8 Easy Ways to Decrease or Avoid PayPal Fees

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The one thing about freelancing that I absolutely hate (besides self-employment taxes) is paying PayPal fees.

I hate doing great work for my clients and getting paid, only to see a big chunk of my income going to pay fees. Luckily, there are several options available to help us reduce PayPal fees. 

You can reduce PayPal fees by using invoicing software to reduce fees but still get paid via PayPal. Or you can skip PayPal altogether and use other payment processors such as Venmo. Find out how to avoid PayPal fees in this guide.

What is PayPal?

PayPal is “a worldwide online payments system that supports online money transfers and serves as an electronic alternative to traditional paper methods like checks and money orders,” according to Wikipedia.

Thousands of online companies use PayPal as their payment processor. It used to be if you wanted to accept credit cards, then you needed to open up a merchant account and purchase expensive equipment to swipe credit cards. PayPal eliminated the need for all that.

PayPal is convenient, but it is not always free.

Does PayPal Have Fees?

When businesses accept payments via PayPal, they get charged a percentage of the sale and a fixed fee. Generally, in the United States, companies will pay a commercial fee of 2.9% of the transaction amount plus a fixed fee of 30 cents.

Let’s say you invoice a client for $1,000, and the client opts to pay you through PayPal. You will receive $970.70. PayPal’s 2.9% amounts to $29, plus there is the fixed fee of 30 cents.

How to Avoid PayPal Fees

As a freelancer, if you can avoid PayPal fees (or lower them), then you can help your bottom line. Keep reading to learn 8 ways to decrease or avoid PayPal fees so you can keep more of your hard-earned money:

1. Opt to Be Paid Less Often

One way to lower your PayPal fees is to opt to be paid less often.

I have some clients who pay me weekly, some that pay me twice a month, and others that only pay me once a month.

There are a lot of benefits to getting paid more often, such as avoiding cash flow problems in your business. But, one major downside is paying more PayPal fees.

This is because PayPal not only charges you a percentage of the money you receive, but they also charge you a fee for every transaction.

The fee for each transaction is $0.30 USD, plus 2.9% of the amount you receive from U.S.-based clients.

For funds being received from someone outside the U.S., the fee for each transaction is 4.4% plus a fixed fee that varies depending on the country where the funds are coming from.

By opting to be paid only once a month you’ll avoid some of these one-time transaction PayPal fees. Yes, it’s only $0.30 per transaction, but savings is savings.

You just need to make sure your business can handle the change in cash flow that comes with only getting paid once a month instead of more often.

2. Change How You Withdraw Your Money From PayPal

How you take your money out of PayPal can be just as important as how you receive it.

To access your money fast and avoid PayPal fees, you should do one of two things.

Transfer Money from PayPal Directly to Your Bank Account

The most popular way to access your money is to transfer the money from your PayPal account to your bank account.

Standard Transfers have no fee to and funds are usually deposited in your bank account the next business day. This is an improvement as it used to take 3-4 business days for transfers. This is how I choose to access my money most of the time and how to avoid PayPal fees of any kind.

Or if you choose to do an instant transfer to your debit card or bank account, the fee is 1% of the amount transferred up to a maximum of $10. These funds are typically available in your bank account within minutes.

Request a PayPal Cash Card

If transferring the money to your bank account doesn’t work for you, you can request a PayPal Cash Card. This is basically a debit card for your PayPal account and will allow you to access your money right away.

This card has no fee for use at retailers that take Mastercards. You can also use the card at an ATM to withdraw cash — up to $400 each day. There are over 33,000 MoneyPass ATM locations where you can withdraw cash for free in the US. Using your card at other ATMs may result in fees.

3. Use Accounting Software to Lower PayPal Fees

I have been using FreshBooks for my accounting since 2015.

FreshBooks is an accounting software that has saved me tons of time and stress at the end of the month when I get ready to send invoices to my clients. Plus, FreshBooks Classic has an agreement with PayPal that saves me a ton of money on fees, too!

I currently spend $13.50/month on their smallest plan. But, the time and savings on PayPal fees more than pays for the cost of FreshBooks.

Related Post: FreshBooks: An Honest Review of My Favorite Business Tool

How I Save Money on PayPal Fees

FreshBooks Classic works with a PayPal pilot program to lower fees to a flat $0.50 per transaction. This means that no matter if you receive $20 or $5,000, the fee will be $0.50!

In order to take advantage of lower PayPal fees through FreshBooks, you and your client must both be located in the United States. You much also use PayPal Business Payments, and you must already have a FreshBooks Classic account.

UPDATE: You can no longer enroll as a new FreshBooks user and get a FreshBooks Classic account. However, FreshBooks still has a ton of other great features that make it a wonderful tool for freelancers!

Here’s how to connect your PayPal account in FreshBooks:

1.       Go to Settings in the top right corner
2.       Click on the Accept Credit Cards sub-tab
3.       Next to “PayPal” click on the blue “Activate PayPal” link
4.       Check the box next to “PayPal Standard” then enter your PayPal email address
5.       Hit Save
When you send an invoice, you must have the “PayPal Business Payments” box check marked on the invoices you send to your clients.

