Credit card processing is ubiquitous in modern business. Fewer consumers carry cash, and more businesses than ever are eschewing the cash-only model. Credit and debit cards, along with digital wallets like Apple Pay, Google Pay and Samsung Pay, are prevalent. Providing your customers with multiple convenient payment options provides a better checkout experience and boosts overall customer satisfaction.
Unfortunately, navigating credit card processing services can be challenging amid complex pricing structures, fee schedules and hidden fees. PayPal’s credit card processing services eliminate this confusion with transparent pricing, so you won’t be surprised when you receive your statement at the end of the month.
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We’ll explain everything small businesses should know about pricing and fees for PayPal’s credit card processing services.
While PayPal is best known for its peer-to-peer money transfer services, it also offers credit card processing services to businesses of all sizes, transaction volumes and sales ticket values.
PayPal’s credit card processing business is vast, serving 29 million merchants with more than 435 million customers worldwide. Through PayPal Zettle ― the company’s card reader and point-of-sale (POS) system ― or PayPal’s online checkout options, your business can begin accepting debit and credit card payments from customers.
Like most credit card processors, PayPal charges a flat percentage rate on transactions, with per-transaction fees for specific payment types. The company maintains a few additional fees and optional services that may cost extra, depending on your business’s needs.
When accepting credit cards with PayPal, you’ll find competitive rates and few fees. Here’s an overview of PayPal’s processing rates and per-transaction fees. Remember that there will be some cost variations depending on payment type and how you capture card information:
While PayPal eliminates most of the fees found throughout the credit card processing industry, you should be aware of the few it maintains, including the following:
PayPal also offers optional services with monthly costs, including the following:
Overall, PayPal keeps fees and additional costs to a bare minimum, making it one of the easiest and most cost-effective credit card processors. The transparency in pricing and fees means merchants who partner with PayPal won’t get any unpleasant surprises when they receive their monthly statements.
PayPal does not require a long-term contract for its credit card processing services. Instead, you must accept a user agreement when signing up. Service is month to month and can be canceled anytime without penalty. This flexibility is helpful for growing businesses that expect their processing volume to increase over time as lower rates are generally available with full-service credit card processors.
Despite the higher fees full-service processors maintain, high-volume businesses would eventually save more when charged lower rates. Once your business reaches this point, you can close your PayPal account without a termination fee and make the switch to a full-service credit card processor.
Credit card processing companies typically charge a litany of fees that range from $5 per month to more than $45 per incident. These costs can add up quickly.
While PayPal doesn’t charge most of these fees, it’s helpful to understand what industry-standard credit card processing fees entail.
Consider the following recurring fees:
Some fees are charged by occurrence, including the following:
Some credit card processors also charge early account cancellation fees, club or membership fees and fees for vague “additional services” referenced in a contract. Watch for these fees when signing up with a credit card processor as they can increase your monthly credit card processing costs dramatically.
No. Unlike many payment processors, PayPal does not charge monthly fees for its basic credit card processing services. It only charges monthly fees if you add an optional service to your account or upgrade to PayPal Payments Pro ($30 monthly). PayPal Payments Pro provides a virtual terminal and allows you to accept payments directly on your website instead of redirecting customers to a hosted payment page.
There are no hidden fees with PayPal. What you see is what you get. The only fees to look out for are chargebacks associated with disputed transactions and cross-border and currency conversion fees when you accept international payments. Other than these fees, PayPal charges a flat rate as a percentage of each transaction, plus a standard per-transaction fee on specific payment types.
No. While some credit card processors allow you to negotiate the processor’s markup in their pricing, PayPal’s minimal and transparent fees mean you can’t negotiate pricing with the company. Its only additional fees ― chargeback and cross-border fees ― are nonnegotiable.
You can’t decrease the fees associated with PayPal’s credit card processing services. Luckily, most of PayPal’s fees are easy to avoid. For example, if you conduct business domestically, you don’t have to worry about cross-border or currency conversion fees. If you can keep transaction disputes to a minimum, chargeback fees shouldn’t be a problem.
Having said that, consider the following ways to minimize your costs when you use PayPal:
Jennifer Dublino contributed to this article.