Reviews & Comparisons
PayPal Fees for Merchants: Full Breakdown & Alternatives
20.05.2025
Accept Online Payments with Noda
Please note that the information about the companies in this article was sourced from their respective websites as of May 2025. This information may be subject to change.
PayPal is a digital wallet that’s popular for a reason—it's easy, trusted, and widely used. But for merchants, that convenience comes at a price.
Between PayPal fees for transactions, currency conversions, chargebacks, and hidden extras, a significant chunk of revenue quietly disappears each month. For low-margin or high-volume businesses, the impact is especially sharp.
The good news? There are smarter alternatives that don’t compromise on user experience or security—and could help you keep more of what you earn.
What Are PayPal’s Rates and Fees?
PayPal may seem straightforward, but its pricing is anything but. Beyond the standard transaction fee, there are layers of hidden PayPal costs—international surcharges, currency conversion markups, payout fees, and dispute charges—that can quietly eat into your margins.
Standard Domestic Transactions
Below are PayPal’s merchant rates for standard domestic transactions for the UK market, depending on the payment method.
Guest checkout means someone is paying through PayPal, but they don’t have (or don’t log into) a PayPal account. Instead, they just type in their credit or debit card details at checkout and the payment goes through PayPal gateway.
QR transactions mean payments initiated by a PayPal-issued QR code; alternative payment methods include digital wallets such as AliPay and Apple Pay. Meanwhile, card payments are included in “all other commercial transactions”.
| Payment type | Fee |
| Guest checkout (without a PayPal account) | 1.2%+£0.30 |
| QR transaction under £10 | 2%+£0.05 |
| QR transaction above £10 | 1.5%+£0.10 |
| All other commercial transactions | 2.9%+£0.30 |
| Donation | 2.9%+£0.30 |
| Alternative Payment Method (APM) | 1.2%+£0.30 |
Fixed Fee
Note that the £0.30 is a fixed fee different in each currency. For example, for EUR transactions it amounts to €0.35. Fixed fee is also different for QR codes below and above £10.
Standard International Payments
PayPal charges additional fees for international payments. This fee is added on top of the above fees for different types of transactions, depending on the region of payment.
| Region | Additional fee | Final fee (for ‘all other commercial transactions) | Final fee (for guest checkout) |
| EEA | 1.29% | 4.19%+£0.30 | 2.49%+£0.30 |
| Other | 1.99% | 4.89%+£0.30 | 3.19%+£0.30 |
Apart from transaction fees, PayPal also charges a currency conversion fee—3% above the exchange rate. Overall, international payments are very costly with PayPal.
Learn More About Open Banking with Noda
Payouts
There are also PayPal merchant charges for payouts, which are essential for businesses such as marketplaces and gig-economy platforms. Here are the PayPal payout fees.
| Payout type | Fee |
| Domestic | 2%, capped at £10 |
| International | 2%, capped at £60 |
Like with the fixed fee, the cap fee is different for each currency.
Additional PayPal Merchant Fees
Of course, transactions aren’t the only thing PayPal charges for. Additional features—like advanced fraud tools and chargeback protection—come at an extra cost. Chargebacks and disputes also incur separate fees.
| Type | Fee |
| Advanced fraud tool | £0.20 per transaction |
| Chargeback protection | 0.59% per transaction |
| Chargeback | £14 per chargeback |
| Dispute | £12 per dispute |
| High-volume dispute | £24 per dispute |
Read: How to Reduce Chargebacks
PayPal Online Card Services
PayPal offers online card processing services. This is for businesses that want to accept card payments directly on their website, via PayPal. In other words, this is PayPal’s card payment gateway product. On top of the transaction fees, the wallet charges a monthly PayPal merchant services fees, depending on the products you’re using.
- Website Payment Pro plan is £20 per month
- Virtual terminal comes at £20 per month
- Recurring payments cost £20 per month
Below are also PayPal’s merchant processing fees that’d be added on top of the monthly fee.
| Payment type | Fee |
| Cards (Visa, Mastercard, China Union Pay, Diner and Discover card types) | 1.2%+£0.30 or 3.4%+£0.30 for Website Pro package |
| American Express | 3.5% |
| PayPal Express Checkout | 2.9%+£0.30 |
| Virtual Terminal using Express Checkout | 2.9%+£0.30 |
How PayPal Fees and Charges Add Up
PayPal’s fees can quickly eat into profits—especially for businesses with thin margins or high-volume transactions.
