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Updated Nov 06, 2023

PayPal Credit Card Processing: How to Accept Card Payments With PayPal

PayPal provides an easy way for businesses to accept card and digital payments.

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Adam Uzialko, Senior Editor & Expert on Business Operations
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Accepting credit cards and debit cards is a must for modern businesses. Fewer consumers carry cash, making alternative payment options necessary for customer satisfaction and retention. To accept credit cards, debit cards and digital payment methods, you’ll need a payment processor. 

PayPal is a popular peer-to-peer payment application whose ecosystem includes credit card processing. Its payment processing services are affordable and easy to use, making it an excellent choice for many small businesses. We’ll explain how to start accepting card payments with PayPal and share everything your business should know about PayPal’s Commerce Platform.

FYIDid you know
PayPal is just one payment processing option. Read our reviews of the best credit card processors to research other top platforms and compare their services and prices.

How do you accept credit card payments with PayPal?

Setting up PayPal as your payment processor is relatively straightforward. However, the process will differ depending on your business and transaction types. Here’s how it works. 

E-commerce payment processing setup steps

If you run an e-commerce business, follow these steps to start accepting card payments with PayPal:

  1. Set up a PayPal business account. Your first step is setting up a PayPal business account by visiting PayPal’s Business Account setup page. Enter your legal name, business name, bank account information and email address. You’ll set up a password during this step. PayPal does not run a credit check or require any documentation.

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  1. Connect to PayPal’s payment gateway. You can access PayPal’s payment gateway from within your merchant account and use it to connect your website’s payment page to your PayPal account. Now, your website can accept credit cards through PayPal.
Did You Know?Did you know
Some of the best e-commerce platforms, like WordPress, Shopify, Magneto and BigCommerce, offer PayPal as a payment option, making it easy for merchants to use PayPal for payment processing.

In-person payment processing setup steps

Follow these steps to start accepting card payments with PayPal if you have a brick-and-mortar store: 

  1. Set up a PayPal business account. If you have not already done so, set up a PayPal business account by visiting PayPal’s Business Account setup page. Enter your legal name, business name, bank account information and email address. You’ll set up a password during this step. PayPal does not run a credit check or require any documentation.
  2. Get set up with Zettle online or via the app. You’ll use PayPal Zettle technology to accept card payments. You can get set up with Zettle via your online account or the Zettle app for iOS or Android:
  3. Online: Go to the Zettle registration page and enter your business’s employer identification number and your mobile number. Read the PayPal Zettle terms and conditions and privacy statement. If you agree, select Submit.
  4. In-app: Alternatively, download the iOS PayPal Zettle app from the App Store or get the Zettle app for Android from Google Play, and complete this step on your mobile device.
  5. Set up product details. Set up your products and their details, including prices, in the Zettle app or online in your account.
  6. Purchase a card reader. If you’d like to purchase a card reader or POS system, visit the Zettle Shop. You’ll receive the equipment in the mail, usually within a week.
  7. Set up your reader. Setting up your card reader is straightforward:
    • Turn on the card reader and charge it with the enclosed charger cable.
    • Log in to your Zettle app. Under Payment Settings, find PayPal and tap Activate.
    • The app or online account will connect to the reader via Bluetooth. Type in the code shown on the app with the buttons on the reader to finalize the connection. Your reader is now synced with your PayPal Zettle account and is ready to take in-person payments.
  8. Ring up a purchase. After ringing up a customer’s purchase, tap Charge. Choose Card as the payment method, and hand the reader to the customer. The customer will use the reader to tap or insert their credit or debit card. The reader has a numeric pad for customers to input their debit card PIN, if necessary. (If the customer is paying with their PayPal account or Venmo, choose PayPal or Venmo as the payment method.) Tap Done.
  9. Have the customer finish the transaction. Ask the customer to open their phone camera app or their PayPal or Venmo app. Present the customer with your QR code to scan. Once it’s scanned, ask them to tap Confirm.

Card-not-present transactions

Follow steps one through five above for in-person payment processing, and then take the following steps to accept credit card payments over the phone or by mail:

  1. Ready your system for manual transactions. Before your first manual card entry, you must have already taken a payment with your card reader or POS system via chip or tap. After this transaction, wait three hours.
  2. Set up a manual transaction. Go to the app or online account menu, select Manual Card Entry and press Activate. This will enable the Manual Card Entry option as a payment option for future transactions.
  3. Conduct a manual transaction. To accept a sale when the customer’s card is not present, select Manual Card Entry on the reader. Use the app or your online account to manually enter the customer’s payment details and the transaction amount into the app for processing.

