Understanding PayPal Credit Card Fees

Does PayPal offer credit card processing?

Yes — and for many small businesses, PayPal can be one of the fastest ways to start accepting card payments without a lengthy setup process or traditional merchant account application.

A PayPal Business account lets you accept credit card payments (and other payment forms) online, in person at the point of sale (POS) and through invoices or payment links. It also supports digital wallets, including Google Wallet and Apple Pay, giving customers more ways to pay.

How much does PayPal charge for credit card processing?

Like most credit card processors, PayPal charges a flat percentage rate on transactions, along with per-transaction fees for certain payment types. The company also offers optional services that can increase your costs, although its core payment-processing tools come with no monthly subscription fee.

Here’s an overview of PayPal’s processing rates and per-transaction fees:

• Credit card processing: Standard debit and credit card payments processed online start at 2.99 percent plus $0.49 per transaction. Transactions completed through PayPal Checkout, Guest Checkout or Pay with Venmo cost 3.49 percent plus $0.49 per transaction. Rates vary depending on the payment method and how the transaction is completed.
• Point-of-sale payments: Transactions processed through a PayPal point-of-sale card reader cost 2.29 percent plus $0.09 per transaction. This same rate applies to QR code payments processed through PayPal.
• Card-not-present transactions: When a card is manually keyed in at the point of sale, the rate is 3.49 percent plus $0.09 per transaction.
• Website and digital invoice payments: Debit and credit card payments accepted through your website or via digital invoice cost 2.99 percent plus $0.49 per transaction, while PayPal Checkout, Pay with Venmo and Pay Later transactions carry higher rates.
• Virtual terminal payments: A virtual terminal lets you manually enter card payments through a web browser when the customer isn’t present. PayPal’s virtual terminal costs $30 per month, plus 3.39 percent and $0.49 per transaction. When you accept credit cards over the phone, by fax or through the mail, these fees apply.

PayPal’s additional fees and services

Beyond standard transaction fees, PayPal charges a handful of additional fees worth factoring into your cost analysis.

• Chargeback fees: If a customer disputes a transaction and the chargeback moves forward, PayPal charges a chargeback fee of $20 per incident for U.S. merchants.
• Cross-border fees: Cross-border fees apply when you accept payments from customers outside the United States. PayPal adds 1.5 percent to the transaction amount for international commercial transactions, plus an additional fee if currency conversion is required.
• PayPal Payments Pro: $30 per month. This optional service supports more customized website checkout experiences and includes access to PayPal’s virtual terminal, which is useful for businesses that accept credit cards over the phone, by fax or through the mail.

Overall, PayPal’s pricing is relatively straightforward, but optional tools, international sales and payment disputes can increase your total processing costs over time.

What are the terms and conditions of PayPal credit card processing?

PayPal doesn’t lock merchants into a long-term processing contract. Instead, businesses agree to PayPal’s user agreement during signup, and service generally runs on a month-to-month basis with no early termination fee.

That flexibility can be a real advantage for newer businesses that are still getting established. If your sales volume grows to the point where a full-service processor offers better rates or more customization, you can usually move on from your PayPal Business account without dealing with contract buyouts or early cancellation penalties.

What are typical credit card processing fees?

The following are common payment-processing costs, making it easier to compare industry-standard rates and fees with PayPal’s pricing.

• Monthly fees: Many credit card processors charge a monthly fee (sometimes called a statement fee) that ranges from $5 to $15. It may be higher if it includes Payment Card Industry (PCI) compliance or gateway fees.
• Monthly minimum: A monthly minimum typically ranges from $20 to $50. In most cases, this refers to the minimum amount you pay in processing fees, not a required dollar amount of monthly sales.
• PCI compliance fee: When processors charge separately for PCI compliance, the fee typically ranges from $75 to $150 annually, though some providers spread that cost out as a monthly charge or bundle it into other account fees.
• Payment gateway fee: Payment gateway fees vary by provider. Most are charged monthly, though some gateways also include a small per-transaction fee.
• Various network fees: Other network fees, including Mastercard’s Merchant Location Fee and the Visa Fixed Acquirer Network Fee, may be passed on to you as monthly or annual charges.

Some fees are charged by occurrence, including the following:

• Batch fees: Batch fees are nominal daily fees you pay when you close out the day’s sales. They typically cost 10 to 30 cents (often about the same as your per-transaction fee).
• Address Verification Service (AVS) fees: AVS fees are usually a few cents per transaction when you use this tool to verify the cardholder’s address and ZIP code to help reduce credit card fraud.
• Voice authorization: Voice authorization is another anti-fraud tool with a small per-use fee. It’s rarely required, but you’re charged each time it’s used.
• Chargeback fees: Chargeback fees are typically $20 to $100 per incident, with some high-risk processors charging even more depending on the account terms.
• PCI noncompliance fees: If you fail to complete your annual PCI compliance requirements, some processors charge an ongoing noncompliance fee — often $20 to $50 per month or more — until your account is brought back into compliance.
• Nonsufficient funds (NSF) fees: An NSF fee is charged if you don’t have enough money in your business bank account to cover the fees you owe the processor.

Some credit card processors also charge early account cancellation fees, membership fees and fees for vague “additional services” buried in the fine print of a contract. Always read the full terms before signing, as these charges can quietly drive up your total payment-processing costs over time.

Amanda Hoffman and Jennifer Dublino contributed to this article.