In order to avoid PayPal fees with PayPal Business Payments, your client must have a PayPal account, and they must pay your invoice via their PayPal balance or a connected bank account. (This is called an e-check.)

They cannot pay via credit card to qualify for PayPal Business Payments. If they pay via credit card, you will be charged a higher PayPal fee.

As mentioned, you and your client both have to be U.S.-based in order to qualify for the flat $0.50 fee on payments. So, if you have a lot of international clients, it won’t help lower fees for those payments.

How Much It Saves Me

When I first started using FreshBooks, it was saving me about $10/month (net) after paying for the cost of the program. (Meaning I was saving $10 in PayPal fees each month after the monthly cost of FreshBooks.)

But these days, I save around $360/month (net) on PayPal fees thanks to FreshBooks and PayPal Business Payments!

FreshBooks is definitely worth a look, especially because you can try FreshBooks for FREE for 30 days with my link!

Important Note About FreshBooks vs FreshBooks Classic

FreshBooks has changed to a newer version that no longer supports the $0.50 PayPal fee pilot program. If you have a FreshBooks Classic account, you can use this option as long as you don’t update to the new version of FreshBooks!

4. Ask to Be Paid as a Friend or Family

As I said before, whenever you receive money from clients, you’ll be charged a fee of $0.30 plus 2.9% of the amount. However, this is only true for money received for goods or services.

If your client opts to send you money via the friends or family option in PayPal instead, you won’t be charged a fee for receiving the money. The client also won’t be charged a fee to send money via this method either if they use their PayPal balance or a bank account, or a combination of both.

If your client sends money using a debit or credit card, they will have to pay a fee to send you the money. The fee is 2.9% plus a fixed fee based on location from this chart from PayPal.

How to Use PayPal Friends and Family

If you want to get paid via the friends or family option in PayPal, change how you send invoices to your clients. Instead of sending a PayPal invoice to your clients, which will automatically make the payment a business payment that is subject to the $0.30 plus 2.9% fee, send them an invoice via an accounting program or make one on a spreadsheet manually.

After sending your client the invoice, it does take an extra step for them to log in to PayPal and send money via the friends or family option since your invoice is not directly connected to your PayPal account.

Or if you still want to invoice via PayPal, you could also try asking them to make the payment via friends or family instead of paying directly through the invoice. Again, this would be an extra step for your client but it shouldn’t take long.

Risks of Using This Method

One risk for your clients is that they won’t have payment protection if they opt to send you money via the friends or family option. However, if you’re both comfortable with this method, it can be a good way to avoid PayPal fees.

Note also that there is a risk that you could possibly get into trouble with PayPal for using this method. If you are caught doing this for business payments that PayPal decides are not actual friends and family of yours, your account could be shut down. So use this one at your own risk!

5. Factor PayPal Fees into Your Payment Equation

A tip I’ve picked up that doesn’t really reduce your PayPal fees, but helps you to feel better about them, is factoring them into your payment equation.

For example, instead of charging your client $50 for writing a blog post, you could increase your rate to $55 per blog post. This will help you cover those fees so you are still making $50 after the fees are taken out of your earnings.

Another way to avoid PayPal fees is to ask your clients to pay the fees instead. Make sure you get this in writing as part of your contract. Then you can include a 34% fee at the bottom of each invoice to cover your PayPal fees.

Most clients are totally OK with this. You just need to ask!

6. Accept Other Forms of Payment

Of course, the easiest way to avoid PayPal fees is simply to request your clients use other forms of payment instead.

Many companies offer direct deposit. With this option,  you’ll be able to get paid just as quickly. Plus, you can avoid PayPal fees and transfer times altogether.

If direct deposit isn’t an option, you can always go back to an old standby method: a paper check. Getting paid via paper check will take longer, but there won’t be any PayPal fees.

Finally, if you use invoicing software like QuickBooks Online, you can accept ACH bank transfers, which has no fee!

Related Post: FreshBooks vs QuickBooks: A Comparison

7. Use a PayPal Alternative

PayPal is far from the only option for sending and receiving money for your work, so you don’t have to use PayPal. If you switch to a PayPal alternative, you’ll avoid PayPal fees altogether. (Though the alternatives may have some fees too, so watch that carefully.)

In addition to PayPal, I also have a Stripe account to accept payments in my business.

Related Post: 10 Best PayPal Alternatives for Freelancers

8. Include PayPal Fees as a Tax Deduction

Did you know you can deduct PayPal fees on your tax return? This won’t lower the PayPal fees you pay throughout the year. But, it will help you lower your tax bill so you can keep more of your money that way instead.

Just add up how much you paid in PayPal fees throughout the year and include that amount on your Schedule C.

Related Post: 18 Commonly Overlooked Tax Deductions for Freelancers

How are PayPal Fees Calculated?

The way that PayPal makes money is by charging a 2.9% fee from the total amount of each payment that is received from the U.S. In addition, there is also a $0.30 flat fee on each transaction.

For funds being received from other countries outside the U.S., the fee for each transaction is 4.4% plus a fixed fee that varies depending on the country the funds are coming from.

