Using PayPal to accept payment from customers and clients can cost you quite a bit of money if you aren’t careful. The good news is, in most cases, the fees that PayPal charges can be written off on your taxes as a business expense. However, that doesn’t mean that you should ignore them throughout the year. Learn more about the fees that PayPal charges so that you can determine whether or not accepting PayPal payments is costing your business too much money.
Payment Fees
When your customers send you a payment for goods and services, PayPal charges you a fee of 2.9 percent plus $0.30. So if your customer were to send you a $100 payment, you’re charged a total of $3.20. While this may not seem like a huge amount, it does add up over time, especially when you regularly receive payments from customers via PayPal.
Conversion Fees
While it doesn’t cost your company anything to convert payments received from your clients to your currency, it does cost a fee for you to send payments to people if the money has to be converted. If you regularly send payments to people outside your country, such as freelancers or contractors, conversion fees could end up costing you quite a bit of money. Conversion fees vary depending on the sender and recipient’s country, and whether the payment was sent using the sender’s PayPal balance or its funded using a credit or debit card. The fees that you incur could range anywhere from 0.4 percent of the total payment amount to 7.4 percent of the payment amount and a fixed fee.
Recurring Billing Fees
PayPal offers recurring billing as an additional service to its business customers. The service comes in handy when you’re invoicing clients the same amount of money each month, especially if you’re invoicing a lot of clients. If the convenience is important to you, just keep in mind there is an additional $10 monthly fee to use the service.
Pro Payment and Virtual Terminal Accounts
If you want your customers to have a fully customized checkout experience from your website or you want to be able to accept PayPal payments by phone, you can do so by creating a Pro Payment or Virtual Terminal Account for $30 per month. Keep in mind, even though you’re paying a $30 per month fee to use the service, normal PayPal transaction fees still apply.
Using PayPal to invoice your clients and/or customers and receive payments is convenient, but it isn’t free. So before you decide to handle all of your company’s billing through PayPal, make sure you know and understand what fees you’ll be charged to use the service. The fees are relatively small, but can add up quickly. Be sure to track them as an expense when you do your taxes.
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