Is PayPal the Best Online Payments System?

how much are paypal fees

Now more than ever, internet users in the UK are shopping, working, and running businesses online.

When it comes to facilitating the transactions that drive these activities, payment gateway providers lead the charge. There’s one service in particular that has long stood above the rest. Of course, it can only be PayPal.

Is PayPal the Best Online Payments System?

Since opening in 1998, the platform has amassed over 325 million active accounts. An estimated 87.5% of buyers choose PayPal to make their online purchases. That said, paying for products and services isn’t the only reason to use PayPal. You can use the platform to:

  • Accept payments from senders
  • Pay in-store through linked mobile apps
  • Receive payments for sales or work
  • Send money to family and friends
  • Transfer funds between accounts

PayPal also offers several useful features. This includes the ability to create and send invoices. Plus, there are various analytics tools that allow you to monitor your transactions, generate custom reports, and view data for tax records. The following are some additional reasons why PayPal is popular:

  • Accounts are free to create with no monthly fees
  • Buyer Protection makes it easy to claim refunds
  • Financial details are securely stored on an encrypted network
  • Funds can be kept in different currencies

This is all quite compelling – but is it enough to make PayPal the best online payments system? How much does it cost? Read on to learn everything you need to know about PayPal fees.

PayPal Fee Structure Explained

Before we continue, remember that all PayPal fees are subject to change.

You can head to their official website and check the Policy Updates page to stay informed about the latest fee or rate adjustments and when they will apply. You can also view these details by clicking ‘Legal’ at the bottom of any page on their site and navigating to the Policy Updates section.

That said, the fees you stand to pay when using PayPal vary depending on the context of the transaction. For instance, buyer and seller fees are different, as are those for domestic and international transactions.

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If you’re simply using PayPal to purchase products or perform any kind of commercial transaction, you’ll be glad to know that there are no fees to pay on your side. Keep in mind that an exception applies to transactions that involve a currency conversion.

In order to ensure that you don’t pay transaction fees for domestic personal transactions, you can select the ‘Friends and Family’ option when moving through the ‘Send Money’ menu. This is perfect for transactions between loved ones, albeit less so for those that involve a buyer and seller.

That’s because sending your funds via ‘Friends and Family’ disables the Buyer Protection feature, so you won’t be able to request a chargeback if the product or service you’re paying for isn’t delivered as promised.

PayPal Fee Calculator for International Personal Transactions

So, what about international personal transactions? Luckily, the fees aren’t all that high. The standard rate is 5% of the transaction value. This is superseded by the €0.99 minimum and €2.99 maximum.

PayPal collects your fee from the balance in the currency to which the fee applies. In order to do this, they might have to convert the fee amount from the sending value into the currency of the payable fee. These cases subject your transaction to an additional 4% fee on top of the afore-mentioned base rate.

PayPal Calculator for PayPal Fees UK

For quick and convenient calculations, you can use one of the many online services that are designed to help you determine the fees that apply to your PayPal transactions.

TransferWise offers a handy set of calculation tools on their website for different purposes. This includes the ability to calculate the fixed, variable, and cross-border fees for UK transfers, along with the associated exchange rate mark-up. Speaking of which, you’ll also find an exchange rate calculator and eBay calculator for PayPal on TransferWise.

If you simply need to know what it costs to send or receive any amount of money via PayPal, you can use the more basic calculator on SaleCalc. Their tool allows you to choose different countries or regions as well.

PayPal Fee Calculator UK to US

The United States is one of the countries where the local currency is subject to the 4% additional fee that we discussed above. If you want to convert your balance or receive payments into dollars or another currency, you’ll be charged a 3% fee above the applicable exchange rate. The resulting number forms your transaction exchange rate.

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Both the 4% additional fee and 3% conversion fee also apply to the following currencies:

  • Australian dollar (AUD)
  • Canadian dollar (CAD)
  • Euro (EUR)
  • Japanese Yen (JPY)
  • New Zealand dollar (NZD)
  • Russian ruble (RUB)
  • Swedish krona (SEK)
  • Swiss franc (CHF)

How Much Are PayPal Fees for Transfers?