This fee is charged to the person receiving the money, not the person paying for the goods or services. This is similar to what happens every time you pay by card at a store. The store has to pay a fee for the “convenience” of being able to accept credit card payments.

PayPal Fee Calculator

Wondering exactly how much it’s going to cost you in fees to get paid via PayPal? Find out with this PayPal fee calculator.

PayPal Fees Calculator


PayPal fees current as of April 22, 2019


PayPal fees are so irritating to me. I hate it when I get paid for freelance work, only to have a chunk of my income taken away by PayPal fees. I understand they are a business and they have to make money too, but I still hate paying their fees.

Luckily there are several ways to minimize them, or even avoid them altogether. To minimize them you can be paid less often, use invoicing software that pairs with PayPal, or ask to be paid “Friends and Family”. 

To avoid them altogether you can be paid via other alternatives. 

Have you successfully avoided PayPal fees? What method do you use? 


  • Great strategies! I have clients who pay me all different times of the month as well and I’d rather just be paid monthly for the sake of simplicity and lower fees. I’ve heard so many good things about FreshBooks I don’t know why I haven’t jumped on the opportunity yet. It’s something I’ll need to do real soon.

    • I agree Chonce! I do like being paid multiple times throughout the month for cash flow reasons (so I can pay my bills, haha) but it does make the PayPal fees higher.

        • I would suggest fewer transactions since the fee for sending $100 would be the same as sending $1000! Also maybe trying out an accounting software.

    • I do have PayPal set up as a direct deposit into my bank account but recently had someone pay me and was charged a fee. Do they also need to be connected with the Friends and Family option in order for this to not happen? Iโ€™ve had other people pay me and have not been charged the fee. I know at least one of them is connected with the Friends and family.

    • PayPal now charges an additional 1% to just transfer the money in your account to your bank. Combine that on top of their other fees is ridiculous. If you use eBay that is almost 20% taken off between the two. Moving my stuff to another site.

      • Would you be so kind and share with us to which site you are moving the stuff? And why? I’m also looking for alternatives.

      • No it doesn’t. I do this once a week and if you choose the option that takes 1 business day, it will be free. If you want to do it instant, THAT’s where they hit you for 1%.

      • No that is incorrect. PayPal will charge the 1% only if you opt of instant transfer to your bank account via your debitcard. If you opt to transfer to your bank account it is free. This usually takes one day only.

  • I juuuust started using Hiveage for my invoicing. Now I might just change to FreshBooks. Time to do some quick math.

    Of course, the biggest problem are international clients. How do you usually accept payment? Just grit your teeth and use PayPal?

    • William, I don’t have very many intl clients, so I usually just use PayPal for those.

    • This is the one I’ve been waiting for! Will have to check out Freshbooks. And I do have a decent number international clients, Will. I haven’t figured out a better way than pay pal. If you do, PLEASE tell me!

      • Interesting that you guys have quite a few intl clients. I don’t, so I haven’t investigated how to lower intl payments fees. I’d be interested to hear if you guys figure it out though.

      • Transferwise is the best solution for people accepting payments from international customers. The exchange rate is the official Visa/Mastercard, with zero fees!

  • I definitely agree about trying to be paid less frequently (if your budget can handle it) and factoring those fees into your rates. Corporations and companies certainly account for all the fees they must pay and include that in their pricing; entrepreneurs and writers should do the same. Great points!

  • I think doing the math between paying for Freshbooks or paying PayPal fees is a great idea. I’d been meaning to do the math myself, but your free 30 days affiliate link is the push I need to do it! Also, I had no idea you could take out PayPal fees on your taxes. Awesome!

    • I’m glad this post helped you with some tips to lessen fees, or at least make them work for you on your taxes. ๐Ÿ™‚

  • This is a great tip sheet, especially the one about factoring the fees into your pricing. This will remind me to move it to the front of the process.

    • Yes, I think you should definitely consider fees when you are determining the price of your services.

  • Thank you so much for writing this!! I recently quit my job to become a freelance makeup artist & PayPal fees are hitting me hard!

  • Loved the article, thanks for sharing your tips & tricks on how to navigate/make the most of your money while using PayPal!

      • Pleasure help me
        I have a $60,000 America Dollars coming to me from Australia, it appears that they charge the same rate whether it be $100 $60,000. They do not have a sliding scare. I have never known a company that does not have a lower fee for larger amount especially one with this much money.
        I know this person and have dealt with him directly when ,was in the United states.

  • Kayla – First: Enjoy your blog; each time I read it, I hope my kids are keeping up with you.

    Second: this may be from the ‘just sayin’ department, (and old school) but there are no fees if you take payment from clients by check. Recognize there’s some risk, and you may want to restrict that to clients with whom you have a long-term, standing relationship and trust. I’ve never enjoyed paying credit card fees (which in over-the-counter retail can run nearly 6% sometimes), and appreciated getting a check I could deposit and be done with it.

