PayPal fees
PayPal is a huge global online shopping and digital payment provider, with a presence in almost every country in the world.
Thanks to its convenience, many people use it when making purchases abroad, transferring money overseas, or receiving payments from other countries.
However, PayPal’s handling fees can be high compared to other providers. If you want to reduce the cost of spending and sending money overseas, there are other alternatives such as Wise or OFX, that can offer cheaper and more transparent fees.
In this article we’ll explain everything you need to know about PayPal fees, how they compare to alternative providers, and we’ll share some useful tips to help you avoid some of the fees that PayPal charges.
PayPal fees: an overview
If you’re spending online with a retailer based here in the US there’s no fee as long as no currency conversion is needed.
If you’re sending a payment domestically in USD, there are also options available to let you avoid PayPal fees entirely. Simply pay with your PayPal balance, a linked bank account or an Amex Send account if you’re sending a domestic transfer. Fees only creep in if you’re using another card to make your USD payment – in this case you’ll pay 2.9% + a fixed fee based on the currency involved (0.30 USD if you’re sending locally).
Where PayPal fees become unavoidable – and on the high side – is when you’re converting currencies or moving money across borders. Here’s what you’ll pay in this case:
| Payment type/fee | Send a personal PayPal payment overseas | Shop online internationally |
|---|---|---|
| Cross-border transaction fee | 5% (Minimum fee $0.99, maximum fee $4.99) | No fee |
| Exchange rate | 3% – 4% on top of the wholesale rate | 3% – 4% on top of the wholesale rate |
The exact charges you pay when using PayPal may vary depending on how your account is set up, and your location. Check your account terms and conditions to learn more before you get started.
Once you add up all the PayPal fees that apply to your international transaction, you may be surprised by how much it pushes up your overall costs. We’ll dive into this a little more later – and look at a comparison with alternative providers like Wise and OFX, which may present a cheaper alternative for your payment.
PayPal currency conversion fee
PayPal adds a 3% – 4% markup fee to the conversion rate used to switch your dollars to the currency you need whenever you send a payment overseas or shop with an international retailer.
What this means is that PayPal takes the wholesale or mid-market exchange rates on the day of conversion or the previous business day, and adds this markup to calculate the rate used for your transaction. This makes it difficult for the user to see the full costs of the transfer, whether these are charged to their own bank account or to that of the beneficiary.
You can check the PayPal exchange rate of the day by following these steps:
- Go to “Wallet”
- Open the menu to the right of any currency balance and select “Convert Currency”
- Select the desired currency and click “Next”
- Enter the remittance amount to check the exchange rate
When sending money with a credit card or a debit card, you can choose to use the card issuer’s exchange rate. However, it is impossible to know the exchange rate used at the time of remittance immediately, and the exchange rate used at that time cannot be checked until the bank issues the monthly statement.
PayPal transaction fees
The transaction fee applies when you sell products and services in-store or online.
There are different rates for each type of transaction. You might also hear this fee described as a payment processing fee, or seller fee. The exact fees you pay will depend on whether the transaction is considered domestic or international, and the payment method.
There are lots of different ways to get paid as a seller with PayPal, so you’ll need to check out the full details online if you’re looking to compare all the alternatives – but here are the standard PayPal transaction fees for some of the most popular types of payment method:
| Payment type | Domestic US | International |
|---|---|---|
| Receive money for goods/services | 2.99% | 2.99% + 1.5% international fee |
| Receive payments by credit or debit card | 2.99% + fixed fee (0.49 USD if you’re paid locally) | 2.99% + fixed fee based on currency + 1.5% international fee |
| Invoicing | 3.49% + fixed fee (0.49 USD if you’re paid locally) | 3.49% + fixed fee based on currency + 1.5% international fee |
| PayPal Checkout/Guest Checkout | 3.49% + fixed fee (0.49 USD if you’re paid locally) | 3.49% + fixed fee based on currency + 1.5% international fee |
| Pay with Venmo | 3.49% + fixed fee (0.49 USD if you’re paid locally) | Not usually available |
PayPal withdrawal fees
Once you have money in your PayPal account you may want to withdraw it to your regular US bank account or card. There may be a fee for this service, depending on exactly how you want to process the withdrawal. Here are the PayPal US withdrawal fees for consumer accounts:
| Withdrawal type | PayPal Consumer fees |
|---|---|
| Standard withdrawal to local bank account | No fee as long as no currency conversion required |
| Instant withdrawal to local bank account | 1.75% Currency conversion fees apply if PayPal funds are held in a foreign currency |
| Withdraw to a linked card | 1.75% Currency conversion fees apply if PayPal funds are held in a foreign currency |
| Have a check mailed to you | 1.5 USD |
| Currency conversion fee | 3% – 4% |
The options available and the fees you’ll pay vary if you have a PayPal merchant account and want to make a withdrawal. Here’s what you need to know:
| Withdrawal type | PayPal Merchant fees |
|---|---|
| Standard withdrawal to local bank account | No fee as long as no currency conversion required |
| Instant withdrawal to local bank account | 1.5% Currency conversion fees apply if PayPal funds are held in a foreign currency |
| Withdraw to a linked card | 1.5% Currency conversion fees apply if PayPal funds are held in a foreign currency |
| Currency conversion fee | 3% – 4% |
Other PayPal fees
In addition to the fees mentioned in the table above, PayPal also applies optional fees to business accounts for online card payment and services, like Chargeback Protection or Advanced Fraud Protection.
