2022 PayPal Business Review: Is It Right for You?

PayPal Business offers a simple in-person and online payment processing solution. Its features include invoicing, mobile payments, recurring payments, more than 100 currencies, chargeback and seller protection, and an embeddable “buy now” button.

Signing up for PayPal is free, with no hidden fees. And while it is equipped to support any type of small and midsize business, we recommend PayPal as a cost-effective solution for occasional sellers or businesses that process less than $5,000 in monthly sales. It’s also an ideal option for those wanting to increase online conversions.

PayPal Business

What We Like

• Seamless online checkout integration
• Known and trusted platform by consumers
• Instant deposits into your PayPal account
• Discounted processing fees for nonprofits

What's Missing

• Unpredictable freezing of funds
• Confusing pricing
• Few POS features and benefits
• No offline payment processing

Deciding Factors

• Monthly fees:
  • PayPal account: $0–$30
  • Virtual Terminal $30
  • Recurring Billing: $10
  • Recurring Payment Tool: $30
  • Payment Gateway: $0–$25
• Transaction fees:
  • PayPal payments online: 3.49% + 49 cents
  • Online card payments: 2.59% + 49 cents
  • In-person card Payments: 2.29% + 9 cents
  • Invoicing: 3.49% + 49 cents
• Chargeback fee: $20

Visit PayPal Business

When To Use PayPal Business

In our evaluation of the best merchant services for small businesses, PayPal earned a 4.02 out of 5. It’s a user-friendly platform for businesses and customers alike with a flat, predictable pricing model. For online sales, PayPal offers decent developer tools, lots of integrations, and international payment options. One of the biggest drawbacks to using PayPal is the potential to have your funds frozen or withheld, along with difficulty in getting quality customer support.

Specifically, we recommend PayPal Business for:

• Quickly adding online payments to your business: If you don’t already have the ability to accept payments online, PayPal Business is an easy way to do it. You can embed its “Pay Now” functionality directly onto your existing website. It’s also one of our top picks for subscription billing solutions.
• Boosting online conversions: PayPal is not only an accessible payment method, considering its huge user base, but its familiarity also improves trust. So, online shoppers may be more willing to make a purchase knowing it’s backed and protected by PayPal. In fact, shoppers view PayPal Verified as the most trustworthy security seal in the industry.
• Processing international payments: PayPal offers one of the best international payment processing solutions, as it operates in 200 countries and 100 currencies.
• Processing nonprofit payments: PayPal is one of our top recommendations for nonprofit payment processing because it offers discounted transaction fees for IRS 501(c)(3) nonprofits. Plus, it’s easy to use and offers fundraising tools—like donate buttons you can add to any website, sharable payment links, a QR code generator, and a hosted donation page.

When PayPal Business Would Not Be a Good Fit

• Those needing a simple virtual terminal: Though PayPal offers a decent virtual terminal, especially for international or cross-border sales, it comes with a monthly fee. Individuals and small businesses may find Square or Helcim to be better value-for-money options. Both offer a virtual terminal with competitive processing fees, user-friendly software, and zero monthly fees. Learn more in our virtual terminal evaluation.
• Those wanting a standalone payment gateway: Reports of frozen funds and add-on charges prevented PayPal from earning a top spot in our evaluation of the best payment gateways. If you need a standalone gateway to work with an existing merchant account, consider Authorize.net.
• Those requiring a high-risk merchant account: PayPal is known for unpredictably freezing funds without explanation—and for months at a time. Plus, it doesn’t work with high-risk merchants. If that describes your business, review our recommendations for the best merchant accounts for high-risk businesses.
• Processing for permanent retail shops: PayPal Business is cost-effective for occasional in-person sales, but it’s not the most affordable option for permanent brick-and-mortar establishments, especially if you process more than $5,000 in payments each month. Check out the leading retail credit card processing companies for alternatives.
• Operating on a multichannel model: If you need to tightly integrate your retail, wholesale, and online sales channels and inventory, PayPal Business may become limiting. Instead, opt for one of the top-recommended multichannel retail POS systems.