    Keep up the good work,
    Patrick Toth

    • Hey Pat, the main reason I don’t take checks is because none of my clients are local and TBH – I don’t trust the mail system. With online payments, yes I have to pay a fee, but I don’t have to wait days and days to have clients write checks and mail them. Plus, most of my clients are in the generation that prefers to pay online – most don’t even carry or use checkbooks anymore. I do have a couple that pay by check or direct deposit, which is fee-free. ๐Ÿ™‚

  • Madam, I am Indian and I use paypal last 1 year, I am tired for paypal heavy fees. Kindly you suggest me how decreased fees.

  • PayPal charging ~5% looks like a major concern for me sometime, as i lose a lot of money over a span of 1 year. But on the other hand, i find PayPal so useful, Unlike Pakistan here in India we can use PayPal and receive money from overseas clients with so ease – i think they deserve it. The best thing we can do i guess is your top #1 : Get paid less often. I try to charge fees as a whole upfront fees, Thank you for the great article :))

  • It took me a while to get the hang of freshbooks following your recommendation but think I’m OK now. Looking forward to the savings!

    Also looking into the PayPal card.

    Thanks a bunch Kayla.


  • Hi!

    Your description about connecting paypal with Freshbooks (4. Use Accounting Software to Lower Your PayPal Fees) is nothing like what I see on the Freshbooks account pages.

    • Hey Rex! This was an offer that Freshbooks used to have. They no longer offer it on new plans, but I convinced them to let me keep mine. If you use my link, it should work that way!

  • $360 in savings per month from avoiding a 2.9% fee? That’s like 150K in just PayPal payments I’m impressed.

    Thanks for the tips. PayPal has been killing me lately and this has been helpful

  • Hey Kayla, thank you for your guide, please let me know if PayPal allows all this. I mean it’s legal, if I have many transactions there is no problem to pay just 0.5 per each one, and if someone send me 2000$ I will pay just 0.5$ ??

    • It’s definitely legal to use FreshBooks to decrease your PayPal fees.

  • Hi, I am based in the US but want to start pricing my European customers in EUR. I also want to receive EUR to my account in Germany rather than actually have PayPal convert back to USD. Is that possible?

    • Hi Terry! I’m not sure. You’ll have to check with Paypal, I believe they have a link to chat with someone about that! ๐Ÿ™‚

  • For every $100 CAD I send, I get charged $10 in fees as a friends and family.
    I cringe each time.
    Sending from New Zealand

    • WOW! I’m wondering if it’s the currency exchange rate and not necessarily a fee?

  • Hi Ms.Kayla,
    I’d like to asks help about Paypal concerns.The problem is she sent the payment through goods and services infact I don’t have any business .So as what she said there’s no option Send to Family and Friends on her Paypal. The payment is still Pending on my end. How can I claim the payment Ms? .Thank You .?

    • I’m not sure, you’ll have to contact PayPal and let them know it was sent through the wrong channel and that it was supposed to be friends and family. Good luck!

  • Kayla, Using the Family/Friends option won’t incur a fee only if the bill comes directly out of the client’s checking or savings account. If paying with a credit card, then the PayPal transaction fee applies no matter which option is used. I found this out the hard way when I used my credit card to pay for work done on my house and I ended up paying the transaction fees. Lesson learned.

  • It is currently against PayPal’s TOS to have the client pay the fees, or to ask clients to pay via Friends and Family when it was a business transaction.
    PayPal can (and will) freeze your funds if they catch you so I just wanted to put this out there as a precaution to those who want to try those methods.

    • Yes, I put that as well! Use your own judgment on those for sure, but the point is they can save you money.

  • Thank you so much, how do you choose monthly?
    I was also thinking to get e-commerce plan on wix, do you know if i still need to go through PayPal if i do that?

    • Hi Nineta! I’m not sure, I’ve never used Wix. I would check with them ๐Ÿ™‚ Good luck!

    • WIX will let you either get paid through PayPal or directly to your account through Stripe. It’ll depend on how your customer pays.
      Butttt, I would suggest Shopify over WIX any day!

  • I had price quote of 13400 for a product on eBay but instead of using PayPal I called the seller instead and bought the product for only 10850. no eBay or PayPal include, I received discount that away .greg

  • Hi Kayla thanks for the tips!

    I read this post a few days ago and have been searching for better ways to accept and send payment as I deal with a lot of international payments (and Paypal were starting to frustrate me – some of my payments after conversion were fees upwards of 8% by the time you account for the less than appealing exchange rates they provide).

    I suggest anyone reading this look into a company called Transferwise if they haven’t heard of it already. It may be just what you’re after (and may not depending on who your customers are)

    (I am in no way affiliated). Just a happy new customer. I still have Paypal for when its the only option, but the way Transferwise works is awesome.

    • Thanks for the tip Hayden! I’m sure that would be a perfect option for those who accept international payments!

  • Hi Kayla,
    Thanks for the post.
    For those sending money Internationally – XE money transfer has saved me a lot of money. They have the best exchange rates (so far 2% less than bank rates and PayPal) and ZERO FEES. Also when I made a mistake in a transfer they had excellent customer service.
    As Hayden says above I am a happy customer who compared rates and tried XE, I don’t have any affiliation.

