13 Best Ways To Avoid PayPal Fees 2023 [Maximize Your Income]

Updated On: 07/18/2023
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Ever found yourself cringing at the sight of those pesky PayPal fees that sneak up on you at the end of a transaction? If you're like me, you're probably wondering how to avoid PayPal fees and keep more of your hard-earned money in your pocket.

Well, you're in luck. Today, I will share some insider tips and tricks that will help you navigate the world of PayPal like a pro, avoiding unnecessary fees and saving more in the process.

PayPal has become a staple in our lives, making online transactions a breeze. But, those convenience fees can add up quickly, especially if you're a frequent user or running a small business.

So, how do you avoid PayPal fees without sacrificing its convenience? Stick around, because I'm about to spill the beans.

Why Does PayPal Charge Fees?

Why Does PayPal Charge Fees?

Let's start by understanding why PayPal charges fees in the first place. Like any other business, PayPal needs to make money to keep its services running.

These fees are essentially their revenue. Every time you send or receive money, especially across borders or in exchange for goods and services, PayPal takes a small percentage as a fee.

These fees cover the cost of the transaction, including things like currency conversion, seller protection, and the general maintenance of your PayPal account.

It's also worth noting that these fees can vary depending on the nature of the transaction and the countries involved.

Now that we've got that out of the way let's dive into how to avoid these fees and save yourself some money.

PayPal Fees For Personal Accounts

PayPal Fees For Personal Accounts

If you're using a personal PayPal account, it's crucial to understand the fee structure. Fees can vary based on your country of residence, but here's the lowdown for those of us in the U.S..

Firstly, buying within the United States is absolutely free. That's right, no hidden charges or extra fees when you're shopping domestically.

Secondly, sending money is also free, provided your PayPal balance or a linked bank account funds it. However, if you're financing the transaction with a credit or debit card, or PayPal credit, a fee of 2.9% plus a fixed fee will apply.

Transferring money from your PayPal account to a linked bank account won't cost you a dime unless you're in a hurry. Instant transfers come with a 1% fee, but there's a cap at $10, so you won't find yourself paying exorbitant amounts for convenience.

Now, let's talk about currency conversion. If you're purchasing goods in a different currency, sending money in a different currency, receiving money in an unsupported currency, or withdrawing money to a bank account with a different currency, PayPal will charge a currency conversion fee.

For transactions involving Canadian or U.S. dollars, the fee is 3.0%. For all other currencies, the fee is slightly higher at 3.5%.

PayPal Fees For Business Accounts

PayPal Fees For Business Accounts

When it comes to PayPal fees for business accounts, there's a lot to unpack. PayPal charges sellers transaction fees for selling products and services online and in-store. These rates vary based on location and the type of sale.

For instance, balance transfers from PayPal to a bank account have no withdrawal fee. However, if you opt for Instant Transfers, you'll incur a 1% fee, up to a maximum of $10.

Now, if you're using PayPal Payments Pro or Virtual Terminal, the fees differ based on location. You can expect rates ranging from 2.9% to 4.6% per transaction, along with fixed fees. This is something to keep in mind if you're considering these services for your business.

For those who utilize mobile card reader transactions, there's a seller's fee of 2.7% for swiped transactions. If you're keying or scanning transactions, the fee jumps to 3.5% plus $0.15. And if you're dealing with international credit cards, there are additional fees to consider.

One of the less pleasant aspects of doing business is dealing with chargebacks. PayPal's chargeback fees for processing these requests vary by currency, but you can expect to pay around $20 per chargeback.

And what about refunds? Well, while there are no fees for processing refund requests, PayPal does not refund the original seller fees. So, that's another cost to bear in mind.

Finally, if you're dealing with international sales, there are additional fees to consider. These include a 3.0% charge for currency conversion and a 3.5% fee for processing American Express cards. Plus, uncaptured authorization and card verification transactions may also have small fees.

How To Avoid PayPal Fees Conclusively

How To Avoid PayPal Fees Conclusively

While we can't eliminate these fees entirely, we can minimize them with smart strategies. Now, let's get down to business and explore the best ways to avoid PayPal fees and save more of your hard-earned money. Buckle up, because we're about to embark on a journey to a more cost-effective PayPal experience.

Change The Way You Accept PayPal Money

Change The Way You Accept PayPal Money

Did you know that the way you withdraw your money from PayPal can significantly impact the fees you pay? Let's break it down.

The first option is to transfer money directly to your bank account using Standard Transfers. This method has no fee and usually takes one business day to process.

The second option is to opt for an instant transfer to your debit card or bank account. While this method incurs a 1% fee (up to $10), it provides access to your funds within minutes.

