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PayPal is a payment services provider that helps small and medium-sized businesses accept payments in-person and online. With transparent fixed processing rates, dozens of integrations and no monthly commitment, a PayPal Business account is a great starter option for new businesses.
Though PayPal's per-transaction fees are slightly higher than its competitors like Square and Stripe, its ease of use, ubiquity and transparent fees make it a solid choice for businesses with fairly low transaction volumes. Businesses with higher sales volumes should look into payment processors with interchange-plus pricing and volume discounts to save on per-transaction fees.
Payment gateway cost
Accepted payment methods
Extensive integrations with major websites, shopping carts and POS systems, including PayPal’s own POS (PayPal Zettle).
Instant payout to PayPal account; transfer to bank account within three to five business days or instantly for additional 1.5% fee.
Contract-free with no termination fees.
Phone support from 8 a.m. to 8 p.m. Central time Monday through Friday plus text support, an online community and a resolution center for transaction or account issues.
Ease of use
Simple sign-up and payment processing.
How does PayPal Business work?
PayPal lets small businesses accept and process payments in person and online. Merchants can accept all major payment types for reasonable fees without a monthly subscription.
PayPal Business users can accept payments from customers without PayPal accounts, as well as send and receive payments in 25 currencies. Online businesses also have the option of setting up a payment gateway to facilitate checkout with major e-commerce platforms.
PayPal is a simple and well-known payment processing method with easy setup, tight security and dozens of extra features and integrations available. Here are a few:
PayPal Business integrates with hundreds of shopping carts, POS systems, accounting software products, e-commerce platforms and more.
The platform also offers PayPal Payouts for mass payments and its own POS app, PayPal Zettle (formerly PayPal Here), for businesses to accept payments in-store.
PayPal Business advertises 24/7 monitoring for sellers. Its Seller Protection program covers two buyer complaint types: “Unauthorized Transaction” and “Item Not Received.” For both of these claims, PayPal will side with the seller if basic requirements are met.
Subscription payments and invoicing
PayPal Business users can set up customized subscription and interval payments with built-in flexible incentives, like free and discounted trial periods. It also offers a free invoicing app, which comes with customizable templates and easy link sharing.
How much does PayPal Business cost?
The price of using PayPal to accept payments will come out to a combination of per-transaction fees plus an optional monthly subscription fee for online card payment gateway services.
PayPal Business offers three monthly payment gateway options for merchants:
2.99% plus 49 cents for standard credit and debit card payments.
3.49% plus 49 cents for digital payments (PayPal Checkout, Pay with Venmo, PayPal Credit, Pay in 4, PayPal Pay with Rewards and Checkout with Crypto).
2.29% plus 9 cents for card-present or QR payments through PayPal Zettle.
2.89% plus 49 cents for online card payments through Payments Advanced or Payments Pro.
All merchants can include recurring billing as an add-on service for an additional $10 monthly.
When no currency conversion is involved, you can transfer PayPal funds to a linked bank account for free. Funds can be expected within three to five business days. Instant transfers are available for 1.5% of the withdrawal amount, with a 25-cent minimum and a $15 maximum fee.
Chargeback fees and fraud protection
PayPal charges a $20 settlement fee for credit and debit card transaction chargebacks, which happens when a customer rejects a charge through their card issuer.
PayPal Business offers advanced Fraud Protection Services at $10 per month plus 5 cents per transaction to help counteract chargebacks and other issues.
Ease of use
One of the biggest advantages of using PayPal Business as your payment processor is how straightforward the platform is, for both you and your customers. Simple integration is available with a majority of website hosts and shopping carts, making it a quick and easy way to start accepting payments as soon as you start your business.
PayPal is the most commonly used payment processing platform, which makes it a go-to for customers and merchants alike. Many users will already be familiar with PayPal, so the interface likely won’t be a big adjustment for new business owners. Because so many people use PayPal, there's also more information available online about how to troubleshoot specific problems — for example, on the company's large online forum for merchants, PayPal Community.
PayPal’s flat-rate per-transaction fees are extremely transparent, allowing merchants to accurately predict their monthly payment processing costs.
Not for high-risk businesses
New merchants looking to use PayPal as their payment processor must adhere to the platform’s Acceptable Use Policy, and the platform has fairly strict standards. The company requires preapproval to accept payments for certain items that are age-restricted or have a high risk for card fraud or chargebacks, including for high-value items, products like alcohol and tobacco or items on online marketplaces. The company also doesn't support certain high-risk merchants, such as businesses that sell firearms or drug paraphernalia.
If your business is in one of these industries, consider going with a high-risk merchant account instead.
Withheld funds and frozen accounts
Though PayPal Business offers phone support from 8 a.m. to 8 p.m. Central time Monday through Friday, text support, an online community forum and a resolution center for transaction or account issues, the usefulness of the support is hit-or-miss, according to reviews. Customer service representatives’ expertise is said to vary.
Square is a popular payment processor with many of the same features as PayPal Business at a slightly lower cost, starting at 2.6% plus 10 cents per transaction. Square, unlike PayPal, offers virtual terminal access at no additional charge. It doesn’t offer multi-currency capabilities, though. It may be a better option if you’re looking for more customization options and aren’t planning to expand your business internationally.
Stripe is also a worthy PayPal Business competitor, especially for e-commerce businesses with an international presence. Stripe charges 2.9% plus 30 cents per transaction, which is also slightly lower than PayPal’s current rates. Unlike Square, Stripe accepts over 135 currencies and is also much more customizable than PayPal.