  • You wrote:
    “If your client opts to send you money via the friends or family option in PayPal instead, you wonโ€™t be charged a fee for receiving the money.”
    OK; however, this way, as far as I know the client will then be charged a fee for sending you money via friends or family.
    Is there a way for him/her to avoid this fee?
    Thank you.

  • In response to ‘Greg hWke’ – eBay frowns on people who find something on their site and then go outside eBay and purchase the item directly from the seller. If eBay figures out that that is what you are doing, they will close your account (and the seller’s) and ban you both from ever using eBay again. As for the method of payment, while eBay pushes the use of PayPal, you can pay any any way the seller agrees to accept payment. Cheating is not a great way to avoid fees!

    • I don’t really sell on eBay, but this is good to know for those that do! Thank you!

  • If the buyer of your services agrees to pay the Paypal fees, Paypal shouldn’t really care since it doesn’t affect the amount of fee they receive. Since they apparently do care, there is an easy solution. Add a “service charges” to you invoice for an amount similar to the amount of the fee. If the client owes you $1,000, add $31.50 in “service charges” to your bill. Just make sure your client agrees.

  • It is pretty obvious that many of the people commenting on Paypal fees have very little understanding of business. There is a concept in business called “the cost of doing business”. Paypal fees would be included in the CDB; just like renting office space, postage, utility bills for the office, employees, etc.

    Every time you use a credit card, the merchant pays Visa or Mastercard 3-5% of the amount of the sale. That is part of the merchant’s “cost of doing business”. If paying 3% to Paypal gets you $1,000 worth of business, you’d be nuts not to do it.

    Having said that, another method for bypassing Paypal fees would be to see if your client can pay you through an ACH transaction. When you write a check, the funds are actually transferred between banks using ACH transactions. I haven’t been paid that way in a while, but when I did get payments through ACH, the fee was 10 cents per transaction

    As for getting paid monthly instead of weekly to save 90 cents in fees??? Again, that’s nuts. I would always pay 30 cents a week to get my money now rather than weeks from now. Businesses, especially online businesses, go belly up all the time. Thirty cents is a teeny-tiny price to pay to know your money is in the bank.

  • I wish I could use FreshBooks but I live in Poland, so it’s no use to me :<
    Great article still. Pretty obnoxious how PayPal gets away with these fees, considering they're the most robust service out there. Still it's better than having to force your clients to type in your bank account credentials each time they commission you.

  • I wish the Paypal Debit card was available in more countries in the EU. Currently it’s only available in the UK as far as I know.

  • You can use Revolut which is expanding pretty fast worldwide. They also have a mastercard and you get your money fast if you have a revolut account (no fees, no time to wait, access the money right away and spend them in 132 currencies). I am very happy about it. PayPal is eating a lot of money and time.

  • Hi Kayla ๐Ÿ™‚

    I cannot for the life of me figure out how to change how often I get paid by PayPal. I want to change this to what you recommended (to be paid only once a month) but all my googleling on how to do this has got me nowhere. Wondering if you could tell me how.

    Thanks so much!

    • What do you mean? Does PayPal have an automatic set-up for you? I just request the money to transfer to my bank when I’m ready. ๐Ÿ™‚

  • Hey! Cool post! ๐Ÿ™‚

    I have one question, though. I am not a US citizen, thus my Paypal could operate solely using my credit or debit card but not my bank account. so when receiving payment from the States, I am charged THE flat fee+ the percentage+ the conversion fee.
    Is there any way using the suggested invoicing can affect the currency conversion fee?
    Because, all together, I end up losing probably around 6.5% of the whole amount! Quite a bit…

    Thanks in advance ๐Ÿ™‚

    • In your case, PayPal may not work for you. I don’t know of a workaround with that.

  • Thank you for these insights! I don’t have a ton of transaction fees with my business, but I have some. I’ve been thinking about switching from my current accounting software, https://www.1099-etc.com, and it didn’t occur to me I could also save on transaction costs with FreshBooks.

  • Actually, coming in November, Paypal WILL charge a 1% fee to transfer funds into your bank account–another rip-off that’s making it increasingly difficult to sell on Ebay.

  • If I use my Discover card to pay for shipping vice Paypal do I avoid the PP fee? Thanks

  • I can’t seem to link my paypal to freshbooks. I would love to pay for the services of freshbook rather than to have it be consumed by paypal. illogically

    • Freshbooks has an AMAZING support team. Reach out to them and let them know, I’m sure they’ll be able to help you!

  • Nice review. Now, I understand how to have less fee than before. Thank you so much Kayla. All the best for you!

  • Using my personal account (the only one I have) I recently sent my sister-in-law a friends and family request for money for something we had arranged. She paid me and I was charged a fee. Any insights into why that happened and how I can make a correction for the future?

    • I’m not sure. Are you in a different country? I’ve never had that happen before. I would talk to PayPal and see if they can help you!

  • Simply add 30ยข to the amount you need to receive then divide that by .971 for domestic or .956 for international. The result is what you charge the customer or client. You will get the exact amount you ask for to the penny!

  • The only problem, I have seen, with clients sending money through friends and family is that they are responsible for the 2.9% plus .30 fee per transaction. Is this correct?

