How PayPal Fees Work
Domestic Transactions
PayPal charges 2.9% + £0.30 for standard domestic transactions where both sender and receiver have UK-registered accounts. This applies to most goods and services payments within the United Kingdom.
International Transactions
International fees apply when the sender and receiver are in different countries. PayPal adds a cross-border fee on top of the standard percentage rate.
| Region | Standard Rate | QR Code (Above £10.01) | Charity Rate |
|---|---|---|---|
| UK (Domestic) | 2.9% + £0.30 | 1.5% + £0.10 | 1.4% + £0.20 |
| EEA | 4.19% + £0.30 | 2.79% + £0.10 | 2.69% + £0.20 |
| Rest of World | 4.89% + £0.30 | 3.49% + £0.10 | 3.39% + £0.20 |
Currency Conversion
If you receive payment in a currency different from your account’s default currency (GBP), PayPal charges an additional 2.5-3% conversion fee on top of their exchange rate markup. This can significantly increase your total costs for international sales.
Fixed Fees by Currency
The fixed fee portion varies depending on the transaction currency. While GBP transactions have a £0.30 fixed fee, other currencies have different amounts:
| Currency | Fixed Fee (Standard) | Fixed Fee (QR Above £10.01) | Fixed Fee (Micropayment) |
|---|---|---|---|
| GBP | £0.30 | £0.10 | £0.05 |
| EUR | €0.35 | €0.10 | €0.05 |
| USD | $0.30 | $0.10 | $0.05 |
| JPY | ¥40.00 | ¥12.00 | ¥7.00 |
| AUD | A$0.30 | A$0.10 | A$0.05 |
| CAD | C$0.30 | C$0.10 | C$0.05 |
Special Transaction Types
Micropayments
For businesses processing many small transactions (typically under £5), PayPal offers a micropayments rate of 5% + £0.05 for UK domestic transactions. While the percentage is higher, the lower fixed fee makes it more economical for small amounts.
QR Code Transactions
PayPal offers reduced rates for QR code payments, making them attractive for in-person sales:
- £10.01 and above: 1.5% + £0.10 (UK domestic)
- £10.00 and below: 2% + £0.05 (UK domestic)
Charity & Non-profit Rates
Registered charities, PTAs, and sports clubs can apply for reduced rates of 1.4% + £0.20 for domestic transactions. International charity rates are also lower than standard commercial rates.
Maximising Your PayPal Revenue
Pricing Strategies
When setting prices, consider incorporating PayPal fees into your pricing structure. Use the reverse calculator to determine the exact amount to charge to receive your desired payment after fees.
- For domestic sales, add approximately 3.1% to your base price
- For international sales, add 4.5-5.2% depending on the region
- Consider offering slight discounts for bank transfers to avoid fees entirely
- For high-volume sales, negotiate with PayPal for reduced merchant rates
Avoiding Currency Conversion Fees
To minimise currency conversion charges:
- Maintain multi-currency balances in your PayPal account
- Accept payments in the customer’s local currency
- Withdraw funds to a multi-currency bank account
- Consider alternative payment processors for international sales
Volume Discounts
High-volume merchants may qualify for reduced rates. PayPal offers tiered pricing where your percentage fee decreases as your monthly sales volume increases. Contact PayPal directly to discuss merchant rate reductions if you process over £10,000 monthly.
Common Scenarios & Solutions
Selling on eBay with PayPal
When selling on eBay, you’ll pay both eBay final value fees and PayPal transaction fees. For a £100 item:
- eBay fee: approximately £12.80 (12.8% including category fees)
- PayPal fee: £3.20 (3.2%)
- Total fees: £16.00 (16%)
- You receive: £84.00
Receiving Payment from EU Customers
Post-Brexit, EU payments are considered international. A €100 payment (approximately £85) from Germany would incur:
- International fee: 4.19% + £0.30
- Currency conversion: Additional 2.5-3%
- Total cost: Approximately 7% of the transaction value
Accepting Donations
Standard donation rates mirror commercial transaction fees unless you qualify for charity status. Personal PayPal accounts receiving frequent donations may be flagged and required to switch to a business account.
