How PayPal Fees Work
Transaction fees include a percentage plus a flat rate per sale -- it's a cost to factor in. These rates vary based on the payment type, where the buyer is located, and how quickly funds are available to you.
PayPal Fee Types Explained
| Payment Type | Rate | Fixed Fee |
|---|---|---|
| Goods & Services (US) | 3.49% | $0.49 |
| International | 4.49% | $0.49 |
| Micropayment (<$10) | 4.99% | $0.09 |
| Invoice | 3.49% | $0.49 |
| QR Code (In-Store) | 2.49% | $0.09 |
| Friends & Family (Bank) | Free | $0.00 |
| Friends & Family (Card) | 2.99% | $0.00 |
Common Mistakes Sellers Make
- Overlooking the fixed fee. That $0.49 charge feels particularly unfair for small transactions, reducing your earnings. For a $5 sale, the fee accounts for nearly 10% of the price.
- Ignoring currency conversions. PayPal adds a 3-4% spread to the exchange rate when buyers pay in different currencies. That stacks on top of the percentage fee.
- Using Goods & Services for in-person sales. Think carefully about how you handle in-person payments. QR Code payments save you about 1% per transaction compared to the standard rate.
Tips to Minimize PayPal Fees
- Switch to QR Code payments in person -- 2.49% plus $0.09, versus 3.49% plus $0.49 for standard card swipes.
- Factor fees into your prices -- a 4-5% increase usually accounts for the difference and protects your profit margins.
- Bundle small purchases -- small transactions quickly eat into profits, so combining products is a good strategy when you can.
- Look at Stripe for online sales -- 2.9% plus $0.30 per transaction is typical, and it frequently offers better rates than PayPal.
PayPal vs Other Platforms
PayPal takes a $3.98 cut from a $100 sale -- more than Stripe's $3.20 or Square's $2.70 for in-person payments. Sellers often stick with PayPal for online transactions, even with the higher fee. Buyers trust it, and that trust has value. Check our full comparison for a side-by-side breakdown.