  • Alternatively you can just use a service like Transferwise’s Multicurrency Account and receive USD to a virtual USD account, GBP to a virtual GBP account or EUR to a virtual EUR account.
    And with their debit card… you can spend whatever currency you have in your accounts with 0 fees or convert a currency to another with minimal fee on the fly.

    Use my referral link to register, and earn credits on your future transactions: transferwise.com/u/gianfrancop2

  • I think there are a lot of limitations of how friends and family payments work. Also, it’s sad the Freshbook does not offer the flat charges anymore.

  • I quote service charge to clients like this :- “$60 + Paypal fee”. I also let them know that they can avoid the fee if they pay via friends and family option. Clients almost always choose friends and family option ๐Ÿ™‚

  • Thanks for the post, you answered my question. Honestly speaking I find the fees to be quiet hefty. I will definitely look into some of the alternatives mentioned here and research some others too.

    • I agree, they can get really hefty, especially when you charge more or multiple times. Hope the alternatives work for you!

  • I read your comments and found it quite interesting that you’ve responded to each one. Very good information and great job keeping up the post!

  • Read full guide, and have no words to say, especially for “ask to send the payment as Family & Friends”. If sender will open a claim and escalate it to the PP directly, there are a risk to get your PP account suspended… So be careful with this, don’t play with fire, 2.9% it’s so big fee, look on the others, like skrill, liqpay, they get 5-10% fee from the any withdraw to ur bank account/card.

    • That is true. I haven’t had anyone open a claim on me (knock on wood), so for me, it hasn’t been an issue. But yes, be careful!

  • Hello Kayla,
    You are doing a great job ๐Ÿ‘
    Where can I find how to pay to โ€œfriends and familyโ€? I can only find to pay โ€œgoods and servicesโ€.
    I live overseas but I have a US account and when I pay thru Paypal to another US account the charges are different than 2,9% minus $0,30. Does PayPal have a published rate somewhere?
    Take care and best regards

    • It seems as if it’s different if you live overseas. I suggest looking it up and seeing how you can secure that. I’m in the US so I’m not entirely sure how it works if you aren’t!

  • Great article, but I don’t understand why not just withdraw PP funds right into your bank account to save on the fees. Am I missing something? Is there a benefit to using PP to make payments instead?

    • Hey Kathleen! The fees are taken out as soon as someone pays you (unless it’s via friends and family). However, yes, transferring to your bank account is free.

  • The comment from the man in New Zealand having to be large money exchange fees came up with my very first client. At least 50% of my business is with a client outside the US. After that first chunk of paypal conversion fees hit, I now do a price quote in United States Dollars USD. The currency conversion fees are paid for by the client.
    I was upfront about my price quote and not a single client has said a thing. I think not having someone on staff do the work (eliminates some taxes, no paid vacation, no retirement, etc.) is a big factor for the client.
    I do my work for them in the US, they understand I want to be paid in USD.

  • I got a charge on credit card that says PayPal Google ultimate San Jose California is it PayPal charging me for the stuff purchased on Ebay an other sites?

    • I’m not sure. That’s something you’ll have to reach out to them about!

  • Hi kayla
    Is there any other way then the pp for inter and us clinets payment

      • We have added Stripe to receive credit card payments. Fees are better than PayPal. The new PayPal refund policy for 2019 makes me consider to even completely remove paypal from our shop. PayPal will not refund fees for refunded payments. That’s insane. Effective in US as per today, rumours have it same will happen to European payments in June 2019.

  • Thank you so much for your precious knowledge , I want to ask that is there any limits of rate when our customer choose the option of friends or family while transferring money to us ? Please let me know and also how to get certified clients on freelancing as There are many skilled person I know but there skills were not utilized because they failed to get freelancing work even as a scrap writer so please share your experience regarding your work too !!!
    Thank you (^^)

    • You’ll have to look at PayPal policy on that to confirm, but I believe it’s around $500. Also, I have quite a few free blog posts on here talking about freelancing, check those out!

  • Thanks a lot Kayla for sharing your experience with all of us.
    I have recently wired money to my relative in US (from India) via PayPal and was trying to figure out if there is any fees which PayPal might charge my relative when they transfer money from there PayPal account to a Chase account based in NYC.
    Can you please let me know basis your experience if PayPal might charge my relative any additional money in such a scenario?

  • The recent fee increases at PayPal are due to the fact that it was bought by venture capitalists, and as we know, such people ONLY care about money. The first thing they did was to move customer service to the Philippines. Then they started raising fees. High-volume sellers used to pay 2.8%, but now everyone pays 2.9%. If you refunded money to a customer, you used to get ALL your fees back. Then they started keeping the 30-cent fee, and starting in May they will keep ALL fees. I have already talked to a lower-ranking person at PayPal who says that if there is an accidental double-payment, they MAY refund the fees for the double-payment (if you ask them). But frankly, all of this sucks. It’s obvious that the investors who bought PayPal are part of the wealthy 1%, and I resent giving them more and more money to run my business. Fortunately, I am phasing my business out. The real problem is that PayPal has no real competition — heaven knows why.

