The standard Paypal fee rate for United States sellers is 2.9% + $0.30 for each domestic transaction. That means your Paypal fees are basically 2.9% and some change, right? Not exactly. That seemingly harmless $0.30 fee balloons your actual Paypal fee percentage to 9% on a $5 transaction. Ouch. Think about that next time you sell something for $5.00.
Let’s crunch some of the numbers in a sample Paypal fee chart:
$5.00 transaction
$0.15 (2.9%) + $0.30 (flat fee) = $0.45 –> 9%
7.50 transaction
$0.22 (2.9%) + $0.30 (flat fee) = $0.52 –> 7%
$10.00 transaction
$0.29 (2.9%) + $0.30 (flat fee) = $0.59 –> 5.9%
$20.00 transaction
$0.58 (2.9%) + $0.30 (flat fee) = $0.88 –> 4.4%
$50.00 transaction
$1.45 (2.9%) + $0.30 (flat fee) = $1.75 –> 3.5%
$100.00 transaction
$2.90 (2.9%) + $0.30 (flat fee) = $3.20 –> 3.2%
$200.00 transaction
$5.80 (2.9%) + $0.30 (flat fee) = $6.10 –> 3.1%
$500.00 transaction
$14.50 (2.9%) + $0.30 (flat fees) = $14.80 –> 3.0%
Making Sense of the Chart
Fees for transactions between $5.00 and $20 range from 4.4%-9.0% (a 4.6% spread). The fees for transactions between $50 and $500 transaction only range from 3.5%-3.0% (a 0.5% spread).
How can I pay less in Paypal fees?
Unfortunately, your options for paying lower Paypal fees are limited, but the Paypal Merchant Rate can save higher volume sellers at least 0.4% and using Paypal Micropayments (Business Accounts only) can save money on transactions under $10.
Paypal Merchant Rate
If you sell over $3000.00 each month, you can lower your Paypal fees from 2.9% + $0.30 to 2.5% + $0.30. Take a look at the article about The Hidden Paypal Merchant Rate for more information.
Paypal Micropayments (Paypal Business Accounts Only)
If most of the items you sell are priced under $10, then you might consider opening Paypal Micropayments. Paypal Micropayments provides an alternative fee structure of 5.0% + $0.05, which is more advantageous for low value items (under $10). You need to have a Paypal Business Account (not Personal or Premier) and fill out a one-time micropayments application. Once approved, the pricing structure automatically adjusts based on the size of the transaction. So a $5 transaction would cost 5% + 0.05 = $0.30 while a $100 transaction would cost 2.9% + $0.30 = $3.20.
Final Thought: The Flat Rate Portion of the Paypal fee is Non-Refundable
If your buyer returns an item or you send the buyer a full refund for any other reason, Paypal keeps $0.30 (on standard Paypal transactions) or $0.05 (on Paypal Micropayments).