Note: Funds from manual card entry transactions will not appear in your PayPal Zettle daily deposit email or on the PayPal Zettle deposits page. Instead, they’ll go directly into your PayPal account. 

Did You Know?Did you know
PayPal Zettle also allows you to accept multiple types of NFC mobile payments, including Apple Pay, Google Pay and Samsung Pay. You'll need the PayPal Zettle Reader 2 mobile reader for these transactions.

What is a PayPal business account?

A PayPal business account is an account you set up with PayPal for your business that allows it to send and receive payments. A business account’s functionality differs from a PayPal personal account. 

Your PayPal business account gains you entry to PayPal’s Commerce Platform, which includes various services and features to service businesses of all sizes.

FYIDid you know
You don't use a traditional merchant account with PayPal. As a merchant who works with PayPal's payment services, you're part of an aggregated merchant account shared with other vendors.

What services does the PayPal Commerce Platform provide?

The PayPal Commerce platform supports an array of business types, including online sellers, brick-and-mortar stores, and even crowdfunding and nonprofit ventures. Together with your business account, the platform’s primary functions include the following: 

  • Accept payments: Accepting payments is a primary function of the PayPal Commerce Platform. Your business can accept payments with PayPal for online shopping, in-person purchases, and phone or email transactions. Your business will also be able to accept Venmo and PayPal Credit payments as well as alternative payment methods.
  • Make payments: Your business account allows your organization to make payments in several ways. Mastercard powers the debit option. It lets you spend from your PayPal balance and comes with rewards. The account also enables PayPal Credit payments and can link to a bank account to create a third payment option.
  • Fraud and seller protection: Your PayPal business account offers protection services via the PayPal Commerce platform. Fraud protection measures detect credit card fraud and stop it in its tracks. Additionally, seller protection works to minimize claims and avoid chargebacks. PayPal is uniquely empowered with this feature, as it sees both sides of any PayPal transaction.
  • Capital loans: PayPal Working Capital is a business loan plan that helps secure funding for business investments. It’s paired with promotional resources and international selling to make ROI easier. (Read our review of PayPal business loans to learn more about PayPal’s lending options.) 
  • App Center: The App Center grants business customers access to exclusive apps. Each is capable of streamlining business operations and improving growth and prospects.
  • Cash flow and dispute management: PayPal provides businesses with a resource suite designed to help business operations in general. The first part of the suite is a cash flow management resource called Funds Now. It aims to improve flexibility with drawing and using funds. The dispute management program streamlines dispute processing beyond the standard business resource.
  • Business insights: Business insights is an analytic resource that helps track performance, shopping and optimization in general. The full power of operations streamlining can help transform small businesses.
TipBottom line
Read our complete PayPal Credit Card Processing review to learn more specifics about the service's pricing and terms, features, customer service, and more.

How much does PayPal charge for credit card processing?

PayPal’s credit card fees are competitive even if your business’s transaction volume isn’t high. It has flat-rate pricing and pay-as-you-go terms; it doesn’t require long-term contractual commitments.

PayPal’s pricing is laid out transparently on its website. Here are the current rates for its credit card processing services:

  • Credit card payments: 2.29% + $0.09 per transaction. This rate applies to credit cards, debit cards and contactless payments from digital wallets for in-person transactions using the PayPal Zettle mobile app and card reader. PayPal works with all major credit card brands and applies this same rate to each, as well as to mobile wallets like Apple Pay, Google Pay and Samsung Pay.
  • Manual-entry transactions: 3.49% + $0.09 per transaction. This rate applies to credit cards and debit cards you manually enter.
  • QR code payments: 2.29% + $0.09 per transaction. This rate applies to payments you accept through a QR code.
  • E-commerce transactions: 2.59% to 2.89% + $0.49 per transaction. This rate applies to Visa, Mastercard and Discover card payments you accept through your e-commerce site.
  • Virtual terminal: 3.09% + $0.49 per transaction. This rate applies to credit card payments you accept through PayPal’s virtual terminal. 

