To those buyers who solely shop with their PayPal accounts, the experience can be a quick and safe way to purchase items without revealing their credit card and bank account information. Sellers who accept PayPal as a payment option also get benefits such as claims protection and instant payment, but they pay for the privilege through various fees tithed to PayPal at the time of buyer checkout.
The Big Picture
Vendors who accept PayPal for their payments are mostly lumped into one main group, and a basic payment percentage is applied to all of their receipts. Sellers pay a flat rate of 30 cents per every transaction, plus 2.9 percent of the total sale price. A seller who has sold a shirt for $10, for example, will see 59 cents taken out of his PayPal payment – 30 cents for the transaction and 29 cents for the percentage of the total sale price. Fees are taken out before the money even gets to the seller, so there’s no invoicing or additional payment.
High Volume Discounts
High-volume sellers are eligible to knock that 2.9 percent fee down to 2.2 percent. Volume seller discounts kick in when sales surpass $3,000 each month. At that point, the percentage comes down to 2.5 percent. Above $10,000 in monthly sales is where the 2.2 percentage fee applies. Sellers with a monthly volume of over $100,000 are encouraged to call PayPal directly at 1-888-818-3928 to discuss further discounts. To qualify for the volume discounts, sellers must be members of PayPal for at least 90 days.
PayPal also offers discounts on the percentage it takes from non-profit organizations' transactions on the site. Monthly volumes from zero to $100,000 are charged the 2.2 percent rate, as well as the 30 cents per transaction fee. Non-profits with higher volume rates should call PayPal to discuss their options. To qualify, organizations must have 501(c)(3) status and fill out an application. Businesses who don't qualify but process only very small transactions, such as those under $10 each, may be interested in PayPal's Micropayments option, in which they pay a flat rate of 5 percent plus five cents per transaction.
Circumventing the Fees
There is a way to get around losing a percentage of your income to PayPal fees. When you send an invoice, PayPal treats the process as a business transaction, and that is where you lose the money. If you request payment through PayPal gift, where buyers transfer money directly into your PayPal account from their own, no percentage is taken out. This option is available from the “Send Money” area on the PayPal site. The buyer will have to mark the “Gift” radio button, make a note of what they’re buying, and input your PayPal-synced email address.
A Note About eBay
Keep in mind that the payments you receive from eBay PayPal purchases will be slightly lower. eBay takes its own bite out of the purchase price. Fees vary greatly and depend on what you’re selling and the final value price. For example, the price you start your item on eBay makes a difference for one of eBay’s fees. List an item at one dollar and your insertion fee is $0.25. List it at $200 and your insertion fee is $2.00. You’ll also pay 9 percent of the total sale price up to $250.
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