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7 Easy Ways to Decrease or Avoid PayPal Fees

August 1, 2018

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There are so many good things about getting paid to write for blogs that it’s nearly impossible to name the bad.

Seriously, I love working my freelance business that much. (I mean I better since I quit my job to pursue it full-time, right?!)

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

What Percentage Does PayPal Charge?

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

This is for each transaction in the United States. Fees for foreign transactions may be higher.

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.

Why I Hate PayPal Fees

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

For the longest time, I wondered if there were any legitimate ways to help decrease PayPal fees so I could keep more of my freelance income. After a year of working my business online, I’ve come up with a few strategies to decrease my PayPal fees. Now I’m sharing them with you so you can keep more of your money too!

Here are 7 ways to decrease or avoid PayPal fees.

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 of getting paid by your clients more often. Getting paid more often can help you avoid cash flow problems in your business.

But, one major downside of getting paid more often 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.

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 Take Your Money Out of PayPal

After you get paid in your PayPal account, how do you take your money out? If you request a paper check from PayPal, you’ll be charged another fee of $1.50. To access your money faster and avoid this fee, you should do one of two things.

Request a Free PayPal Debit Mastercard

Having a PayPal Debit Mastercard will let you access your money right away.

This card has no fee for use at any retailers that take debit cards. You can also use the card at an ATM to withdraw cash  up to $400 each day. But, using your card at an ATM may result in fees.

Transfer Money from PayPal Directly to Your Bank Account

This method of accessing your money has no fee. Plus, PayPal has also sped up the amount of time it takes to transfer money into your bank account. It used to take up to 34 business days, but now they estimate that funds should arrive in 1 business day.

This is how I choose to access my money from PayPal most of the time to avoid fees of any kind.

3. 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.

If you want to get paid via the friends or family option, 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 another program. (I use FreshBooks Classic!)

It does take an extra step for your client 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.

If you 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.

The other downside for your client is 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 save money on PayPal fees.

4. Use Accounting Software to Lower Your PayPal Fees

I have been using FreshBooks Classic for my accounting since 2015. I used to do all of my finance tracking manually, but now that I’ve started using FreshBooks, I’ll never go back.

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

FreshBooks 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, their agreement with PayPal saves me a ton of money on fees, too!

I currently spend $9.95/month for their smallest plan. But, the time and savings on PayPal fees more than pays for the cost of FreshBooks.

Here’s How It Works:

FreshBooks Classic works with PayPal via PayPal’s 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 must use PayPal Business payments.

First, you have to connect your PayPal account in FreshBooks. Here’s how:

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 this check marked on the invoices you send to your clients as one of the payment options they can use to pay your invoice.

Your client must have a PayPal account, and they must pay 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 fee.

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. These days, I save around $360/month (net) on PayPal fees!

FreshBooks is definitely worth a look to avoid PayPal fees. 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. However, I have specifically asked to have my link point to FreshBooks Classic. This way you can still take advantage of this program to lower your PayPal fees.

If you sign up with my link and do NOT get into FreshBooks Classic, please email me! I will connect you directly with my friends at FreshBooks to fix the problem. You also cannot update to the new FreshBooks after you sign up for FreshBooks Classic if you want to keep the $0.50 payment option!

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 a blog post, you could increase your rate to $52 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. Include PayPal Fees as an Expense on Your Tax Return

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.

7. Consider Other Payment Methods

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

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.

The bottom line is, you deserve to keep as much of your hard-earned money as possible instead of giving it over to PayPal in the form of fees!

Do you have any other ideas for lowering your PayPal fees?


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87 responses to “7 Easy Ways to Decrease or Avoid PayPal Fees

  1. 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.

    1. 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.

  2. 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?

    1. 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!

      1. 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.

  3. 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!

  4. 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!

  5. 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.

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

  7. 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

    1. 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. 🙂

  8. 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.

  9. 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 :))

  10. 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.


  11. 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.

    1. 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!

  12. $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

  13. 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$ ??

  14. 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?

  15. 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

  16. 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 .?

    1. 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!

  17. 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.

  18. 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.

  19. 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

  20. 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.

  21. 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.

  22. You wrote:
    “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.”
    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.

  23. 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!

  24. 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.

  25. 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.

  26. 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.

  27. 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.

  28. Hi Kayla 🙂

    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!

  29. Hey! Cool post! 🙂

    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 🙂

  30. 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,, and it didn’t occur to me I could also save on transaction costs with FreshBooks.

  31. 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.

  32. 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

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