Both small businesses and individuals can use PayPal. You only pay for the processing you use, making it our pick for best low-volume credit card processor. It’s also the best Android mobile credit card processor for the quality of its Paypal Here app.
PayPal is a huge name in the payments industry, serving 23 million merchants and 246 million consumers in more than 200 countries and regions. With a PayPal Business account and the PayPal Here app, small businesses can accept credit, debit, and PayPal payments online, in-store and on the go.
PayPal is one of the few processors that allows both businesses and individuals to accept payments, making it a popular choice for freelancers, consultants, solopreneurs, and other very small businesses. It has flat-rate pricing and no contract, so you only pay for the processing services you use, and you can close your account at any time without paying a penalty. For these reasons, it’s our pick as the best low-volume credit card processor.
PayPal is also our pick as the best Android mobile credit card processor. While some mobile credit card processing apps are platform-specific, the PayPal Here app works equally well on both Android and Apple phones and tablets, and its Android app includes all the same features as the Apple version.
Visit our best picks pages to see all of our recommendations for credit card processing companies and mobile credit card processors. If you want to learn more about PayPal’s business loans and working capital, check out our small business loans review.
If your business doesn’t accept many credit card payments each month, you may find it expensive to work with a full-service processor that has a monthly minimum processing requirement and a handful of regular fees, such as monthly statement and gateway fees, and an annual PCI compliance fee. Choosing a processor like PayPal that has flat-rate pricing and pay-as-you-go terms can save you money since you only pay for the processing you use.
PayPal is very transparent with its pricing, and you can find all of its rates and fees posted on its website. Here’s what you’ll pay when you accept credit cards using PayPal.
Accepting credit card payments in-person using PayPal Here:
Accepting payments online or by invoice:
Accepting credit and debit card payments using a virtual terminal:
You’ll notice that PayPal’s transaction fees are somewhat higher than those of full-service processors. However, it’s still more cost-effective if your monthly processing volume is low, because you aren’t paying account fees.
If you use a full-service processor, you pay around $20 per month in account maintenance fees and have a monthly minimum of $25, which can be difficult to meet if you process less than $2,500 per month.
Here are the fees you won’t pay using PayPal:
Incidental and optional fees. Some of PayPal’s additional services cost extra. For example, if you need the money from your transactions immediately, you can pay 1% for an instant transfer from your PayPal balance to your bank account. Regular bank transfers are free and usually take one business day.
Here are some more examples of optional services that carry fees:
Special pricing is available for certain business types:
Terms. There’s no long-term contract requirement with PayPal, as you accept a user agreement instead of signing a contract. As your business grows and your processing volume increases to the point where the savings from lower rates would surpass account fees and you want to close your PayPal account and switch to a full-service processor, you can do so at any time without penalty.
One of the best things about PayPal is that you can accept various payment methods simultaneously – on the go, at a brick-and-mortar location and online, via invoice and website – and the money from all of your transactions goes into one PayPal account, making it easier to manage your finances.
Here are more features PayPal offers
Free basic POS software. To accept payments in person at your business or on the go, you install the PayPal Here app on your phone or tablet and attach a credit card reader. This mobile credit card processing app includes point of sale features that help you run your business.
Here’s what it can do:
Card reader options. PayPal has several card readers for you to choose from. The basic Mobile Card Reader costs just $19.99, but it isn’t EMV compliant as it only reads magstripe cards.
Because there’s a greater risk of counterfeit fraud when you use this card reader, PayPal will hold your funds in a reserve account if you use it to process more than $500 of sales in a seven-day period. You can avoid this problem by choosing one of PayPal’s other three card readers.
The following credit card readers are EMV compliant and connect to your phone or tablet via Bluetooth. PayPal also sells receipt printers, cash drawers, stands and cases.
PayPal integrations. One of PayPal’s strengths is that it integrates with many business systems and applications. Here’s a small sampling of the business solutions PayPal integrates with:
Online payments. PayPal makes it easy to accept credit, debit and PayPal payments online. It offers two plans for this payment method as well as a payment gateway option:
Online invoicing. You can create and send invoices by logging into PayPal’s website using your business account credentials or using the PayPal Business app on your phone or tablet. Your customer receives an email with a link, clicks the link to open the invoice and can then choose to pay the invoice using their credit or debit card or their PayPal account. There’s no cost to send invoices; when receiving payments from your customers, you pay 2.9% + $0.30 for each transaction.
Accept payments from international customers. If your small business sells to customers in other countries, PayPal is a good processor for you. It accepts payments made in over 100 currencies around the world.
PayPal Commerce platform. Startups with online marketplaces, crowdfunding platforms and other e-commerce solutions can use this advanced payment platform to allow their sellers to accept payments from buyers around the globe.
Here’s additional information about PayPal to keep in mind as you decide which payment processing company is the best fit for your business.
Customer service. If you run into an issue using PayPal, you can call or email the company 24/7 or use the self-help resources on its website, which include live chat, FAQs, a searchable knowledgebase, how-to guides, a community forum and its Resolution Center that assists with customer disputes. Although the company lists extended phone hours on its website, a company rep noted that you can actually reach a customer service representative 24/7, though if you call after hours, your call may be routed to one of its international offices.
Security. PayPal uses multiple security measures to keep your customers’ payment data safe, including end-to-end encryption and 24/7 transaction monitoring. It complies with the data security standards established by the Payment Card Industry, and most of its card readers are EMV compliant, which deters counterfeit fraud. Your account is password-protected, and you can add a second authentication factor using PayPal Security Key, which sends a unique one-time PIN code to your phone via text.
PayPal Business Debit Mastercard. Using this card, you can spend your PayPal funds at any store and receive 1% cash back on qualified purchases. You can also withdraw cash from in-network ATMs. There’s no annual fee for this business debit card.
PayPal Business Loan and PayPal Working Capital. Eligible merchants can receive small business loans and working capital through PayPal. You can also offer your customers financing options on purchases over $99 through PayPal Credit.
PayPal is a great solution for low-volume businesses as it allows you to accept credit, debit, and PayPal payments in-person and online on a pay-as-you-go basis with no monthly or annual account maintenance fees and no long-term contract. However, if you go beyond the basic credit card processing services, there are a lot of little fees to keep track of, and they could add up quickly. Though to PayPal’s credit, it lists them in full on its website.
Another issue to be aware of is held funds and frozen accounts, which is the cause of many online complaints. This problem isn’t exclusive to PayPal – you’ll find similar complaints about other payment facilitators online as well – as this type of payment processor tends to be more wary of fraud than traditional processors, and irregular patterns in your processing, such as spikes in transaction amounts or frequency, can raise red flags.
Following PayPal’s seller best practices can reduce the likelihood of having your money held in a reserve account. You also want to make sure that the products or services your business provides are within PayPal’s acceptable use policy; otherwise, your funds may be frozen or your account may be closed without notice.
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