To transfer your money out of PayPal, you can either send it to your linked bank account or debit card via standard transfer – assuming either is eligible. It’s best to first convert your currency to that of your bank before making the transfer so that you don’t pay additional conversion fees.

When transferring your balance from a personal PayPal account, the below-listed fees apply:

  • None for local bank accounts
  • 3% for US bank accounts
  • Fixed fee per transaction for card withdrawals

The fixed fee for your card withdrawal depends on the withdrawal currency. For UK pounds, it’s only €1.50 per transfer. If you’re dealing with US dollars, it’s $2.50 per transfer. Euro transactions are €2.00 each.

How Much Does PayPal Charge UK Businesses?

Now for commercial or merchant transaction rates. Let’s begin with the standard rates for receiving domestic payments:

  • 2.9% + fixed fee for commercial transactions
  • 1.5% + fixed fee for QR code transactions above €10.01
  • 2% + fixed fee for QR code transactions below €10.00

The fixed fee for commercial transactions is based on the currency you receive. Australian and Canadian dollars are set at 30 cents and so are US dollars and UK pounds. The fixed fee for each of these currencies when receiving money through QR code transactions is 10 cents for those above €10.01 and 5 cents for those in the last category.

PayPal Fees UK 2020 International Business

There are additional percentage-based fees for commercial transactions with accounts in other countries. Luckily, they’re all very straightforward. Here’s what you stand to pay as a merchant when receiving payments from overseas:

  • 2% for Canada and the United States
  • 0.50% for Europe I
  • 2% for Europe II
  • 0.50% for Northern Europe
  • 2% for the rest of the world

You might be wondering what the different sectors of Europe are. This is how PayPal groups specific countries in the EU. Northern Europe comprises the Aland Islands, Denmark, Faroe Islands, Finland, Greenland, Iceland, Norway, and Sweden. Europe II is made up of the following countries and Europe I contains all those that remain:

  • Albania and Andorra
  • Belarus
  • Bosnia
  • Bulgaria
  • Croatia
  • Georgia
  • Hungary
  • Romania
  • Russia
  • Switzerland
  • Ukraine
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How Much are PayPal Fees UK Charity

You’ll need to apply and be pre-approved by PayPal to become eligible for charity transaction rates. If your application is successful, all of your subsequent commercial transactions will be subject to charity rates, which are 1.4% for domestic transactions with an added fixed fee based on the currency received.

Work Out PayPal Fees and PayPal Costs UK

Going back to consumer fees, there are a couple of other charges that you should be aware of. This includes a variable fee for attempted bank transfers out of PayPal that failed due to incorrect account details or delivery information. For this, you’ll pay €0.50 each time.

When adding a credit or debit card to your PayPal account, you may be charged a small confirmation fee. This amount is quickly refunded after you complete the verification process. Some users will need to add their card when increasing their spending limit.

Leave your account unattended for too long and it may be subject to an inactivity fee, which can be the entire remaining balance of your account. That’s why it’s wise to keep your money out of PayPal and in a bank account instead.

The final ‘other’ fee for consumers is the Records Request. This is made when PayPal asks for the provision of information relating to why they had reasonable justification to prevent your payment order. The figure ranges from €10 to €12 per item. However, you won’t be charged if you provide the information in good faith.

How Much PayPal Fees UK eBay Sellers

Let’s end off with an overview of the PayPal fees for making a private listing as a seller on eBay. They are:

  • 50p to set the Buy it Now price
  • £2 for the Subtitle
  • £2.50 for gallery images (free for certain items such as clothes and furniture)
  • 35p for a listing in two categories
  • 30p for international visibility

At the end of the day, the fees associated with using PayPal are unlikely to dig far into your funds. For the level of service you receive, it’s usually worth the cost.

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