When completing transactions through PayPal, sellers are liable to pay a PayPal fee. Buyers are not liable for any fees. The fee that a seller pays is worked out for every transaction and represents percentages for the overall transaction plus 30 cents. The PayPal percentage rates can fluctuate and depend on the money that the seller is earning every month through PayPal.
How PayPal fees are calculated
Access your PayPal account and click on “History,” followed by clicking on “Payments Received.” Click on the last month as your time-frame to work out your monthly sales from the previous month from PayPal.
It is advisable to use a fees calculator for PayPal to calculate the exact charges PayPal will charge you. Otherwise, multiply every transaction made in the “current month” by 0.029, if you sold $3,000 or less last month, or by 0.025 if your sales were between $3,000.01 and $10,000, or by 0.022 if your sales were between $10,000.01 and $100,000, or by 0.019 if your sales were over $100,000 through PayPal.
Add 30 cents after multiplying the transactions by a percentage rate that applies to your sales. This will provide you with the fee you are paying for your last transaction. For example, if your sales through PayPal were $1,000 last month, and you sold $1,000 in the current month, your PayPal fee would be $29 plus 30 cents for each transaction.
What Situations Result In Paying Fees For Sellers?
PayPal is a platform that is most appealing to customers since they don’t pay any extra fees when they make a purchase using this payment-processor. However, this doesn’t apply to merchants that use PayPal. If you are receiving money for any transaction made using a shopping cart, you will be liable for a fee. This is a fee that you pay for using the software for your checkout processes.
The domestic merchant fees that all businesses have to pay to utilize the PayPal Shopping Cart are 2.9% of each payment and 30 cents added onto every transaction. When it comes to international transactions, conversions of currency will also apply. These transactions will require different types of processing when compared to the domestic “standard” transactions.
PayPal Fee Types
The fees that merchants or sellers pay often vary according to the circumstances that surround the purchase. Various circumstances will affect the amount you will end up paying.
Standard Domestic Merchant Fee
As mentioned above, this is the amount that the merchant has to pay for payments received from a buyer located in the country that the business is based. This is calculated at 2.9% of the payment received and 30 cents (or the equivalent of the “fixed fee” that PayPal gives to that currency if the country is not based in the U.S.)
Merchant Fee For International Transactions
If a business is located in 1 country and the customer comes from another country, the merchant is charged 4.4% on the payment received. Similar to all the other transactions, a “fixed fee” will also be added. The “fixed fee” applies to the country where the customer is shopping from.
For example, if the company is registered and located in the U.S., but the customer is in the U.K., the merchant will be charged 20 pence rather than 30 cents. PayPal would be charging a “fixed fee” of 4 pesos for a customer in Mexico or 40 yen for a customer from Japan.
Currency Exchange Fee
This is a fee charged for converting other currencies such as yen, pesos, and pounds to dollars or the other way around, or a combination of other currencies. The fee for this is not set since the rates are always fluctuating. The amount charged for currency conversions will change regularly, similar to exchange stations and banks.
Tips On How To Lower PayPal Fees
The standard rate for every transaction made through PayPal is 2.9% plus 30 cents. The fees charged can become hefty for businesses that have started to experience significant growth, and the transactions have increased dramatically.
However, merchants can contact PayPal to make an application for Merchant Rates. This is a program that PayPal may grant the business with reduced rates on the charges that they are paying. The percentage that is lowered will depend on the amount of money that the merchant is making every month. For example, if a merchant exceeds $3,000 in sales but has not exceeded $10,000 before the end of the month, the transactions received will be charged at 2.5% and 30 cents for each transaction.
Not all eCommerce businesses will be able to qualify for Merchant Rates. Merchants interested in apply for the discount cannot have a “negative balance” with the company. Also, the store must be operating or in business for over 30 days. The applicant should also be making more than $3,000 every month through PayPal.
An important consideration about PayPal fees is the “fixed fees.” Regardless of whether products sold are luxury items or economically priced, the merchant is liable to pay 2.9% on the amount received for every transaction. Adding 30 cents to an item priced at $2.00 is very different from an item priced at $200. If the merchant is offering an inventory at low prices, these standard fees will dramatically reduce the merchant’s profits.
If the business is making under $10 for most of the purchases, they can apply for the PayPal Program for micropayments. With this system, the merchant will be paying 5% for each transaction, but the “fixed fee” will fall away.