Although PayPal’s transaction fees tend to be higher than most full-service credit card processors, the lack of account setup and maintenance fees easily offsets the costs, making PayPal a cost-effective option for small businesses that process a low volume of monthly transactions. Here are the other fees you won’t have to pay with PayPal:

  • No application fee or setup fee
  • No monthly fee for statements and customer support
  • No monthly minimum processing requirement
  • No gateway setup fee
  • No monthly gateway fee
  • No annual fee
  • No annual or monthly PCI compliance fee
  • No early-termination or account-closure fee

However, some of PayPal’s services will cost more beyond the transaction rate and fee. These services include the following:

  • Chargebacks: $20 per incidence
  • Recurring billing service: $10 per month
  • Advanced fraud protection services: $10 per month 
  • PayPal Payments Pro: $30 per month (This option allows you to accept payments directly on your website and includes a virtual terminal.)
  • Cross-border fee: PayPal adds 5% to the transaction fee when you accept payments from customers outside the U.S.; it adds 2.5% if your cross-border payments require currency conversion.

In addition, eligible charitable organizations are charged 1.99% of each transaction plus $0.49 for online donations. In-person donations cost the same as regular business accounts at 2.29% + $0.09 per transaction.Businesses with transactions less than $10 may qualify for PayPal’s micropayment fees, which cost 4.99% of each transaction plus $0.09 per transaction.

PayPal credit card processing FAQ

PayPal is best known for its peer-to-peer money transfers, but it also offers credit card processing services for businesses. PayPal extends credit card payment processing services to 29 million merchants worldwide. Coupling a PayPal business account with the PayPal Zettle mobile application allows businesses to accept in-person and online debit and credit card payments.
According to PayPal, credit card payments can take up to three days to process. This is standard for most credit card processing services. Some transactions will process faster, but PayPal does not guarantee transactions will be complete in fewer than three business days.
PayPal offers businesses several card reader options. When you set up a new Zettle account, your first card reader costs $29. It's always wise to incorporate a card reader that works with EMV chips and contactless payment options through near-field communication (NFC). Here are the card readers PayPal offers:
  • Zettle Reader 2: $79. This model accepts chip and contactless credit and debit cards and mobile payments from Apple Pay and Google Pay. It connects with your phone or tablet via Bluetooth.
  • Zettle Terminal: $199. This reader accepts chip and contactless cards and mobile wallets. It's the only model that has a point-of-sale (POS) terminal with a screen. It connects with your phone or tablet via Bluetooth.
  • Store Kit Mini: $249. This POS system has a tablet, stand and Zettle Reader 2 credit card reader with dock, and it accepts chip and contactless cards.
  • Additional accessories: Additional accessories are also available, including a portable printer at $269, a Zettle Dock 2 for $49, a Zettle Stand 360 for $159, a Cash Drawer for $119 and a Barcode Scanner for $229.
PayPal accepts all credit card brands, including prominent names like Visa, Mastercard, Discover and American Express. When you sign up with PayPal, your customers can use whichever debit or credit card they already have, offering a versatile new payment method for your business. Once a customer pays with their preferred credit card, you can instantly transfer the funds to your bank account for a 1% fee. Regular bank transfers that take one business day are free with PayPal.
Sometimes, PayPal will be unable to process a payment. This can occur for several reasons, such as when a customer's balance isn’t sufficient to complete a transaction or their card information is not current. The payment could also be blocked for various security reasons. When this happens, first ensure that the customer's information is entered correctly, especially if you manually enter it for a card-not-present transaction. You could also ask the customer to change the funding source in PayPal for their current transaction. If these methods fail, contact PayPal customer support to resolve your issue.

PayPal credit card processing makes it easy for your business to accept card payments

With relatively low rates and few fees, PayPal makes it easy for businesses of all sizes to process credit card payments. Even if you don’t conduct a high volume of credit card transactions each month, you can still benefit from PayPal’s credit card processing services. 

PayPal offers various card readers and is compatible with several POS solutions. It has discounted rates for registered charities and businesses that conduct many small-ticket transactions and offers additional services for extra costs.

Credit and debit card transactions have become ubiquitous; consumers expect businesses to accept these payment methods. To avoid falling behind in an increasingly digital marketplace, you must partner with a credit card processor, and PayPal is a great place to start. 

Jennifer Dublino contributed to this article.

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Adam Uzialko, Senior Editor & Expert on Business Operations
Adam Uzialko, the accomplished senior editor at Business News Daily, brings a wealth of experience that extends beyond traditional writing and editing roles. With a robust background as co-founder and managing editor of a digital marketing venture, his insights are steeped in the practicalities of small business management. Since 2015, Adam has meticulously evaluated a myriad of small business solutions, from contact center platforms to email and text message marketing software. His approach is hands-on; he not only tests the products firsthand but also engages in user interviews and direct dialogues with the companies behind them. Specializing in digital marketing, Adam's expertise spans content strategy, editorial direction and adept team management, ensuring that his work resonates with entrepreneurs navigating the dynamic landscape of online commerce.
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