But wait, there's more! You can also request a PayPal Cash Card, which functions as a debit card for your PayPal account, allowing immediate access to your funds.

The PayPal Cash Card can be used fee-free at retailers accepting Mastercard and provides up to $400 daily cash withdrawal at over 33,000 MoneyPass ATM locations in the US. Do keep in mind that other ATMs may charge fees.

Reduce The Payments Frequency To Avoid PayPal Fees

Reduce The Payments Frequency To Avoid PayPal Fees

As a business owner, you're likely juggling a multitude of tasks, and the last thing you need is to be bogged down by avoidable PayPal fees.

If your business revolves around recurring services such as consulting, subscriptions, or coaching, you might want to reconsider your payment model and invoicing frequency.

Instead of opting for a bi-weekly or weekly payment schedule, why not switch to a monthly payment model? This simple tweak can significantly reduce the number of transactions you make, and, consequently, the associated $0.30 transaction fees that PayPal charges.

Now, you might be thinking, "It's just 30 cents. How much of a difference can it make?" Well, let me tell you, those pennies can quickly add up, especially if you're handling a high volume of transactions.

By reducing the frequency of your payments, you're not just saving a few cents here and there, but potentially hundreds or even thousands of dollars over time.

Claiming PayPal Fees on Your Tax Return

Claiming PayPal Fees on Your Tax Return

If your side hustle evolves into a full-fledged business with significant annual revenue, it's essential to consider the PayPal fees incurred during transactions when filing your taxes.

Business owners can include PayPal fees as a deductible expense on their tax returns, as these fees are an inevitable cost of business operations.

To claim PayPal fees as deductions, you need to document the amount paid in fees throughout the year. This can be particularly beneficial for businesses processing a large number of PayPal transactions annually.

Remember to keep the details of every transaction to use them as a way to avoid PayPal fees during tax return.

Leverage the Power of Friends and Family

Leverage the Power of Friends and Family

One of the easiest ways to dodge those PayPal fees is by using the Friends and Family feature. Unlike regular transactions, PayPal Friends and Family payments have a different fee structure.

For instance, if you're requesting money for goods and services, you're slapped with invoice fees of 2.9% + $0.30 per paid request. However, when you receive money from friends and family on the app or online, it's absolutely free.

This feature can be a game-changer for freelancers or small business owners. You can completely sidestep PayPal transaction fees, keeping more of your earnings.

But, there's a catch. Your clients need to be comfortable with this option, and there should be a level of trust already established from previous business dealings.

Buyers lose payment protection when sending money through Friends and Family. Therefore, building trust and convincing your clients is crucial. Consider splitting the 2.9% fee savings with your clients.

This could incentivize them to use the PayPal Friends and Family feature, saving both of you money in the process.

Embrace MicroPayments

Embrace MicroPayments

PayPal's micropayment model is a hidden gem that many users aren't aware of. This feature is specifically designed for merchants who frequently deal with transactions under $10.

It's a godsend for those dealing with a high volume of low-cost transactions, as it can significantly reduce the overall fees.

The micropayment fee for U.S. customers is a flat 5% of the transaction, while for international customers, it's slightly higher at 6.5%. While this might seem steep at first glance, it's actually a lot more cost-effective than the standard 2.9% + $0.30 per transaction that PayPal usually charges.

You need to apply for this option, and your PayPal account should be in good standing. So, if you're a merchant dealing with small transactions, this could be your ticket to saving on PayPal fees.

Use Accounting Software to Avoid PayPal Fees

Use Accounting Software to Avoid PayPal Fees

One of the smartest ways to avoid PayPal fees is by integrating your account with accounting software. Many of these software options, like QuickBooks or FreshBooks, offer lower transaction fees than PayPal.

This means that you can process payments through these platforms and save a considerable amount on fees.

All you need to do is link your PayPal account to your chosen accounting software, and voila! You're on your way to a more cost-effective payment processing. Remember, every penny counts, especially when you're running a business. So, don't overlook this savvy trick.

Strategize Your Cash Flow

Strategize Your Cash Flow

Let's talk about your cash flow. One of the simplest ways to avoid PayPal fees is by being strategic with your withdrawals. When you transfer funds from your PayPal account to a linked bank account, you won't be charged a fee. Sounds good, right?

However, if you're in a rush and opt for an instant transfer, you'll incur a 1% fee, up to a maximum of $10. So, if you're not in a hurry, it's best to stick with the standard transfer. Plan your cash flow needs in advance and always opt for normal withdrawals to your linked bank account.

This way, you can dodge those unnecessary instant transfer fees. Trust me, your wallet will thank you.