- Chargeback Protection – protect yourself against fraudulent chargebacks on card payments, from 0.4% per payment
- Advanced Fraud Protection – helps business and enterprise customers stay ahead of fraudsters using data driven insights
PayPal fees: a comparison
Choosing an international payment specialist like PayPal is almost certainly cheaper than sending money using your bank. However, some providers might offer more competitive fees and rates.
Let’s look at how a few different payments from PayPal compare to other well-established providers in the market: Wise and OFX.
| Payment/provider | With PayPal recipient gets: | With Wise recipient gets: | With OFX recipient gets: | Winner |
|---|---|---|---|---|
| 1,000 USD to GBP | 803.57 GBP | 842.15 GBP | 838.55 GBP | Wise |
| 5,000 USD to GBP | 4,033.99 GBP | 4,212.89 GBP | 4,194.50 GBP | Wise |
| 1,000 USD to EUR | 917.14 EUR | 960.44 EUR | 955.70 EUR | Wise |
| 5,000 USD to EUR | 4,601.01 EUR | 4,804.16 EUR | 4,775.30 EUR | Wise |
*Fees and rates correct at time of research – 15th November 2022
As you can see in our comparison, Wise and OFX are both cheaper options to send money abroad compared to PayPal.
Specialist services like these also tend to offer their own specific competitive advantages. For example,
- Wise also offers Wise multi-currency account and the Wise card which you can use to hold and exchange 50+ currencies with the mid-market exchange rate, and spend in 170+ countries around the world.
- OFX on the other hand offers currency risk management solutions to individuals and businesses with a 24/7 phone service when you need support or advice.
How to avoid PayPal fees?
Let’s look at some tips on how to help lower the cost when using PayPal to send payments or shop internationally.
- If you send money internationally with PayPal, the fee minimum and maximum caps make this a better value option if you send one single payment versus several smaller ones
- Try to avoid using your credit or debit card with PayPal where possible as this often means extra fees to pay
- Look at your PayPal currency conversion options carefully – the charge varies depending on the transaction type, so you may find it’s cheaper to switch currency within your account before making your payment for example
- PayPal merchant transaction fees vary according to the way your customers pay – check out which works best for your business as you may be able to minimize fees here
- Consider using alternative ways to process your payments, like Wise or OFX
Conclusion: is PayPal a good deal?
PayPal is easy for both business customers and personal customers to use. It’s also extremely commonly used and globally accepted.
If you’re a merchant or business customer, the benefits of offering PayPal payments may outweigh the fees you pay, at least for domestic transactions. But if you’re making or receiving regular international transactions for business or personal use, you may want to compare PayPal to a few other providers which could offer lower fees and better exchange rates, with just as convenient and quick a service.
On our Exiap comparison page, you’ll find the best deals to send your money abroad depending on the currency and amount that you need to exchange.
PayPal Fees FAQs
How do I avoid PayPal foreign transaction fees?
Pick a different provider like Wise or OFX when you’re sending payments internationally or spending in foreign currencies. Otherwise you’re likely to find that conversion and international transaction fees apply.
How much are PayPal fees?
PayPal fees vary depending on your account type and the specific transaction.
Domestic fees are often low, with many transactions completely fee free to personal customers. However, international payments can be more costly: sending money overseas has a charge of 5% (Minimum fee $0.99, maximum fee $4.99) + conversion fee of 3% or 4% on top of the wholesale rate.
How can I avoid PayPal fees?
Cut the costs of using PayPal domestically by sticking to USD payments funded from your bank account or PayPal balance. To avoid PayPal’s fees when sending money internationally, pick an alternative provider which offers lower charges and a better exchange rate.
How much are PayPal seller fees?
PayPal seller fees vary based on the type of transaction. Usually you’ll find costs of 2.99% to 3.49% + 1.5% international fee if the payment is made from abroad.
How can I send money with PayPal without fees?
Send domestic PayPal payments from your linked bank account or PayPal balance fee free. For international payments you’ll need to pick a different provider to avoid PayPal fees, as charges apply to all payment methods.
How do I avoid PayPal conversion fees?
Avoid PayPal conversion fees by sticking to local USD transactions only – or pick a different provider like Wise or OFX when you need to send or spend in a foreign currency.
Is PayPal free to send money internationally?
No. Sending money overseas with PayPal has a charge of 5% (Minimum fee $0.99, maximum fee $4.99) + conversion fee of 3% or 4% on top of the wholesale rate.