Friends & Family Payments
Friends and Family payments are free for UK domestic transactions in GBP. However, they offer no buyer or seller protection and should never be used for commercial transactions. PayPal may suspend accounts that misuse this feature.
Frequently Asked Questions
How much does PayPal charge per transaction in the UK?
For standard domestic transactions, PayPal charges 2.9% plus £0.30. This means a £100 transaction costs £3.20 in fees, and you receive £96.80.
Are PayPal fees different for business and personal accounts?
Personal accounts receiving money for goods and services are automatically charged business rates. True personal payments (Friends & Family) in GBP are free, but these cannot be used for commercial purposes.
Can I pass PayPal fees onto my customers?
While not prohibited by PayPal’s terms in the UK, adding surcharges for payment methods may be restricted under consumer protection regulations. The recommended approach is to incorporate fees into your standard pricing.
Do I pay fees when sending money through PayPal?
Sending money to friends and family within the UK using your PayPal balance or bank account is free. Commercial payments and international transfers incur fees, typically paid by the recipient but sometimes deducted from the sender for cross-border transactions.
What’s the difference between domestic and international PayPal fees?
Domestic transactions (both parties in the UK) are charged 2.9% + £0.30. International transactions from the EEA are 4.19% + £0.30, and from the rest of the world are 4.89% + £0.30.
How do I calculate what to charge to receive a specific amount?
To receive £100 after fees, divide your desired amount by (1 – fee percentage) and add the fixed fee. For UK domestic: £100 ÷ 0.971 + £0.30 = £103.29. Use our reverse calculator for automatic calculations.
Are there cheaper alternatives to PayPal?
Alternatives like Stripe, Wise, and direct bank transfers often offer lower fees. Stripe charges 1.4% + £0.20 for UK cards, while bank transfers through services like Wise can be significantly cheaper for international payments. However, PayPal’s wide acceptance and buyer protection features may justify the higher cost for many merchants.
Do I pay VAT on PayPal fees?
No, PayPal fees are exempt from VAT in the UK as they constitute financial services. The fees charged are the gross amounts you’ll pay.
Fee Calculation Examples
Example 1: Small Online Sale
Scenario: You sell a £25 item to a UK customer
- Transaction amount: £25.00
- Percentage fee (2.9%): £0.73
- Fixed fee: £0.30
- Total PayPal fee: £1.03
- Amount received: £23.97
- Effective rate: 4.1%
Example 2: International Sale
Scenario: You sell a £150 item to a customer in France
- Transaction amount: £150.00
- Percentage fee (4.19%): £6.29
- Fixed fee: £0.30
- Total PayPal fee: £6.59
- Amount received: £143.41
- Effective rate: 4.4%
Example 3: Micropayment
Scenario: You sell a £2.50 digital download to a UK customer
- Standard fee: £0.37 (14.9% effective rate)
- Micropayment fee: £0.18 (7.2% effective rate)
- Savings with micropayment: £0.19
- Amount received with micropayment: £2.32
Example 4: High-Value Transaction
Scenario: You receive a £5,000 payment for services from a UK client
- Transaction amount: £5,000.00
- Percentage fee (2.9%): £145.00
- Fixed fee: £0.30
- Total PayPal fee: £145.30
- Amount received: £4,854.70
- Effective rate: 2.91%
Note: For high-value transactions, the fixed fee becomes negligible, and the effective rate approaches the percentage rate.
Regional Fee Variations
European Economic Area (EEA)
The EEA includes all EU member states plus Iceland, Liechtenstein, and Norway. Transactions from these countries to UK merchants are considered international and charged at 4.19% + £0.30.
North America
Payments from the United States and Canada follow the rest-of-world rate structure: 4.89% + £0.30 for standard transactions. Currency conversion adds another 2.5-3% if receiving USD or CAD.
Asia-Pacific
Australia, New Zealand, Japan, Singapore, and Hong Kong are all covered under rest-of-world rates. The fixed fee varies by currency, with JPY having a notably higher fixed fee of ¥40.00.