    Unfortunately, getting paid less often will only save you 30 cents for each payment you consolidate. Is it really worth the risk getting your payments later in order to avoid 30 cents? As for the way you withdraw money, I always transfer it to my bank or use my PayPal debit card. I predict, however, that PayPal will begin to charge for transfers to your bank. I also predict that the 2.9% will go up soon. PayPal’s new owners appear to be very greedy.

    The posts from other people reveal some misunderstandings. For example, Friends & Family transactions are not free to other countries. When I sent $10 to someone recently, there was a flat fee of $5. Now, however, I think they have changed that to a percentage. When you receive a business payment from someone in another country, 1% is added to the 2.9%, making it 3.9%. Someone said that they were being charged 1% to transfer money to their bank — that charge is only for a super-fast transfers that show in your account within hours. The usual transfer method is still free (for now).

  • I want to know if someone send me money from BVI based Paypal to my UK Paypal Account what would be the conversion and processing fee for that?

  • You’re finding PayPal fees annoying but it IS a business that provides a service. So I don’t feel that we should expect to get something for nothing. You would expect to get paid for your services as well. You must have a high volume of sales if you pay so much in fees. I haven’t added up my monthly fees but it seems reasonable overall.

  • Hi, Kayla! Thank you for such an informative post! I have a question, four years later. ๐Ÿ™‚ I am setting up QuickBooks Online, but I see there’s a 1% fee (up to $10) per ACH payment you receive from a customer. Is that what you’re seeing, too? I am not sure if it’s possible to invoice a customer monthly without incurring that fee.


    • Yes, that includes a fee. There’s no way around it, unfortunately!

  • OK, trash that last post, and kudos to you for maintaining a site that doesn’t use junky software that gets in the way of posting and replying to comments. Here’s the real comment:

    You recommend using Friends & Family to avoid Paypal fees. They have made some changes and now a fee is charged to the sender, though not a full 2.9%. I think it varies depending on whether the remitter is foreign. You might want to look into this and update the article.

    More important, I believe Paypal terms do not actually permit business accounts to solicit payments this way and they COULD shut you down, with or without a refund of your balance.

  • I’m in an “old school” business with high-dollar, low-volume sales, and mostly middle-aged or elderly clients, and a high degree of trust between seller and buyer. Wire transfers and checks are still common and I encourage them because zero fees. Online transfers (between same-bank clients) and Zelle (across banks), both zero fee, are becoming more common. I find that people using Paypal are generally more lacking in trust than credit-card payers, and chargebacks more common. Also, my credit card processor (via Costco) has a fixed 1.9% charge for VISA, but Mastercard can go up to 3.65% so I always ask for VISA over Mastercard.

  • I understand the wish to avoid paying fees, but would you provide a service and NOT charge for it? Whether you sell online or in person, if a credit card is used for payment the seller will pay a bank fee. Why would a bank provide you a free service? It doesn’t matter that they don’t “need” it , in your opinion, if they provide a service they’re entitled to be paid for it. Period. Paypal is providing a payment platform so they charge a fee for you to use their service. It’s the price of doing business. And it’s tax deductible. Accepting payment as friends and family is great until the first time something goes wrong, then the buyer has no recourse. You want happy, repeat customers so do what’s best for them, provide detailed invoicing which gives them some protection. It’s a small price to pay in the long run.

  • I tried to opt-in to receive payments once a month to avoid fees. There is no option to do so. I called customer service and they say they never heard of it. Any specific directions to apply this change to ones Paypal?

    • You would either need to invoice once a month or just not take the money out except for once a month.

  • Thank you for sharing, why can’t paypal just lower their fees. Some time, I work so hard to earn a 10% margin and they are taking away 3 to 4%. How I wish my business is Paypal.

  • I transferred my PayPal balance to my bank and I was charged $1. I know that’s not a lot but if it accumulates that’s still a big sum of money. I saw in your post that PayPal didnt charge you for transferring money? Would u know if its because im paid from the US and my bank is here in n the Philippines?

    • Could be. They typically charge for bank transfers in other countries.

  • Last few times I used it there are still fees on friends and family tried sending g 600 to a friends and they still wanted to charge the fee ? Why is that ?

  • Thanks so much for the information! These fees are so annoying. Anything can do to save money can really be of assistance to raise profits. My readers really will enjoy reading this as it can be so useful!

  • best content guide. this is a big help specially those who start their small business. money is money and even 0.1%, in the long run, will affect because number don’t lie.

  • Hi! great post, though I have a question. It is legal to charge the fees to the clients? I think Paypal prohibits that, if not that would be awesome for my business. I have an online store and Iยดm thinking to intall a plugin that charges an extra fee in the cart, but people told me that Paypal doesnt allow that and they could close my account if they find out. Do you have info about this? Whatยดs your experience on this and would you recommend?
    Thanks in advance!

    • You’d have to check with the plugin creator and read the PayPal rules for yourself.

    • We offered the option to clients to pay our invoices using their credit card if they are willing to accept the standard Visa 3% processing fee. Mastercard and Amex charge higher percentage so would need to charge higher in that case.

