(Newswire.net — October 6, 2021) —
If you use PayPal for your business, you need to know about some major changes that have been made to their fees. They could have a huge impact on what you are currently paying for in payment processing services. Here’s an overview of what’s happening.
Changes to PayPal Fee Structure
In August 2021, PayPal is adjusted the fee structure on their payment processing platform. What was once a flat 2.9% and $0.30/transaction has now become a sliding fee structure based on the program merchants are using and how they are accepting transactions.
1. Merchants using Zettle POS hardware will be charged anywhere from 2.29% + $0.09/transaction for card swiped transactions to 3.49% + $0.09/transaction for keyed-in sales.
2. Merchants using Online Card Payment Services will pay between 2.89% + $0.49/transaction for payments input by the customer directly into PayPal and 2.89% + $0.49/transaction for transactions going through a merchant website. Virtual terminal transitions will be priced at 3.09% and $0.49/transaction.
3. Merchants using the mobile payment service PayPal Here will be charged 2.70% for card swiped transactions and 3.50% +$0.15 for keyed-in transactions.
4. Finally, general commercial PayPal Fees are for commercial transactions that do not fall into any of the above programs. These fees will vary from 2.99% +$0.49/transaction when accepting standard PayPal user payments to 3.49% + $0.49/transaction for PayPal Checkout or other transactions.
Why is PayPal Changing Their Fee Structure?
PayPal continues to be one of the most popular payment processors in the world. With that, they have the responsibility of keeping their users’ data secure. To do so, they need to invest in data analytics, fraud detection tools, and more. Rather than footing the entire bill on their own, they have increased some of their fees to drive revenue to cover those costs.
During the pandemic, merchants and payment processors saw a significant shift in consumer behavior. Not only did consumers purchase more items online they also began shifting to digital, contactless payments in lieu of the standard chipped or swiped card. This has led PayPal to enhance their services in this area, the cost for which has been passed on to their merchants.
What is the Impact of the PayPal Fee Structure?
In May of 2021, e-commerce giant eBay dropped PayPal as their payment processor. Many have alluded to the fact that it could be due to the fee structure change, but that’s not entirely accurate. eBay has designed and implemented its own payment processing system, which allows them to manage the end-to-end user experience. They believe this is a huge benefit to their consumer base and is expected to add about $2 billion in annual revenue.
Some businesses are evaluating whether to leave PayPal because of this fee increase, but it’s not that simple. This fee structure is still less expensive than some of PayPal’s competitors such as Stripe. Additionally, PayPal is decreasing fees in some other areas to maintain a competitive edge.
What Does This Mean for My Business?
Merchants now have the task of determining whether PayPal is a good fit for their business. Although an increase in fees is never a good thing for a merchant, PayPal offers a variety of other services that are important to businesses. As a business owner, it’s important to consider the services offered versus the cost of those services from another provider.
It’s likely that the benefits outweigh the risks for many merchants. As consumers continue shifting to contactless and digital payment types, PayPal is an easy way for merchants to accept those transactions. Be sure to consider all your options before jumping ship.