Does PayPal Charge a Fee for Nonprofits?

PayPal serves as a widely recognized platform for charitable organizations to collect online contributions. Understanding its fee structure is important for nonprofits to manage financial resources effectively. The platform offers specific account types and discounted transaction rates for eligible charities.

Understanding PayPal Accounts for Nonprofits

Nonprofit organizations must establish a PayPal Business account to receive donations. This account type provides access to features and a fee structure suited for organizational use, including potential reduced transaction rates. During setup, accurately designate the account as a “Nonprofit Organization” and select “Nonprofit” as the category.

Setting up this account requires detailed organizational information. This includes the organization’s registered legal name, physical address, and Employer Identification Number (EIN). Details of the primary account holder, such as their email address, job title, date of birth, home address, and Social Security Number, are also necessary. Linking the nonprofit’s bank account enables transferring collected funds to the organization’s primary bank account.

Qualifying for PayPal Nonprofit Rates

To access PayPal’s reduced transaction rates, a nonprofit must undergo a verification process to confirm its charitable status. This typically requires the organization to be a registered 501(c)(3) charity recognized by the Internal Revenue Service (IRS). Without this confirmed status, the organization will incur standard business transaction fees, which are higher.

The application for discounted rates involves submitting specific documentation. Required documents commonly include the IRS 501(c)(3) determination letter and the organization’s EIN. A copy of a recent bank statement or a voided check for each linked bank account is also requested to verify banking details.

PayPal may request additional supporting documents, such as a letter of authorization on the organization’s letterhead or proof of business registration. The verification process also confirms the individual setting up the account is an authorized representative. Discounted rates apply only after email confirmation of the charity’s verified status.

Standard Nonprofit Transaction Fees

For eligible nonprofits that have qualified for discounted rates, PayPal applies a specific fee structure to incoming donations. As of 2025, the standard rate for confirmed charities in the United States is 1.99% plus a fixed fee of $0.49 per transaction. This rate is a significant reduction compared to standard commercial transaction fees, which are typically 2.89% plus $0.49 per transaction.

This fee applies to most online payments received by the nonprofit, including one-time and recurring donations made through various PayPal products like donation buttons or direct links. The fixed fee component of $0.49 is based on the currency in which the donation is received.

Additional Fees for Nonprofits

Beyond standard domestic transaction fees, nonprofits may encounter other charges. International donations typically incur an additional fee of 1.50% on top of the standard nonprofit rate. The fixed fee component for international transactions can also vary by country and currency.

Nonprofits also face chargeback fees, which are penalties imposed when a donor disputes a transaction. PayPal charges a Merchant Dispute Fee to manage this process; this fee can be fixed or vary by the organization’s dispute rate. These fees are assessed in addition to the original transaction amount that is reversed.

In cases where a refund is issued for a direct PayPal transaction, the original transaction fee paid by the nonprofit is typically not returned. Additionally, if a nonprofit manually enters credit card details, such as through the PayPal Zettle app, higher percentage fees, potentially around 3.49% plus $0.09, may apply.