      I have discovered that it was the credit card companies that prohibited merchants from passing on processing fees to clients. Our CPA advised that we build these processing fees into our price and as seller, we cover the processing fee for the client should they wish to use their credit card or use another method. This is the best way to avoid getting into trouble with credit card companies and any other payment processing companies.

  • Hi I have also a problem with! transfer fee..I opened PayPal for personal and not for business purposes, how to change it please. And can the sender get back the transfer fee? Coz I returned the money to the sender thru full refund option but minus the fee! Knowing that they I can only take the money after 5 to 7 days and I need that money this week. So that is what I did. Please help me with this matter. I will really appreciate it and thank you so much!

  • Wait a minute! Am I understanding you correctly?
    Is it cheaper to say wait at the end of the week to transfer the total of multiple invoices at once into my bank?
    Every time someone pays an invoice I immediately go and transfer it into my bank?

    Thank you for the input

    • If you’re using a specific service or depending on your bank, it could be cheaper to take it all out at one time. That’s something you’ll need to check.

  • Kayla, PP never charged you for bank transfer because you are US citizen, located and created account in USA and withdrawing $ to US bank.
    Try euro or pounds or anything else, it not only charges conversion attrocious fees but also charges for bank withdrawal by %, then your bank also charges , then they convert by the bank and you wait 3 to 5 days. Also if you send dollars to account created outside US there is an international PP fee.
    It is cringy ,evil PP Use Revolut,transferwise,paysera,monzo,monese & etc

  • Hi Kayla, thanks for your info! I’m trying to send money to a family/friend in Europe. Paypal is charging me $4.99 for sending USD with my checking bank account. Any idea why it would be charging me that fee? I’ve reached out to them but heard nothing. Thanks!

  • My small business boss pays me through PayPal and I get charged 1% every time I transfer that money to my bank account. I don’t see that type of fee mentioned in your post. Do you know of a way to avoid this? What do you know about Venmo? Does it have a similar charge?

  • Why does anyone even use this money stealing machine?
    Send your money by bank transfer and you pay nothing !

  • I have a question, I live in the UK and I have the possibility to withdraw $7.39 which would be handy right now as the banks are shut over new years period where I live, would it charge me $20 just to withdraw the $7?

  • Seriously hate PayPal fees too. Just went to transfer $2,400 to a CAD account and they are going to charge me about $100 to do that (in the exchange rate)I really recommend TransferWise, but getting clients to switch over isn’t always easy. Urgh!

    • For me, the biggest fee is the ridiculous conversion rate. Losing hundreds of dollars because of it. ๐Ÿ™ So direct bank transfer is actually REALLY expensive.

  • They removed the 1% only transfer fee to card. It’s now back to $5 per transaction. ๐Ÿ™

  • If someone pays you multiple times a month it’s insane to not just let them transfer the money for free via ebanking.

  • One major mistake about asking your customers to send you payments as friends and family…its not only the customer that isn’t covered, it’s also the merchant. Here’s an example, if your customer buys a product or a service from you and you ship it or render the service, they can still go to their bank and say they didnt make that purchase. Now you are out of that money plus 25 bucks for the chargeback fee. Happened to me personally, I was out 325 bucks for a photoshot I did. Doing family and friends can be costly in the long run.

    • That’s a great point, Pedro! Always good to be careful and cover all your bases!

  • Has anyone tried to send paynow-link (Stripe) link for payment?
    How is it?

    • I haven’t used it either! Maybe someone else can chime in about that. ๐Ÿ™‚

  • Thank you for the information! I have decided to be very up front with my buyers on an up and coming group crafts site. I HAVE to offer paypal, but am allowed to offer other methods, too. I spoke with another vendor and she has a flat $5 fee to use paypal verses other methods. She says a LOT of people do NOT like paypal and opt for the other methods, i.e., personal check that must clear before item(s) are sent, cashier’s check, money order.

    • It’s great to be upfront and honest right from the get-go!

  • Paypal takes fees when money comes in
    then when I want to withdraw USD to US bank they want another 3% (as an alternative they offer conversion to my country currency for 2.50%)
    I still offer Paypal to my clients but with note ‘Last resort!’ in payment method listbox.

    • Having payments in a listbox and listing a “last resort” listed is a great idea! Thanks, Adrian!

  • I have a UK PayPal Account . but most of my client is US base. So the payment from USA to UK account the charge is two high i think, USA to USA charge is same . or I need USA account save my money.

    this think i lost lot of paying charge . any suggestion for me.

    • Unfortunately I don’t think there is a way to avoid those fees. If anyone else knows, feel free to chime in!

  • I used to have a PayPal account several years ago when I bought things from Ebay. I can’t remember ever paying a fee, but I stopped using it and my account got closed down eventually. Fast forward, and I made a business deal where I would get paid for it. The buyer was not “local” and asked if I used PayPal, so I restarted my account. When the money got to me via by bank, I saw “THE FEE” and was a little surprised, and started thinking why was I paying this fee, it ought to be the guy at the other end’s responsibility, maybe. Now I’m thinking of adding the fee to the money owed to me, like the big credit cards do, and let the sender pay that fee. Unless they make a fuss, like I usually do when my credit card tries to stiff me!!
    This article was very helpful. Gave me something to think about.


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