PayPal Alternatives At a Glance

Best for	Tech-savvy and B2B businesses	Low-cost payment processing w/ free POS	High-volume merchants with large transaction amounts	Small businesses and startups
Monthly fee	Starts at $0	$0	Starts at $59	Starts at $0
Card-present transaction fee	2.7% + 5 cents	Interchange plus 0.1%–0.3% + 5–8 cents	Interchange + 8 cents	2.6% + 10 cents
Keyed transaction fee	2.9% + 30 cents	Interchange plus 0.2%–0.5% + 10–25 cents	Interchange + 15 cents	3.5% + 15 cents
Ecommerce transaction fee	2.9% + 30 cents	Interchange plus 0.2%–0.5% + 10–25 cents	Interchange + 15 cents	2.9% + 30 cents
	Visit Stripe	Visit Helcim	Visit Payment Depot	Visit Square

If you want the lowest rates: The payment processing rates you will pay can vary based on your business size, type, and average order value. To find the most affordable option for you and compare multiple processing rates, read our guide on the cheapest credit card processing companies.

If you want the best alternatives to PayPal: PayPal is often compared to Square and Stripe, or you can check out our guide in finding the best PayPal alternatives for your business.

PayPal Business Pricing

PayPal offers a variety of ways to accept payments, from simple commercial transactions to POS payments. For more detailed information on PayPal fees, expand the sections below.

Commercial Transaction Rates

Applied When: Accepting payments where customers use various PayPal options—including Pay Later, Pay with Rewards, Crypto, and Venmo—and alternative payment methods (APM) such as Apple Pay.

	Monthly Fees	Local Transaction Rates	Add-on for International Transactions
Standard Debit/Credit Card Payments	$0	2.99% + 49 cents	1.50%
PayPal Checkout/Guest Checkout	$0	3.49% + 49 cents	1.50%
Invoicing	$0	3.49% + 49 cents	1.50%
Venmo	$0	3.49% + 49 cents	1.50%
QR code – $10.00 and below	$0	2.40% + 5 cents	1.50%
QR code – $10.01 and above	$0	1.90% + 10 cents	1.50%
Apple Pay	$0	2.59% + 49 cents	1.50%

PayPal Online Card Payment Services

Applied When: Accepting payments where customers key-in their credit and debit card details on a PayPal checkout service.

	Monthly Fee	Local Transaction Rates	Add-on Fee for International Transactions
Advanced Debit and Credit Card Payments	$0	2.59% + 49 cents	1.50%
Payments Pro	$30	2.89% + 49 cents	None
Virtual Terminal	$30	3.09% + 49 cents	None
Payments Advanced	$5	2.89% + 49 cents	None

Payflow Pro (Payment Gateway)

PayPal Zettle

Applied When: Accepting in-person transactions through PayPal Zettle.

	Monthly Fee	Local Transaction Rates	Add-on Fee for International Transactions	Monthly Processing Volume Limit
Card present	$0	2.29% + 9 cents	None	None
Keyed-in		3.49% + 9 cents	None
QR code		2.29% + 9 cents	None

Donation & Nonprofits

Applied When: Accepting donations as a business (donation) or as a PayPal approved charitable organization (nonprofit)

	As a Business	As a Nonprofit
Monthly Fee	$0	$0
Donate Button	2.89% + 49 cents	N/A
Generosity Network	2.89% + 49 cents	N/A
PayPal Checkout for Donations	2.89% + 49 cents	N/A
Charity Transactions	N/A	1.99% + 49 cents
International Payments	+1.5%	+1.5%

Micropayments

Businesses that process payments less than $10 can apply for micropayment rates. The rates are applied to all commercial transactions and start at 4.99% + 9 cents per local transaction and an additional 1.50% for international transactions.

Other Fees

• Chargeback fees: $20 for transactions not processed through a buyer’s PayPal account or through guest checkout.
• Dispute fees: $15 Standard or $30 for high volume transactions.
• E-check fees: 3.49% capped at $300
• Instant withdrawal of funds to linked card or bank account: 1.50% of the amount transferred
• Recurring billing service: $10/month optional service available for PayPal Online Card Payment Service and Payment Gateway users
• Recurring payment tool: $30/month optional service available for PayPal Online Card Payment Service users

Custom Plans

PayPal doesn’t offer custom plans—only discounted pricing for nonprofit organizations. If you want lower rates or a custom plan, consider using Braintree, PayPal’s online payment solution geared toward higher-volume businesses. Read our Braintree review for more details.

