PayPal announced earlier this month that they are jacking up their fees…er, we meant to say, “making changes to published rates to better align pricing with the value their products and services provide.”

The increase is effective August 2, 2021 and the announcement states that this applies to United States merchants.

Depending on how you’re using PayPal, the fees could be quite significant.  Digital payments are increasing more than 20%, jumping from 2.90% + 30 cents to 3.49% + 49 cents.  In some cases, this can represent an even higher percentage-of-revenue increase for providers, most of whom accept PayPal.  A quick survey of recent offers on LowEndBox and LowEndTalk shows that PayPal is still the most commonly accepted payment method.

Let’s take a case study of a small hosting provider.  They have 500 clients and sell VPSes at an aggregate price of $7 per month.  Their gross revenue is $3500.  Previously, their cost was:

• 2.9% of this $3500, or $101.50 per month
• 30 cents per transaction, or $150 per month

This is a total PayPal cost of $251.50 per month, or 7.2% of their revenue.

Now with the new fees, their costs jump to:

• 3.49% of the $3500, or $122.15 per month
• 49 cents per transaction, or $245 per month

This is a total PayPal cost of $367.15 per month, or 10.5% of revenue.

Having 7% of your revenue sliced off for processing fees is pretty rough; 10.5% is egregious.  In comparison, when you go down to your corner grocery store and swipe your Visa or MasterCard, the merchant there is only paying perhaps 4% depending on their volume.

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raindog308

Dread Lord of LowEnd Content at LowEndBox

I'm raindog308, techno polymath and long-time LowEndTalk community Administrator. My technical interests include all things Unix, perl, python, golang, shell scripting, vintage operating systems such as MVS, and relational database systems such as Oracle, PostgreSQL, and MySQL.

I also enjoy using LEBs! I have an empire of little guys for VPNs, larger guys for apps, and big guys for databases and storage. When I'm not in front a screen I'm into German Shepherd dogs, quality knives, target shooting, theology, tabletop roleplaying games, and forest hiking.

I enjoy writing technical articles here on LowEndBox to help people get more out of their systems. You can find me on LowEndTalk @raindog308

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