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PayPal Rates Increasing on August 2nd

Tags: , , , , Date/Time: July 30, 2021 @ 12:00 pm, by raindog308

PayPal LogoPayPal 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.

 

PayPal Fees Increase

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.

 

 

I'm Andrew, techno polymath and long-time LowEndTalk community Moderator. My technical interests include all things Unix, perl, python, shell scripting, and relational database systems. I enjoy writing technical articles here on LowEndBox to help people get more out of their VPSes.

5 Comments

  1. oleMan:

    Greed, nothing but greed. We have been shifting away from Paypal over the last two years. This means us using Paypal internally and other companies using it.

    Matter of fact, having to move from a host that advertises here because they have chosen to only accept 2checkout which does not support our company Mastercard, but happily accepts Paypal.

    Goodbye Paypal:)

    July 30, 2021 @ 12:58 pm | Reply
  2. Socheat:

    Because of their ridiculous fees, that’s why I don’t want to buy something by using PayPal again.

    July 31, 2021 @ 6:01 am | Reply
  3. Sohot Kall:

    Any alternative?

    July 31, 2021 @ 7:42 pm | Reply
  4. Alk6:
    August 1, 2021 @ 11:02 am | Reply
  5. Cariboo:

    I wonder what the cost difference would be with different crypto coin? Any one know?

    August 4, 2021 @ 10:14 am | Reply

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