PayPal’s US fee structure looks simple at a glance — 2.9% + $0.30 — but actually has five distinct rate tiers for different transaction types, each with its own percentage AND fixed component. The calculator above models all of them.
The five rate tiers
| Transaction type | Percentage | Fixed | Notes |
|---|---|---|---|
| Domestic US | 2.9% | $0.30 | Buyer in US, USD |
| Cross-border Europe | 3.4% | $0.30 | Buyer in EU/EEA |
| International (rest of world) | 4.4% | $0.30 | US, Australia, Asia, etc. |
| US charity | 1.4% | $0.30 | Registered charity status required |
| US micropayments | 5.0% | $0.05 | Sub-$5 with PayPal approval |
The $0.30 fixed component is what makes PayPal painful for small transactions. A $2 sale: 5.8p percentage fee + 30p fixed = 35.8p total fee on $2 revenue. That’s 17.9% effective rate.
When micropayments rate makes sense
PayPal’s micropayments rate (5% + $0.05) is only available with explicit approval from PayPal — not automatic. It exists because the standard rate is genuinely uneconomic on tiny transactions:
| Sale amount | Standard rate (2.9% + $0.30) | Micropayments (5% + $0.05) | Better |
|---|---|---|---|
| $1.00 | $0.33 (33%) | $0.10 (10%) | Micro |
| $3.00 | $0.39 (13%) | $0.20 (6.7%) | Micro |
| $5.00 | $0.45 (9%) | $0.30 (6%) | Micro |
| $6.00 | $0.47 (7.9%) | $0.35 (5.8%) | Micro |
| $10.00 | $0.59 (5.9%) | $0.55 (5.5%) | Micro |
| $15.00 | $0.74 (4.9%) | $0.80 (5.3%) | Std |
| $30.00 | $1.17 (3.9%) | $1.55 (5.2%) | Std |
Crossover is around $12-$14. Below that, micropayments wins. Above, standard rate wins. Apply for micropayments only if your average sale is sub-$12.
Cross-border premium and currency conversion
The 0.5pp Europe premium and 1.5pp international premium add up. Combined with PayPal’s currency conversion markup (~4% on FX), you can lose 7-8% of a US buyer’s purchase before the funds even hit your USD balance.
For sellers with significant non-US revenue, alternatives: - Wise (formerly TransferWise): ~0.5% conversion fee, near-interbank FX rate, 1% withdrawal to local bank account. Saves substantially vs PayPal on cross-border. - Stripe: 1.5% + 20p US domestic; 2.5% + 20p European; 3.25% + 20p international. Lower than PayPal across the board, but no buyer-protection layer. - Revolut Business: similar to Wise, with native multi-currency accounts.
For pure US sellers, PayPal’s domestic rate is competitive and the buyer-recognition factor (most US consumers have PayPal accounts) often wins on conversion rate.
What this calculator doesn’t model
- Currency conversion (~4% spread when PayPal converts non-USD receipts to USD)
- Withdrawal fees (free standard 1-3 day; $15 instant)
- Chargebacks ($14 per lost dispute)
- PayPal Working Capital (a business loan product with separate APR)
- PayPal Pro / advanced merchant rates negotiated for high-volume sellers
PayPal vs platform-included payment processing
Many marketplaces (Etsy, eBay, Mercari) handle their own payment processing. The fees you see in their fee structure ARE the payment processing layer — PayPal isn’t an additional fee on top.
PayPal as a separate fee only applies when: - You sell on your own website (Shopify, Squarespace, WordPress + WooCommerce, custom) - You use PayPal Direct Checkout as a payment option - You’re processing peer-to-peer payments (consultants, freelancers, services)
For Etsy/eBay/Mercari sellers, the fees in those calculators already include the payment processing — running this PayPal calculator separately would double-count.
Tax treatment
PayPal commercial fees are 100% deductible against trading income for US income tax purposes. Track them via PayPal’s monthly CSV exports. The side hustle tax calculator handles income tax once you’ve netted them off.
PayPal itself doesn’t fall under the new 1099-K reporting (it’s a payment processor, not a sales platform). The marketplaces that route payouts through PayPal do report — see IRS reporting checker.