← Back to Blog

PayPal Fees: How Much Are PayPal Fees?

minute read
Get your invoices paid 3x faster with Bonsai.
Get your invoices paid 3x faster with Bonsai.
Try it free
Updated on:
December 11, 2022
September 7, 2023
Table of contents
Get your invoices paid 3x faster with Bonsai.
Discover Bonsai all-in-one business management software.

If you’re a freelancer or small business owner, you’re probably familiar with PayPal. But how much are PayPal fees, and is it the best option available?

Our article breaks down the fee structure and looks at alternative payment providers.

We look at:

• What PayPal charges

• Using Bonsai’s PayPal fees calculator

• Whether PayPal is a good choice for freelancers

• Alternatives and competitors

• Frequently asked questions.

Let’s get into it!

PayPal fees calculator

PayPal charges fees when processing transactions. These fees vary based on where you live and the method of withdrawal.

For standard transactions, the fees are as follows:

Paypal Fees Table

When you withdraw the funds, there is no fee associated if you want to withdraw to a US bank account. However, if you prefer a check, there is a $5 flat fee.

If you’re finding calculating PayPal seller fees confusing, we have a calculator available that works out how much you will pay in fees (and how much you should ask for to cover those fees!).

Paypal Invoice Fee Calculator

Should PayPal be used for your freelance business?

PayPal is reliable and globally recognized, making it a great option for freelancers. There are a range of advantages that come with using PayPal, including:

  • Straightforward process: It’s easy to set up an account, and very user-friendly.
  • Trusted provider: PayPal has been around for a long time, and most people have either used it or are familiar with the name
  • Globally recognized: PayPal is available in over 200 countries and supports 25 currencies
  • Seller protection: PayPal offers Seller Protection, which takes some of the risk out of being a freelance operator.

What are the PayPal fees for receiving money?

If you’re operating within the US, the fee for receiving money is 2.9% of the transaction plus a flat fee of $0.30.

For international sales, the fee is 4.4% of the transaction, plus a fixed fee that varies based on the country.

Below, we’ve listed the flat fees for some of the most popular currencies. To see the full list, visit the PayPal website.

Paypal Fee Currency Table

How to avoid PayPal fees

1. Use the "Friends and Family" option

When sending money through PayPal, you have the option to use the ‘Friends and Family’ category instead of ‘Goods and Services’. This won’t incur fees if your transaction is domestic.

However, be warned that using this for business transactions is a violation of PayPal’s terms of service – so only use this option for genuine friends and family!

If you’re found violating the terms, it removes seller protection from the transaction, which can put you at risk.

Use a PayPal balance or bank transfer

When you use your PayPal balance or a bank transfer to fund your PayPal account, the transfer fees are lower than if you use a credit card, check, or debit card.

Use PayPal as a funding source

Use your PayPal balance to pay for goods and services on other platforms. By doing so, you’ll be able to avoid withdrawal fees.

2. Receive payments in the same currency

There are fees associated with currency conversion, so ideally you should be trying to make transactions in the same currency as your clients to avoid conversion charges.

3. Offer local pickup or delivery options

If you’re selling locally, you don’t need to use PayPal at all! Try offering pickup and delivery within your local area, and ask to be paid in cash or via a direct bank transfer.

4. Use other payment methods if possible

Look into alternative payment methods, including cash, Stripe, Square, Venmo, and others. See which platform offers the best fees for your business.

Get paid faster with Bonsai
Start free

3. What are the PayPal fees for receiving money?

Paypal isn’t free, even if it is convenient. In fact, when most freelancers do their PayPal 1099 taxes at the end of a year, they should include PayPal fees as a deductible expense against earnings. While the exact amount you’ll pay per transaction will vary based on the amount you received, here is the current formula:

  • There is no fee for opening a PayPal account.
  • The cost for each sale or payment received is 2.9% plus $0.30 USD (volume sellers may get a discount) for sales within the US.
  • There is no fee to transfer funds to your registered checking account; it costs $1.50 to have a check issued; transfers via debit card cost $.25.
  • Additional fees, such as chargeback fees or insufficient funds fees, may also apply.

On a $500 job, for example, you’d pay $22.30 in PayPal fees for receiving the money. Then, it would cost an additional $1.50 to have a check issued.

For a freelancer who does $35,000 in sales each year, with 60% of those sales coming through PayPal payments, you can expect to pay fees on $21,000. This would be a minimum of $924.30 in fees, but likely more (since the $.30 charge is per transaction, it would really depend on the transaction numbers.)

Considering that you are paying up to 5% of your annual earnings in fees to PayPal, it is understandable why some freelancers are looking for an alternative.

One way that freelancers are getting around the PayPal fees when receiving money is by bundling them into their service costs. If you normally charge $250 for a blog post, you can choose to charge $265 and more than cover your PayPal fees. The client doesn’t necessarily know what all goes into your pricing formula, so this is a safe way to feel good about the value you provide while also keeping your expenses in check.

(Note that PayPal prohibits passing on the cost of fees as a fee “surcharge”. Just as a restaurant can’t charge you more for using a credit card vs. cash, you can’t charge an additional fee for accepting PayPal. You can, however, charge a bit more across the board to account for your PayPal expenses. Be sure that you aren’t adding this extra charge as a line item on your invoices. Simply bundle it into your service cost.)

PayPal Invoice Fees Calculator

Final thoughts on PayPal for freelancers

In the end, it’s hard to avoid using PayPal entirely. Some clients insist on using it, and it’s really one of the most convenient ways to get paid – and in a hurry. When tied to a PayPal Mastercard, it can simultaneously serve as a tool for both tracking expenses and payments. (Many freelancers use their PayPal payments to then pay off their card, making it easy to keep debt paid off each month).

For the freelancer on a strict budget, losing a bit of each paycheck to Paypal may not be an appealing thought. Many have successfully ditched the processing giant altogether. For these freelancers, however, it mostly works because they have just a few large retainer clients who have no problem paying via electronic bank transfer. The vast majority of freelancers, however, have over a dozen clients a month, and even more in the course of a year. It’s a very tedious process to set up a new or one-off client for a check or direct deposit situation – not to mention a bit scary.

In truth, PayPal may be the best option for those looking for quick payments from any source, and without the need to expose your personal information or bank account numbers. There are also few things more satisfying then getting a notification that payment has been received for a job well done. Perhaps the best part of freelancing, getting paid is an amazing feeling, indeed. Ensure it happens fast by signing up for a free Bonsai trial.

Get your invoices paid 3x faster with Bonsai.
Related Articles