For instance, if you process £10,000 in monthly sales through “all other commercial transactions” (the standard 2.9% + £0.30 fee), you’d be paying around £320 in fees right off the bat. That doesn’t yet include:
- International sales: Add up to 1.99% more.
- Currency conversion: Add 3% above the base exchange rate.
- Payouts: Another 2%, capped per payout.
- Chargebacks or disputes: Fixed £12–£24 fees, plus protection fees if opted in.
On top of the cost, there are UX drawbacks. Customers without a PayPal account hit login walls or default to guest checkout, which adds friction. Payouts can also be delayed, depending on bank processing times—something critical to consider in fast-moving sectors.
Eliminate PayPal Fees with Pay-by-Bank
PayPal might have strong brand recognition, but under the hood, it comes with high fees, slow payouts, and multiple intermediaries slicing into your profits.
Pay-by-bank, run on open banking, is a smart alternative. It removes card networks and wallet providers entirely from the payment flow, offering a fast, secure, and direct bank-to-bank payment. No card processing fees, no PayPal logins, no settlement delays.
Here’s how it works:
- At checkout, your customer selects pay-by-bank
- They choose their bank (for example, Noda connects to 2,000+ across across 28 countries the UK and Europe)
- They approve the payment in their banking app using Face ID, fingerprint, or passcode
- The money lands in your account instantly
Open banking is fully regulated under PSD2, and it runs on secure, bank-grade APIs. It’s the preferred payment method of a growing number of customers—14+ million users in the UK and 63+ million in Europe are already on board, especially among Millennial and Gen Z shoppers.
Read: PayPal Alternatives for Business Payments
Why Open Banking Works Better Than PayPal
- Lower fees: No intermediaries like card networks or wallets means more money stays in your business.
- Instant payouts: Funds land in your account immediately, improving cash flow and reducing reliance on payout schedules.
- Superior UX: No logins, no PayPal accounts—just a quick bank app approval with Face ID or fingerprint.
- Stronger security: Runs on secure, regulated bank APIs with built-in multi-factor authentication.
- Less chargebacks: Bank payments are final, so there’s no risk of revenue loss from disputes.
How to Add Pay-by-Bank with Noda
Say goodbye to high fees and chargebacks. With Noda, you can start open banking payments across the UK and Europe—no cards, no logins, no delays. Plug it in your way:
- Want full control? Build a custom checkout with our Open Banking API.
- Prefer speed? Share instant payment links or QR codes with a pay-by-bank checkout.
- Using an e-commerce platform? Just install our e-commerce plugins and go live fast.
Smarter payments, built for how you do business.
FAQs
Does PayPal charge fees?
Yes, PayPal charges various fees for transactions, payouts, currency conversions, chargebacks, and more. These fees can quickly add up, especially for businesses.
What are PayPal fees?
PayPal’s standard transaction fees range from 1.2% to 2.9% + £0.30 for domestic payments. Additional fees include up to 1.99% for international payments, a 3% currency conversion fee, 2% payout fees, and fixed charges for disputes and chargebacks.
Does PayPal have international fees?
Yes, international transactions incur an additional fee of 1.29% to 1.99% on top of standard rates, depending on the region. Currency conversion also adds 3% above the exchange rate.
How do I avoid PayPal fees when sending money internationally?
To avoid PayPal’s high international fees, consider using pay-by-bank solutions like Noda. These offer direct, bank-to-bank payments with no card or wallet fees, no currency markups, and faster settlement.
Do PayPal invoices have fees?
Yes, when customers pay a PayPal invoice, the same transaction fees apply as with standard commercial payments—typically 2.9% + £0.30, plus any applicable international or currency conversion fees.
How much are PayPal fees?
PayPal fees vary depending on the payment type and region. For most standard UK commercial transactions, the fee is 2.9% + £0.30. International payment fee can increase up to 4.89%+£0.30.
