Why Is PayPal So Expensive? (10 Reasons Why)

PayPal is a multinational financial company that makes buying, selling, and receiving payments easier. Unfortunately, when using a payment service, there are always extra expenses and fees.

If you use PayPal, or are wanting to use PayPal, you may be wondering what the extra expenses are and why they are so expensive? I looked into PayPal’s fees, and here is what I found!

Why Is PayPal So Expensive In [currentyear]?

PayPal makes its money through fees, and has many branches of fees for all its services, which makes the service expensive. If you are using PayPal for personal payments to friends and family, you don’t have to worry, but if you are using PayPal for any other transaction, withdrawal, or special feature, there are several fees that apply in [currentyear].

If you are interested in learning more about what PayPal’s fees are, how much they cost, and more, then you should keep reading!

1. Merchant Fees 

If you are a merchant or seller on PayPal’s platform, you have several fees that apply to you.

The most common fee that applies is when you receive a payment from the purchase of the good or service you are selling. This is commonly considered a Commercial Transaction.

These fees include:

  • Invoicing – 3.49% + fixed rate
  • PayPal Checkout – 3.49% + fixed fee
  • PayPal Guest Checkout – 3.49% + fixed rate
  • PayPal Guest Checkout – American Express Payments – 3.50%
  • QR code Transactions – 10.00 USD and below 2.40% + fixed fee
  • QR code Transactions – 10.01 USD and above – 1.90% + fixed fee
  • Pay with Venmo – 3.49% + fixed fee
  • Send/Recieve Money for Goods and Services – 2.89% + fixed fee
  • Standard Credit and Debit Card Payments – 2.99% + fixed fee
  • All Other Commercial Transactions – 3.49% + fixed fee

When receiving international payments, the standard fees apply, plus “Additional fee rates for international commercial transactions”. This fee is 1.50% of the transaction.

To see the fixed fees, click here, go to “Commercial Transaction Rates,” and scroll to “Fixed fee for commercial transactions (based on currency received).”

2. International Fees and Currency Conversions

When you send or receive money to or from someone in another country or region, even if it’s considered a personal payment, there is a fee. There is also an additional fee if there is a currency conversion.

The fee rate for international payments depend on if it’s for a personal payment or a good or service, and how much you send.

Fee rates for currency conversions are either 4% or 3%.

4% rates are as follows:

  • Paying for items or services in a currency other than the currency listed
  • Sending money to friends or family, and they receive a different currency than what you sent
  • Sending money using PayPal Payouts, and the recipient of the money receives a different currency than what you sent

3% fee rates apply to all other transactions that involve currency conversions.

3. Withdraw and Transfer Fees

If you use a standard withdrawal from your bank account, and you don’t need a currency conversion, then there is no fee.

However, if you use an instant transfer to your bank or card, ask for a check, or need a currency conversion, there are several fees.

There is a fee of 1.50% of the amount of transfer when using the instant transfer to your bank account or debit card, but there is also a minimum and maximum fee.

Your fee when using Instant transfer will never be less than 0.25 cents, and never be more than $15.

Furthermore, if you need a currency conversion when withdrawing money from your bank account, there will be a 3.00% fee unless, there is another amount explained to you during your transaction.

Additionally, if you ask for a check to be mailed to you, it will cost $1.50.

4. Fees From Merchants Outside of PayPal

There are very few fees outside of PayPal. You may come across a fee from a merchant through PayPal, but it’s not a company fee.

Fees from merchants outside of PayPal may be for things like shipping.

5. Cryptocurrency Fees

Unfortunately, there are fees when buying and selling Cryptocurrency.

These fees are as follows:

  • 00 crypto is $24.99 and there is a 0.50 cent fee.
  • 00 crypto is $100.00 and there is a 2.30% fee
  • 01 crypto is $200.00 and there is a 2.00% fee
  • 01 crypto is $1,000.000 and there is a 1.80% fee

6. Donation and Charity Fees

6. Donation and Charity Fees

When you receive a domestic donation or charity transaction, there are specific fee rates that apply.

Furthermore, charity transactions are subject to an application process and pre-approval through PayPal.

Additionally, If you don’t receive donation money through PayPal’s set payment types for donations, then it’s not considered a donation and will have a different fee rate.

PayPal’s set payment methods for donations are as follows:

  • Donate Button
  • Generosity Network, and
  • PayPal Checkout

Fees for all of these methods are 2.89% + fixed-rate. The fixed-rate for donations is based on the currency received.

You can find the table for fixed fees here. Go to “Receiving Donations,” and scroll until you see “Fixed fee for donations (based on currency received)”.

If receiving an international donation, the standard fee for receiving domestic donations applies, plus the “Additional percentage-based fee for international donations,” both listed above.

The fee rate for receiving domestic charity transactions is 1.99% plies fixed rate.

The fee rate for receiving international charity transactions is the standard fee of 1.99%, plus fixed-rate and 1.50% of the transactions.

Furthermore, the same donation fixed fees is based on the currency received.

To see the table, click here, go to “Charity Transaction Rates,” and scroll to “Fixed fee for charity transactions (based on currency received)”.

7. Credit or Debit Card Fees 

Most stores have a processing fee when it comes to credit or debit cards. The average credit card processing fee is 1.3% to 3.5% of the transactions.

PayPal’s rate for processing credit or debit cards is 2.9% plies fixed fee, the fixed fee is $0.30.

In this case, PayPal is on the higher end of the scale, but it’s not the highest, or over the scale.

8. Alternative Payment Method Fees

Fortunately, for business accounts, PayPal allows you to link some alternative payment methods to your account for your customers to use at checkout, but there are fees that apply.

PayPal’s fees rate for APM’s is 2.59% plus fixed-rate. Furthermore, if receiving an international APM transaction, the standard fee of 2.59% plus fixed-rate applies, plus 1.50%. 

Additionally, the fixed fee for APM transactions depends on the currency received.

To see what each fixed rate is, click here and go to “Alternative Payment Method Rates,” and scroll to “Fixed fee for APM transactions (based on currency received)”.

9. Dispute and Chargeback Fees

PayPal charges dispute or chargeback fees for transactions that are “processed through the buyer’s PayPal account or a PayPal checkout solution”.

Additionally, the fees will be charged in the currency of the original transaction.

To see the fees in each currency, click here, and go to “Dispute Fees” or “Chargeback Fees.”

10. PayPal Raised Some of Its Fees 

Unfortunately, on August 2, 2021, PayPal raised its processing fees. The fee rate went from 2.9% plus $0.30, to 3.4% plus $0.49 for each transaction.

To know more about PayPal, you can also read our related posts on why is PayPal so bad, why is PayPal so slow, and if you can cancel a PayPal payment.


PayPal makes its money through the fees that it charges. Furthermore, depending on how and why you are using PayPal, the fees can make it very expensive.

If you only use PayPal for personal payments, there are no fees, but for anything else, there are multiple charges.

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Marques Thomas

Marques Thomas graduated with a MBA in 2011. Since then, Marques has worked in the retail and consumer service industry as a manager, advisor, and marketer. Marques is also the head writer and founder of QuerySprout.com.

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