PayPal Business Hardware

Merchants that require an in-person payment solution through PayPal can sign up for PayPal Zettle. Features include a proprietary mobile card reader and other hardware to support its built-in point-of-sale app.

Zettle Reader 2 $79 (first reader $29)	Zettle Dock 2 $49	Zettle Stand 360 $159

PayPal Zettle offers card readers and POS system hardware.
(Image Source: PayPal)

Read our PayPal Zettle review.

PayPal Business Features

Setup & Application

PayPal has a simple and straightforward application and setup process, especially when compared to other payment processing options. All you have to do is sign up, connect your business account, and start accepting payments.

Choose the type of PayPal account you would like to set up.
(Source: PayPal)

---

Fill out the basic information and review PayPal policies by clicking on the links provided. Once that is done, hit the “Agree and Create Account” button.
(Source: PayPal)

---

You will then be given temporary access to your PayPal business account where you can fill out a form to get your account verified.
(Source: PayPal)

---

The first section of the form will ask for your basic personal and business information.
(Source: PayPal)

---

It will then ask you for your business profile. Once you are done, hit the “Save and Continue” button to proceed to the next section.
(Source: PayPal)

---

If you choose “Individual/Sole Proprietor” as a business type, you will be asked to provide personal details such as your SSN, date of birth, and home address. For all other business types, an Employer ID is required. Click “Submit” and a verification email will be sent to your specified email address.
(Source: PayPal)

---

To verify your account, you need to (1) Verify your email address, (2) Add a bank account, and (3) Verify your bank account.
(Source: PayPal)

---

Contract & Terms of Service

PayPal’s user agreement is provided on the website while signing up for a PayPal account. It includes standard terms and conditions you would find on a merchant account aggregator such as disclosure of personal information, service level agreements, restrictions, and terms for opening, verifying, and closing your account.

Some terms and conditions to note are:

• While not yet verified, you can begin accepting payments on your PayPal account—however, in the event that your account, for some reason, could not be verified, your PayPal balance can only be withdrawn by transferring the amount to your linked bank account. (You can also request for a check to be sent, subject to a $1.50 fee)
• You may hold funds in a different currency, but you will have to request for the amount to be converted into dollars in order to withdraw. This will be subject to PayPal’s currency conversion fee.
• Accepting e-checks will take three to five business days for approval.
• A high-volume dispute fee will be imposed if transaction disputes reach 1.5% or you had more than 100 disputed sales transactions in the past three months.
• “Fund Hold” will be at the sole discretion of PayPal and based on its risk decisions. This usually happens when an account is new, your business is considered high-risk, or when you have received a high number of disputes.

PayPal User Agreement

In the event that your account reaches certain processing limits or begins to add certain business activities, PayPal will require you to enter a “Commercial Entity Agreement” as stipulated by the card networks. The Commercial Entity Agreements will then be applied to succeeding payments you process through PayPal.

PayPal Checkout

The PayPal checkout provides you with simple tools to integrate with your product, cart, and payment pages. This way, you give customers a variety of PayPal payment options that are secure, flexible, and well trusted by many, increasing chances of conversion. Choose an integration format that presents the most relevant payment type to your customers, depending on your business needs.

• Button Generator
• Standard Integration
• Advanced Integration

The button generator provides you with a pre-built code that you can paste on your product page without the need for a shopping cart.
Best for: Businesses that sell at a fixed quantity and price.
(Source: PayPal)

Standard Integration PayPal checkout allows you to include payment options exclusive to PayPal. Requires some coding knowledge to install.
Best for: Most businesses
(Source: PayPal)

PayPal checkout with advanced integration allows you to customize your payment fields on the webpage, as well as use PayPal’s fraud protection tools. Also requires coding knowledge to set up.
Best for: Businesses that want a fully customized checkout.
(Source: PayPal)

Virtual Terminal

PayPal also offers a virtual terminal solution when you sign up for a PayPal Payments Pro service. This feature allows you to accept in-person or over-the-phone payments anywhere with an internet connection and a browser. Note, however, that you will be charged a monthly fee of $30 to use this platform.

