The new changes, which take effect in August, will see fees rise from 2.9% to as much as 3.49% for some PayPal Digital Payments. These changes could have big impacts on some small businesses. However, it’s not all bad news, as charity transactions will drop below 2%. Here’s a closer look at the fees and the changes that PayPal will be making.
PayPal Digital Payment Changes
Here’s an overview of all the changes PayPal is making – remember, it previously charged 2.9% + 30 cents.
For PayPal payment products, such as PayPal Checkout, Pay with Venmo, PayPal Credit, Pay in 4, PayPal Pay with Rewards, and checkout with crypto — the rate will be 3.49% + 49 cents per transaction.In-person payments over $10 — the rate will be 1.9% + 10 centsIn-person payments under $10 — the rate will be 2.4% + 5 cents“Certain” in-person debit and credit transactions — the rate will be 2.29% + 9 centsOnline credit and debit transactions without Chargeback Protection — 2.59% + 49 centsOnline credit and debit transactions with — 2.99% + 49 centsCharity transactions for confirmed charities (subject to application and pre-approval) — 1.99% + 49 cents
If you’re a small bar or restaurant, for example, the drop for in-person rates over and under $10 might prove a big benefit. However, if you’re a small business selling on an ecommerce platform, the changes to PayPal payment products might put a more sizeable dent in your finances. Thinking ecommerce? Your first stop should be our expert guide to the Best Ecommerce Website Builders
Why is PayPal Making These Changes?
As usual with price hike announcements, PayPal’s Dan Leberman senior vice president of small to medium businesses and partners skirted around the topic. In essence, PayPal has decided to invest in data analytics, fraud detection tools, and new “consumer experiences” and decided that merchants will have to foot the bill. PayPal was also keen to show it remains the premier choice for payment processing, apparently:
Consumers who choose PayPal as a payment method are 60% more likely to convert than consumers who do not choose PayPal as a payment method.Consumers are nearly three times more likely to complete their purchase when PayPal is available at checkout.Buy Now, Pay Later solutions have resulted in a 15% lift in payment volume for businesses.
That’s all well and good but the changes will still eat into some business’ bottom lines.
How Do PayPal’s Fees Stack Up with its Rivals?
According to PayPal, its new fees still manage to undercut its main competitors: Stripe and Square. PayPal’s 2.59% + 49 cent fee for online credit and debit card payments is cheaper than Stripe’s 2.9% + 30 cent fee. However, its Digital Payments fee — the PayPal Checkout, Pay with Venmo, PayPal Credit, etc. is more expensive at 3.49% + 49 cents. For in-person payments, PayPal again demonstrates that it is cheaper than Square. PayPal Digital Payments are at 1.9% + 10 cents, while Samsung, Apple, and Google Pay transactions, as well as regular credit and debit card fees, come in at 2.29% + 9 cents. Square, meanwhile, charges 2.6% + 10 cents. However, with Square, you also get access to a full POS system and online store for your business — with PayPal, you’ll have to pay two companies for two separate platforms. That’s not to say that PayPal might work out cheaper for some businesses, but we remain unconvinced. Like the sound of Square? Check out our guide to Square POS Pricing for more
