If you have an online business on eBay or a freelancer, you certainly know how it feels to get the dreaded deductions on every transaction. We get that it’s sad. PayPal is still a business after all. But there are still ways to decrease PayPal fees but it’s not as easy as refunding your money.

How to Avoid Paypal Fees

Here are some ideas to help you get started:


Let customers shoulder the fees

This is a good way to avoid the PayPal fees totally but be sure to clearly mention that to your customer. It’s better to have them acknowledge it to avoid future complaints. PayPal usually takes up $2 – $3. So set the additional charge within that range.

Transfer funds to your linked banks rather than requesting paper checks

You should reconsider removing your linked bank accounts because you can save $1.50 on every transaction if you opt to consider transferring funds to it. Though, you must take note that banks have clearing days so check that out with your local banks.

Be paid as a friend or family

There will be no fees under this transaction if done locally. So this is also a good option to totally avoid the fees. However, there is also a certain catch for this case.

Consider lower merchant fees with PayPal

Yes, we heard you. That’s possible. An online business in eBay, for example, should have transactions amounting to $3000 or above to qualify. To get started, you’ll need to fill out an application form and wait for their approval.

Add PayPal fees as a business expense in your tax declarations

For an online business, these fees are inevitable expenses and its valid to include it in your tax returns. Just make sure to document these fees properly so that you won’t miss any.


When do PayPal fees apply?

  • Every time you receive money from your customers for a purchase
  • Transactions where you receive and send money in PayPal internationally
  • When you send personal payments using your debit or credit cards
  • When you transfer money from your PayPal account to your debit or prepaid card.

These fees have different rates per country, so be guided on the percentage below:

  • Canada – 2.9% of the transaction amount + $0.30 CAD
  • United States – 3.7% of the transaction amount + $0.30 USD
  • Other countries – 3.9% of the transaction amount + fixed rate per country

What transaction is free of charge?

It’s free to send and receive money locally to friends and family. However, an international transfer would still require some fees regardless of your connection to the receiver.

This type of transaction is also a good option to consider when sending and receiving payments locally. It will just depend on your agreement with your employer.

Risks of using the family and friends option?

Free is what we aim, and we can indeed get that through transactions under Friends and Family section. However, when things go wrong, PayPal won’t be able to secure your money under their Buyer Protection program.

What is Buyer Protection and why is it important?

Buyer protection program puts online shoppers covered if something wrong happens within their purchasing journey. You are covered by this program if:

  • No item was received
  • You received a different item
  • You did not receive the right quantity of goods
  • The item has defects or damaged
  • The item is incomplete
  • You did not get what is promised based on the advertisement. (authentic, looks different and the item is misrepresented)

You have to report your complaints within 180 days to PayPal. This is an excellent way to have your money refunded into your account if the case covered and verified.

In Conclusion

We hope that this article helped you know the ins and outs of dealing with PayPal fees. But if you have other ways to avoid these fees, share them out in the comments down below.

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