayPal’s merchant fees guide to see fixed fees in other currencies.

Per the table above, the majority of business-related transactions will have a PayPal fee of 3.49% + $0.49. However, all fees are subject to change per PayPal’s merchant fees guide. For transactions that involve currency conversion performed by PayPal, a currency conversion spread of 3.00%-4.00% will also be included. This amount is also subject to change and will be disclosed to you during the transaction.

Chargeback and Dispute Fees

Not all transactions are smooth sailing, so be prepared for unexpected fees that may result from buyers disputing charges or reversing transactions through their card issuer. These fixed fees vary by the currency received, but here is what you can expect from USD transactions:

Settlement Fee TypeAmount (in USD)Chargeback Fee$20.00Standard Dispute Fee$15.00High Volume Dispute Fee$30.00

Cryptocurrency Buying/Selling Fees

As cryptocurrency is a unique form of virtual transaction, the associated fees are much more varied. Review this chart for what fees to expect with any crypto transactions:

Transaction Amount (USD)Percentage of Amount FeeFixed Fee (USD)$1.00 to $4.99No percentage fee$0.49$5.00 to $24.99No percentage fee$0.99$25.00 to $74.99No percentage fee$1.99$75.00 to $200.00No percentage fee$2.49 USD$200.01 to 1000.001.80%No fixed fee$1000.01+1.50%No fixed fee

How Can I Avoid PayPal Fees?

PayPal charges these fees to cover credit card processing fees, international transaction conversions, and to charge for use of their platform. The fees will vary depending on where the money is coming from (domestic or international), the total amount billed, the payment method, and the type of PayPal account. No one wants to pay extra fees, and those percentages can really add up for high value transactions. Here are four ways to reduce the amount or even avoid PayPal fees when receiving money for your business:

1. Bill Them to Your Client

A common way to negate PayPal fees is by passing them on to your customer or client, but this can get tricky in terms of ethics and legality. Per PayPal’s user agreement, you agree to not surcharge your clients for transaction fees. This makes it a breach of terms to charge the fees to your client, however, there is a workaround.

If you do opt to charge your clients to help cover associated fees, do so by labeling it as a “handling fee” and charging the same fixed amount to every client for every transaction. This is something you might see in a local coffee shop, where they charge a fixed fee for credit card transactions under a certain amount. For example, if a customer purchases a small cup of coffee for $3.49 using a credit card, the coffee shop may tag on an additional $0.50 charge to account for the processing fee. Thus the customer pays $3.99 plus tax for their cuppa joe.

2. Mark Fees as Deductions

Any fees that you pay for business transactions can be marked as deductions for your business taxes! While this doesn’t completely eliminate the fees, it does decrease the amount you’ll owe in taxes later on, which is always a nice bonus for your business budget. Keep track of your write-offs in a spreadsheet or with a handy tracking tool.

3. Request Merchant Rates

If your PayPal account is in good standing and you make at least $3,000 each month, you can request Merchant Rates and lower your fees to 1.9% + the currency-based fixed fee! You must apply for this special rate and maintain a quality account, but if you are confident in consistent earnings, then this route can save a lot of money.

4. Wire Transfer through Fee-Free Banking Instead

PayPal isn’t the only way to collect funds from your clients or customers. If you want to completely avoid PayPal fees, the only real way is to forgo PayPal altogether and opt for a fee-free bank account instead. When you set up direct deposit with your clients through a fee-free banking app like Lili, you don’t have to worry about any processing fees, meaning you keep every penny of that hard-earned cash.

DON’T Use a Personal Account for Client Transactions

You may see other blogs recommending that you use a Personal account for business transactions to avoid the merchant fees, but this is against PayPal’s terms of service and can result in your account being limited or locked if you attempt it. It’s best to adhere to PayPal’s terms and eliminate the risk of losing your account.

How to Calculate PayPal Fees

You can easily calculate the fees that will accrue on any PayPal transaction with this formula:

(Invoice Total x Percentage Fee)/100 + Fixed Fee


You send a standard invoice to a client for $500.

The percentage fee for a standard invoice is 3.49% of the total amount, which is $17.45.

The fixed fee for a standard invoice is $0.49.

Your total fees for this invoice come out to $17.94.

After deducting fees, you will earn $482.06.

If you want to ensure you will earn your total billed amount after fees are deducted, you will need to calculate the total fees in your original invoice amount plus additional cushion for the percentage that will be taken from the new invoice total. You can use this formula to calculate what you should charge in order to receive a goal amount:

(Total Received + Fixed Fee) ÷ (1 – (Percentage Fee/100))


You want to receive a total of $500 from a standard invoice.

The percentage fee for a standard invoice is 3.49% of the total amount.

The fixed fee for a standard invoice is $0.49.

(500 + 0.49) ÷ (1 – (3.49/100))

(500.49) ÷ (1 – 0.0349)

(500.49) ÷ (0.9651)

= 518.5887

To cover PayPal fees for a $500 invoice, you should bill $518.60.

Just keep in mind that it is against PayPal’s user agreement (and illegal in some states) to charge your clients and customers for transaction and processing fees, so this must be worked into your rates from the start.

The Cost of Doing Business

Whether you use PayPal or another payment processor, fees are part of the cost of doing business. Credit card fees in particular are essentially unavoidable, but it’s important to know what other fees are involved and which of those can be reduced or avoided so that you get more bang for your buck.
For fee-free banking that makes invoicing and collecting payment a breeze, check out the business supporting features that come with a Lili Account.

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