PayPal Merchant Fees: How Much Does a PayPal Merchant Account Cost?

Sydney VaccaroMerchant ServicesLeave a Comment

PayPal Merchant Fees. How Much Does a PayPal Merchant Account Cost

Ecommerce merchants strive to have their checkout process be as frictionless as possible. One of the best practices for a good checkout experience is to allow customers to pay in whatever way they would like. For many merchants, this means allowing their customers to pay through PayPal. In 2019, PayPal had 286 million active accounts worldwide, so it makes sense that merchants would want to offer this payment option. But how much does offering PayPal cost, and what are the fees associated with it?

How Does the Online Payment Process Work?

The online payment process requires many parties to make it happen. As expected, each party that has a hand in the completion of a payment will want a cut. Here are the steps and players involved with the payment process:

  1. Step One: The customer submits a payment request.
  2. Step Two: The transaction needs to be authorized. The merchant gathers the payment information the customer gave and provides it to the payment gateway. The payment gateway gives the information to the processor, who then submits the authorization requests to the card network. The card network provides the transaction to the issuing bank, who will authorize or decline the request.
  3. Step Three: If the transaction is authorized, the card network sends the money to the acquiring bank. Who then deposited the funds into the merchant account.

Merchants pay a couple of fees throughout this process:

  • Interchange fee: Interchange fees are charged to merchants whenever a customer uses a credit or debit card. This fee is to cover the fraud or bad debt that happens when approving payments. The card network collects these fees, but it is given to the issuing bank. As Visa describes it, “these fees balance and grow the payment system for the benefit of all participants.”
  • Assessment: Assessment is a fee that is paid to the credit card network. The assessment fees are a percentage of the transaction. For example, Visa assessment is 0.14% credit card sales and 0.13% of debit and prepaid card sales.
  • Acquiring Bank Fee: The merchant’s bank takes a percentage of the sale to provide the merchant account.
  • Authorization Fee: The payment processor charges this fee every time a transaction is sent to the issuing bank.

PayPal Fees

Now that we have covered the payments process and what parties are involved, let’s get into PayPal specifics. For standard transactions, PayPal’s fees for merchants selling online or in-store are as follows:

If you’re selling goods or services and the sale occurs:

And the funds you are receiving are coming from a PayPal account:

Then you pay:

Through an online transaction

In the U.S.

a fee of 2.9% of the transaction amount plus a fixed fee based on the currency.

Outside the U.S

a fee of 4.4% of the transaction amount plus a fixed fee based on the currency.


In your store location

In the U.S.

a fee of 2.7% of the transaction amount

Outside the U.S

a fee of 4.2% of the transaction amount

Fig. 1: PayPal Merchant Fees – Data via PayPal

What Factors Change the Standard Amount?

  • A Charitable Organization: PayPal will offer discounted credit card processing fees for registered charities with 501(c)(3) status.
  • Micropayments: If your transactions are less than $10, you can save money with our micropayment processing fees.

If you qualify to receive micropayments pricing and the funds you are receiving are coming from a PayPal account in:

Then you pay:

The U.S.

a fee of 5.0% of the transaction amount plus a fixed fee based on the currency.

Outside the U.S.

a fee of 6.5% of the transaction amount plus a fixed fee based on the currency.

Fig. 1: PayPal Merchant Fees – Data via PayPal

Dispute Fees 

Paying the necessary parties to make the payment process happen is a part of doing business. Unfortunately, as long as you accept credit cards, disputes will also be a part of doing business. When a merchant receives a dispute, there is usually a dispute fee that is associated with it. Here are PayPal’s dispute fees:

U.S. Dollar

20.00 USD

U.K. Pounds Sterling

14.00 GBP

Euro

16 EUR

You can find a full list of currencies here.