How Much Does It Cost to Have a Paypal Account?

By Jennifer Claerr

  • Overview

    PayPal is a very convenient service for sending and receiving payments. However, there are fees associated with its use. Before setting up your PayPal account, you must familiarize yourself with when fees are charged and what the amounts are. This way, you can save money and avoid experiencing any unpleasant surprises.
  • PayPal Fees

    There is never a charge to open a PayPal account. When you set up a Personal PayPal account, you can receive echecks, PayPal Instant Transfers and transfers from other PayPal balances for free. When you receive a credit card, debit card or buyer credit payment, you will pay a fee of 4.9 percent of the total payment, plus a $.30 transaction fee. The number of credit card payments you can receive with a Personal account is typically limited to 5 transactions within a year. If you need to accept many payments for business purposes, you should set up a Premier or Business PayPal account. With these accounts, you will be charged a fee between 1.9 and 2.9 percent for most transactions, based on your total volume of receipts. There is never a fee to send a payment.
  • Benefits

    If you only need to receive a few payments per year, you should open a Personal PayPal account. The Personal account is also best if you're only using your PayPal account to pay for purchases for personal use. However, if you're using your PayPal account to receive or make payments for your business, you should upgrade to a Premier or Business account. If your customer or client sends bulk payments, you may not have to pay a fee to receive the payment.


  • Considerations

    If you are using PayPal to receive payments for eBay by credit card, debit card or buyer credit, you must have a Premier or Business account. There are considerable risks associated with using a PayPal account to receive money. These risks are greatest when selling highly valuable goods on eBay or from your own website, especially when selling them internationally. If you're not careful, your losses to online fraud could greatly exceed any fees that you are charged by PayPal for its services.
  • Effects

    If you plan to process a high volume of payments per year, PayPal can be very unsafe to use. This is because PayPal has a proportionately high rate of payment fraud. If your customer or client commits fraud, you will be held responsible for the amount in question. Merchant accounts are safer and less prone to buyer chargebacks due to fraud. This is especially true if you sell items from your own website, since only eBay transactions are protected under the PayPal Seller Protection Policy.
  • Prevention/Solution

    To keep your PayPal fees low, strive to process $3000 or more per month in sales. The maximum fee per transaction for echecks is $5, so encourage your buyers to use this transaction type for large purchases. When selling on eBay, always ship to the buyer's confirmed address with delivery confirmation. However, if you're not selling on eBay, especially if you're selling from your own website, get a merchant account instead.
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