How to Avoid Paypal Fees?

PayPal is one of the most common modern ways of sending money between two parties, whether it’s between friends, family members, or entities with a customer-merchant relationship.
While the app itself is free, and you won’t be charged anything for signing up, using it might be associated with fees depending on what kind of transaction you’re completing.
However, are those permanent? To an extent, yes. If a specific type of transaction requires a fee, you won’t be able to waive it if you want to proceed that specific way about it.
What you can do, however, is look for another solution that will still yield the same results. It might sound confusing, but it will become clearer once you see it in practice – you can trust us on that.
So, how to lower PayPal fees? And how to avoid fees on PayPal altogether? Is it even possible? We’ll be talking about this and more in this article.

Why Does PayPal Charge Fees? 

First thing first: why do PayPal fees even exist? Well, the answer to this question is very simple – it’s the way they generate income.
As a payment processor, PayPal has no other way of earning money, as they don’t sell any goods, nor are their services subscription-based.
Imposing fees is the only way they are able to evolve and offer their customers more advanced payment solutions. Again, however, not all transactions involve needing to pay a fee.

Types of PayPal Fees

Among transaction types that do come with a fee, you can find:

• PayPal Goods and Services – This is a special kind of PayPal transaction, meant for businesses, but often also used by those who resell things and who want to be protected against fraud in case something happens – for example, a product you ordered is faulty, fake, or does not arrive at all.
  • The fee includes a percentage of the transaction and a fixed rate.
• Transactions in different currencies – Regular transactions that don’t fall under the PayPal G&S are usually free of any fees unless the transaction’s currency is different from that of your account. Then, you have to pay the conversion service charge of 4.5%.
• Donations – Donating does not involve any fees, but receiving a donation can.
  • If the donations are for a registered charity, the PayPal fee you will need to pay to receive it is 1.99% plus $0.49 per transaction. International donations have an additional 1.50% fee on top of that.
• PayPal Invoicing – When a customer pays you online, you are charged a fee that depends on the transaction amount.

How to Avoid PayPal Fees

PayPal charges the sender, so here’s how to lower or avoid PayPal fees when sending money:

• Ask to be paid using the PayPal Friends and Family option – This is a good option for those who receive payment only every once in a while, for example when selling their old items. Depending on the payment method used, there are either no fees or the fees are lower compared to Goods & Services.

• Avoid currency conversions where you can – As mentioned, currency exchange involves high fees. So if you need to make a business purchase, and you have the option to, either look for more favorable conditions to exchange your money (for example, at a bank), do it, and then pay in the seller’s currency.
• Consolidate transactions – Instead of making a few smaller transactions to the same account, combine the amount and send it as one big payment. That way, you can avoid being charged fees repeatedly.

Tips for Businesses to Lower PayPal Fees

Are you a business owner looking to start using PayPal as your payment processor? Doing so is tricky, as merchants who use PayPal to receive transactions will be charged a fee deducted from the overall amount they receive.
There might be, however, a few ways to lower them, including:

• Negotiating with PayPal – If your business generates more than $3,000 monthly, you should get in touch with PayPal as you might be eligible for reduced fees.
• Using alternative payment methods – If you don’t want to pay as much in fees, consider adding more online payment methods with lower or no fees to your shop so that you don’t have to rely solely on PayPal. If you’re selling locally, consider delivering to customers yourself and receiving payment on delivery – unless you’re selling higher-priced points, in which case we wouldn’t recommend it, as it’s risky.
• Pass the fees onto the customers – Another thing you can do is to increase your prices by the fee amount so that when your customers pay the higher price, you receive the actual amount you want.

FAQ About PayPal Fees

Can PayPal fees change, or are they permanent?

No, the fee structure is not permanent and can be subject to change at any point in time, so if you want to stay on top of things, you should monitor it regularly.

Can you deduct the PayPal fees from your taxes?

As a merchant, you actually can – if you’re using PayPal to collect business income, the fees you pay for it should be tax deductible. For more specific information, we recommend getting in touch with a financial advisor.

Are there different fee structures for different businesses?

Yes, they are usually associated with how much business you’re getting monthly and the type of business you operate.
We recommend contacting a PayPal support representative to see whether yours qualifies for a different fee structure.

Does the fee differ depending on whether the customer uses a reward credit card or a standard credit card to pay for the transaction?

No, the fee amount remains the same regardless of the credit card type used to pay.

Is there an additional fee associated with offering your customers the “Pay in 4” service as a merchant?

Based on the information we currently have, no, there isn’t an additional fee. There are the standard fees you’d expect to pay if a customer paid in full, but there are no additional ones for using the service. Similarly, customers aren’t charged a fee for taking advantage of “Pay in 4.”

If a customer makes a purchase and then requests a partial refund, how are fees handled?

In those cases, a calculated proportional amount is refunded instead of the whole fee.

Are high-risk merchants charged higher fees?

Not at first. However, if, for example, you experience a high chargeback ratio (more than 1%) then PayPal can start considering your account high-risk and start imposing higher processing costs and transaction fees.

How to avoid PayPal fees when receiving money?

Unfortunately, as a merchant, you cannot avoid PayPal fees completely when receiving money – the only thing you can do is lower the fees, but that would require consulting with PayPal to see if your business is eligible for it.

Contact Payment Savvy for Secure Payment Solutions

While PayPal undoubtedly has some advantages for your business, the fees that come with it can be quite high when you calculate how much you’re paying for them monthly.
So, while it’s always a good idea to give your customer options when it comes to payment processing, treating PayPal as an addition rather than your main source of payment is definitely something to consider.
At My Payment Savvy, we offer discounted rates to merchants who wish to invest in a cutting-edge payment processing platform adaptable to their needs.
We know that every business is different – that’s why we offer our customers an “all-in-done” business solution. This is a payment processing platform customized to meet your business needs as best as possible.

Take a look at our payment processing solutions, and find the right one for your business today!