You can accept credit or debit card payments by keying-in your customer’s card details or connecting a card reader to your desktop.
(Source: PayPal)

Invoice Generation

Create and customize digital invoices with PayPal’s invoicing tools for small businesses. You can access this feature on any device, customize your templates to fit every customer, and send the invoice through email or with a sharable link. You can also track unpaid invoices and send reminders from any device via your PayPal Business App.

Create PayPal estimates and convert them into invoices with a few clicks once your customers approve your proposal.
(Source: PayPal)

Recurring Payments & Subscriptions

PayPal allows you to create scheduled or recurring invoices that can be delivered automatically at regular intervals. Subscription tools enable you to design flexible subscription plans such as fixed or quantity pricing, add discounted trial periods, and manage your subscriptions from a central dashboard. You also get real-time reports and updates from the dashboard.

PayPal will take you through a step-by-step process on creating subscription plans.
(Source: PayPal)

Buy Now, Pay Later Options

PayPal has partnered with a number of brands to offer PayPal Pay Later plans. This customer financing exclusive gives your customers the option between paying in four interest-free installments or with PayPal Credit, both appearing on your PayPal checkout page. What’s great about this setup is that you also get paid upfront while your customers pay later.

Here’s how:

The dynamic messaging feature displays the most relevant Pay Later option for your customer.
(Source: PayPal)

---

From there, the customer can select their preferred Pay Later option.
(Source: PayPal)

---

Approval is instant and your customer gets clear information about the payment terms for their selected Pay Later option
(Source: PayPal)

---

Once the customer accepts the terms, you get paid immediately and PayPal will handle the collection of monthly installments.
(Source: PayPal)

---

Social Selling Tools

Connect PayPal Business to Facebook and Instagram and make your offerings available for purchase to social media users. PayPal hosts your listings, so you can create and share this on social media using a sharable link, without the need for an ecommerce platform.

Go to the “Sell on Social Dashboard” page to add your product details, including shipping and tax rates, then click the create button to produce a payment link. The next step will give you the option to click on the Facebook or Twitter icons to share your product listing automatically.

You can also copy your payment link and send them out through email, blogs, and messaging apps.
(Source: PayPal)

Accept In-person Payments

• Point-of-Sale
• QR Codes

In 2018, PayPal acquired European POS software Zettle and began offering its features to US-based businesses in July of 2021 as an eventual replacement for PayPal Here. This gives PayPal the ability to process in-person payments in brick-and-mortar locations using tablets or on-the-go with mobile card readers attached to a smartphone.

PayPal Zettle offers you the flexibility to accept payments in-store or on-the-go with its mobile credit card reader.
(Source: PayPal)

For more information on PayPal’s mobile, in-person payment option, read our PayPal Zettle review.

PayPal lets you create a unique QR code for your business, so you can take in-person payments quickly and securely. Share your QR code with your customers through your PayPal app or have it printed and placed strategically around your store or even on your products. You can even add a tipping option in the app.

Create your QR code from the expanded Menu options on your PayPal app.
(Source: PayPal)

Risk Management

• Dispute Resolution
• Seller Protection
• Chargeback Protection

PayPal assists its users in resolving disputes over payment transactions with its own set of management tools. It provides you with a messaging and notification function, along with the ability to upload supporting documents and a platform for appealing a resolution against your favor. It is important to note, however, that your funds are put indefinitely on hold until the dispute is resolved.

The PayPal app provides a dispute resolution management feature to help you communicate with your customer until the dispute is resolved.
(Source: PayPal)

PayPal offers a seller protection program against claims and chargebacks for its business account holders. It will not charge your PayPal balance for “Items not received” or “Unauthorized transactions” raised by your customers through PayPal—as long as your physical goods are sold and shipped with proof of delivery, or your intangible goods are supported with evidence of delivery or order fulfillment.

