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What Are PayPal Fees?

PayPal charges the person receiving the money, not the person sending it. Almost every commercial payment is billed the same way: a percentage of the amount plus a small fixed fee in the currency you were paid in. The percentage depends on how the payment reached you, and the fixed fee depends on the currency. Because the fixed part does not shrink with the payment, small transactions lose a far larger share to fees than big ones.

How Are PayPal Fees Calculated?

The fee is the percentage rate applied to the full amount, plus the fixed fee for your currency. If the payment crosses a border, PayPal adds 1.50 percent on top. If it also has to convert currencies, expect roughly 4 percent more, taken as a spread on the exchange rate rather than as a separate line item. This calculator adds each part separately so you can see exactly where the money goes, and the reverse mode works backwards from the amount you want to end up with.

PayPal Fee Rates by Transaction Type

Not every PayPal payment costs the same. PayPal Checkout and invoicing are the most expensive at 3.49 percent, because the buyer is paying through their PayPal account. A standard card payment taken through your own checkout, and ordinary goods and services transfers, both sit at 2.99 percent. QR code payments taken in person are the cheapest at 2.29 percent. Micropayments charge a much higher 4.99 percent but almost no fixed fee, which makes them cheaper only on very small sums.

International and Currency Conversion Fees

Two separate charges apply to cross-border money, and they are easy to confuse. The cross-border fee of 1.50 percent applies whenever the sender is in a different country, even when both of you use the same currency. The currency conversion cost, around 4 percent, applies only when PayPal actually changes one currency into another, and it is built into the exchange rate you are offered instead of appearing as a fee. A payment can attract one, both, or neither, so the calculator keeps them as separate switches.

Friends and Family Payments

Sending money to friends and family within your own country costs nothing when it is funded by your PayPal balance or a linked bank account, so there is no fee to work out. Paying with a card attaches the usual card charge, and sending to another country brings back the cross-border and conversion costs. The important thing is that friends and family payments carry no purchase protection, so they should never be used to pay for goods, which is exactly why PayPal charges a fee on the goods and services option instead.

Common Applications

Tips for Fee Management

• Micropayment pricing beats the standard rate below about 20 dollars, and loses above it.
• Use reverse mode when a client owes you an exact figure after fees.
• Holding a balance in the sender's currency avoids the conversion spread entirely.
• The fixed fee is charged per transaction, so one large invoice costs less than several small ones.
• Keep a record of fees paid; in most countries they are a deductible business expense.