Using a New Bank Account

Using a New Bank Account

Opening a new bank account is a savvy method to circumvent PayPal fees, especially for those dealing with international transactions. Specifically, a U.S. bank account can be a real game-changer.

Why? Because transferring USD from a PayPal account to a linked bank account outside the United States can result in significant fees due to currency conversions.

This approach can effectively reduce pesky PayPal fees on currency conversions for freelancers and online earners. Numerous low-fee or even zero-fee bank account options are available for individuals looking to open a U.S. bank account.

By opening a U.S. bank account, you can withdraw USD PayPal funds without worrying about transaction or conversion fees. This means you're saving money on currency exchange fees for frequent USD transactions. It's a win-win situation!

Embrace PayPal Business and Harvest

Embrace PayPal Business and Harvest

One of the best ways to dodge those pesky PayPal fees is by utilizing PayPal Business Payments, especially if you're a freelancer or a small business owner. You can significantly reduce PayPal fees by integrating this with Harvest, a handy tool for managing invoices, tracking projects, and handling expenses.

With PayPal Business Payments, you're charged a flat fee of $0.50 per transaction instead of the regular percentage-based fee. This can lead to substantial savings if you're handling a high volume of transactions.

The best part? Harvest offers a 30-day free trial and a free version that allows you to manage up to two projects. If you need more, the paid version costs $10.80 per month when billed annually or $12 monthly. This gives you unlimited users and projects.

Request Payment in Native Currency to Avoid Conversion Fees

Request Payment in Native Currency to Avoid Conversion Fees

A little trick has saved me a bundle: request payment in your native currency. If you're a freelancer working with international clients, you're likely familiar with the fees associated with currency conversion.

To sidestep these costs, include a clause in your contract or agreement that specifies payment in your native currency. This isn't just for those of us dealing in USD - it works for any major currency. T

his way, you bypass the conversion fees and hold onto more of your hard-earned cash. Trust me, your wallet will thank you.

Alternative Payment Options Instead of PayPal

Alternative Payment Options Instead of PayPal

If you're looking to dodge those PayPal fees, one of the most straightforward strategies is to consider alternative payment options. A whole world of platforms out there can cater to your specific needs and potentially save you a pretty penny in fees.

Take Wise, for instance. It's a great tool for international transfers in different currencies, and it operates through bank transfers. Then there's Payoneer, which provides a debit card option. However, remember that it comes with monthly and withdrawal fees.

Skrill is another alternative similar to PayPal, offering a debit card and fast money transfers to the card account. For those operating primarily in the United States, Dwolla might be a good fit. It's suitable for bank transfers, with a $0.25 transaction fee on amounts over $10.

And let's not forget about Stripe. It's a popular alternative to PayPal, with similar fees and a straightforward setup. The best part? It automatically deposits money into your bank account.

Exploring these alternative payment options can help you find a platform that better suits your needs and potentially save on fees compared to PayPal. So, it's definitely worth giving them a shot.

Planning with Pricing to Account for PayPal Fees

Planning with Pricing to Account for PayPal Fees

A practical strategy I've discovered is to plan ahead with pricing. When setting prices for my products or services, I always factor in the PayPal fees that will be deducted from my earnings. It's crucial not to make your clients bear the burden of these fees or to set complex pricing figures.

Instead, I calculate the anticipated fees in the background, ensuring that my prices account for PayPal fees. This approach is particularly beneficial for side gigs like eBay flipping, where both eBay and PayPal fees should be factored into your margin calculations.

This way, you're not caught off guard by the fees and your profits remain intact.

Do Not Use PayPal

Do Not Use PayPal

Now, this might seem like a drastic measure, but it's a valid one. If you're really serious about avoiding PayPal fees, one of the most straightforward ways is not to use PayPal. There are numerous alternative payment methods out there that can help you bypass these fees altogether.

For instance, consider accepting checks or direct deposits. This approach requires agreement from your clients or customers, but it's worth asking. Especially if you're working with larger companies, you'll find that many prefer direct payment options and are more comfortable working with banks rather than PayPal.


There you have it! Implementing these strategies can significantly reduce your PayPal fees and keep more money in your pocket. Remember, every penny counts, especially if you run a small business or make frequent transactions. So, don't let those fees sneak up on you. Start using these tips today and navigate the world of PayPal like a pro. Here's to a more cost-effective and savvy PayPal experience!

Michael Restiano

I lead product content strategy for SaltMoney. Additionally, I’m helping our broader team of 4 evolve into a mature content strategy practice with the right documentation and processes to deliver quality work. Prior to Instacart, I was a content strategy lead at Uber Eats and Facebook. Before that, I was a content strategist at SapientNitro, helping major Fortune 500 brands create better, more useful digital content.