Know more about the requirements and what’s included in seller protection when you visit PayPal’s website. (Source: PayPal)

PayPal Business accounts enrolled in Advanced Credit and Debit Card Payments are provided with chargeback protection. PayPal assumes liability for your eligible debit and credit card transactions and will reimburse you for the chargeback fee and purchase amount, if the transaction is deemed fraudulent or a customer claims that they did not receive your item.

PayPal provides a step-by-step guide to assist you with handling chargebacks.
(Source: PayPal)

Operations Management

PayPal is now more than just sending and receiving card payments. It also includes a range of tools for managing your day-to-day business operations.

• Taxes: You can set up PayPal to calculate taxes for every transaction. It can also track the payment volume of your business account and send a Form 1099-K to its user if it crosses the IRS thresholds in a given calendar year.
• Small Business Financing: Merchants in need of extra capital can get a small business loan directly from PayPal. It works with WebBank to offer fixed-term loans, payable in weekly installments. Anyone who’s interested can visit PayPal’s website and click on the “Check Eligibility” button, which takes you to a five to 10 minute online questionnaire. You can also customize loan terms and loan amounts. Once your application is approved, funds are transferred directly into your PayPal Business account as early as the next business day.
• Reporting and Analytics: PayPal’s reporting and analytics feature provides useful shopping insights to help improve your sales and plan your marketing strategy. It gives you a list of reports, from a history log to sales insights and details on disputes and chargebacks.
• Shipping Label Tools: PayPal partners with UPS and USPS, which also gets you discounts on their daily shipping rates. And because it’s integrated with PayPal, you can purchase and print shipping labels and track your packages from PayPal.

PayPal Business Ease of Use

PayPal Business is among the most popular payment platforms in the industry and widely used because it makes accepting local and international payments easy. Customers and shoppers recognize it as a secure platform for sending and accepting payments online. However, merchants are constantly expressing their concern on how PayPal freezes accounts and withholds funds.

Next-day Funding

PayPal Business will make received funds available as early as the next day. However, these funds are only available that quickly when deposited into a PayPal account. Withdrawing funds from your PayPal account to your linked bank account and credit card is free and usually takes three to five business days. Instant withdrawals are also available for a 1.5% fee of your withdrawn amount.

Fraud Protection

PayPal uses tools such as a two-sided network, a machine learning engine that monitors card transactions on your website, and analytics to stay up-to-date with existing fraud and evolving cyber threats that can compromise your account. This toolkit is available for PayPal Business account holders with integrated advanced debit and credit card payments.

Customer Support

PayPal offers extended business hours for live customer and technical support. It also provides an extensive knowledge base which includes step-by-step guides, troubleshooting, and developer documentations.

Other ease of use observations to note:

• Easy-to-use app
• Does not require hardware to accept payments
• Secure platform with simple payment methods
• Provides integration with popular online platforms
• Active seller community
• Robust help center
• Text messaging
• Extended business phone hours

What Users Think of PayPal Business

Many small business owners that left PayPal Business a review had positive feedback on it. Reviewers consistently rate it as a user-friendly platform with a simple checkout process.

• G2: More than 1,800 users rated PayPal with 4.4 out of 5 stars, mostly citing that when it works, it’s great—but when you have an issue, it’s tough to get a solution.
• Capterra: PayPal received an overall rating of 4.7 stars, with reviews from over 21,000 users following a similar theme as those on G2.

Generally, merchants love that it’s a familiar and well-liked platform, especially for customers. However, it’s worth noting that PayPal doesn’t function well offline. Support is difficult to reach, and funds may inexplicably become unavailable.

Bottom Line

Overall, PayPal Business is a valuable payment processor if you’re just getting started with payments, if you sell in-person only seasonally or sporadically. Compared to Stripe, PayPal also offers a number of user-friendly payment processing tools that’s useful if you need to get set up quickly. Because it’s so versatile, flexible, and well-recognized, it can help boost trust and conversion rates. PayPal has no monthly fees or contractual obligations, so you can try it with low risk. Check PayPal’s website for promotions on free card readers.

Visit PayPal Business

You May Also Like …

• Read the full pros and cons of PayPal
• Learn more about merchant accounts and how they work