Who Pays the Fee on PayPal: The Sender or Receiver?

PayPal is a widely used platform enabling individuals and businesses to conduct transactions globally. Understanding associated fees is a common concern. Fees cover operational costs, security measures, and platform maintenance. This article clarifies who typically bears these fees across various PayPal transaction types.

Determining Who Pays the Fee

The responsibility for PayPal fees depends on the transaction type. Payments are categorized into Personal Payments (Friends and Family) and Commercial Payments (Goods and Services). This distinction dictates the fee structure and who is generally expected to pay.

For Commercial Payments, where money is exchanged for goods or services, the recipient (seller or business) is responsible for the fees. This is considered a cost of doing business, similar to other merchant processing fees. For Personal Payments, which involve sending money to friends or family, the fee structure differs based on the funding source. Payments funded by a PayPal balance or linked bank account generally have no fee for either sender or receiver within the United States. However, if a credit or debit card funds a personal payment, the sender typically incurs a fee.

Specific Transaction Fees and Scenarios

The exact amounts for PayPal fees vary depending on whether the transaction is domestic or international and the payment type. For domestic Commercial Payments, such as receiving money for goods and services within the same country, PayPal typically charges a fee of 2.99% plus a fixed fee of $0.49 per transaction. This rate applies to standard digital payments received through PayPal Checkout or other integrations.

International Commercial Payments incur higher costs due to the added complexity of cross-border transactions. For these, the recipient (seller) generally pays the standard domestic commercial rate, along with an additional international commercial transaction fee, which can be around 1.5%. This brings the total percentage for receiving international payments to approximately 4.49% plus the fixed fee.

If a sender uses a credit or debit card for a domestic personal payment, they typically incur a fee of 2.9% plus $0.30 USD. For international Personal Payments, the sender usually pays a percentage-based fee of 5% (minimum $0.99, maximum $4.99) if funded by a PayPal balance or bank account. If a credit or debit card is used for an international personal payment, an additional 2.9% plus a fixed fee applies on top of the 5% international fee.

Other Associated Fees

Beyond the primary transaction fees, PayPal users may encounter other charges related to specific financial actions. One common additional cost is the currency conversion fee, which applies when sending or receiving money in a currency different from the account’s primary currency. PayPal typically applies a markup of 3% to 4% on the wholesale exchange rate when performing currency conversions. This fee is integrated into the exchange rate provided, meaning the user receives a converted amount that already accounts for this charge.

Another type of fee involves withdrawing funds from a PayPal balance to a linked bank account. Standard transfers to a linked bank account are generally free and typically take one to three business days to process. However, for users requiring faster access to their funds, an instant transfer option is available, which usually incurs a fee. This instant transfer fee is commonly 1.75% of the amount transferred, with a minimum fee of $0.25 and a maximum of $25.00 for USD withdrawals.

Businesses and sellers might face chargeback fees if a buyer disputes a transaction with their card issuer and loses. In the United States, this chargeback fee can be $20 per occurrence. Dispute fees can also range from $8 to $16. While PayPal offers Seller Protection, which can waive these fees if eligibility criteria are met, they represent a potential cost for merchants.