PayPal invoice fee guide

PayPal is the most well known digital payment and invoicing solution. Its total payment volumes hit over $1.5 trillion in 2024 and the platform boasts nearly half a billion users worldwide.

If you're looking for invoicing platforms with the best fees, then you're probably taking PayPal invoice fees into account because of its strong brand visibility. 

But there's a chorus of business owners, consultants, freelancers and other professionals who question its fee structure, especially over the last few years, which has seen a rise in global invoicing and payment competitors.

So if you're wondering whether PayPal's fees are worth it compared to other platforms that offer lower rates or wider feature sets, stick around.

On this page, we'll go through PayPal's invoicing fees, its features and whether rivals like Acctual or crypto powered apps are better suited to your business.

Even a slight percentage difference accumulating over time can directly impact profit margins, cash flow speed and client satisfaction.

Understanding PayPal invoice fees: Does PayPal charge for invoices?

PayPal's fee structure can be complex based on how you're collecting payments, cross border transactions and other hidden costs for your business.

The actual use of PayPal invoicing is free. It has no setup or monthly fees associated with using the feature. You're only charged when a customer pays you online through the invoice or related links.

Simple enough.

What percentage does PayPal take from invoices?

The rate you pay varies depending on country, region and payment type.

The standard rate for domestic invoice transactions is 3.49% plus a fixed fee (around $0.30, depending on your currency). However, this fee is lower when standard credit and debit card payments are made at a fee of 2.99% plus a fixed fee.

Payments by bank (ACH) are cheapest at a 1% fee capped at $10 per transaction, plus, if you enable PayPal Pay Later options, you'll be stung with a 4.99% plus fixed fee.

Here's a quick look at the fee structure for domestic invoices:

If you're receiving international invoices, then you'll be hit with another percentage based fee of an additional 1.50%.

So costs can quickly add up. If you take a 3.49% PayPal checkout fee plus the fixed $0.30 fee and a 1.50% international fee, you hit 5% or more fast. So you might find yourself charged $50 on a $1,000 invoice.

Adding to this, if there is currency conversion involved, you could also incur hidden fees. PayPal charges above market rate for your currency transaction, adding another 2-3% in effective costs.

All of this is the reason why many business owners are turning their back on PayPal, with fees often soaring between 5%-8% on payments from invoices.

That's not just a small increment. It has immediate effects on your cash flow.

The hidden costs beyond the PayPal transaction fees

Those upfront fees are already expensive and higher than a lot of competitors like Acctual, which only charges a 1% flat rate.

To make things worse, there are several hidden fees that you might end up paying if you're conducting a lot of business through PayPal.

Withdrawal and payout fees

These vary from region to region. In some countries, there's no cost to withdraw PayPal funds to a bank account. But in the US, there's another $3 fee attached. Another small but often overlooked expense is every time you move money out of PayPal.

Processing delays

Processing delays also impact cash flow. As PayPal doesn't deposit straight into your bank account, you might have to wait one to three business days and risk potential compliance holds before you receive cash in your bank account.

It can be a painful blocker in your operational agility and might lead to you taking short-term credit, which will incur its own costs in interest.

Dispute and chargeback fees

Dispute and chargeback fees are another liability for your business. They can rack up $15-$30 per incident. And if you become flagged with frequent chargebacks or marked as a high risk account, your transaction fees are further levied at 4.99%.

While PayPal might be acceptable for the odd small transaction, the cumulative cost of all these different fees is incredibly frustrating and leaves you not knowing your real bottom line after you've invoiced.

Comparing PayPal to competitor solutions

Let's look at a clear breakdown of PayPal compared to competitors like Acctual, Stripe, Wise and more:

Overall, you'll see PayPal's high fees are simply a cost of convenience. You might already have a PayPal account, so it's natural to start using it for business invoicing. But when you have specific needs such as international, recurring billing, crypto and more, PayPal is rarely the cheapest, most effective invoicing solution.

Why Acctual is a better alternative

Acctual is the most flexible way to invoice and get paid in any currency. It's unparalleled in its 1% flat fees and seamless integration for cross border and cross currency invoices.

You can use it however you like, for simple fiat to fiat domestic invoices and payments or for international currency payments. Plus, you can even integrate crypto without any complications.

For example, you can invoice a customer and allow them to pay in Dollars or Euros while you get paid in stablecoins like USDC or vice versa. A customer could pay you in USDC stablecoin and you could get paid directly into your bank account in US dollars.

The system is a leap forward in modern invoicing. During the invoice creation process, simply select how you want to be paid and add allowable options for your clients.

High fees and multicurrency headaches of global payments disappear and everything is handled almost automatically. You don't even need to worry about markups on currency conversions or hidden fees. It's convenient for simplifying invoicing between businesses and clients.

Simple sign up flow

It takes seconds to get started with Acctual and integrate your bank and accounting system. The user interface is fast and straightforward, offering you the ability to sign up with Google or manually with an email and password. Then you get a guided onboarding experience.

You can choose between an individual account (which is perfect for freelancers and consultants) or select a business account for a registered company.

You don't even need to put in a credit card to choose your plan, which includes:

• Free: Great for individuals getting started

• Growth plan: Includes automation and batch payments

• Company plan: Advanced approvals and integrations

• Enterprise plan: Custom solutions and large scale operations

Then you can link up your accounting system like Xero or QuickBooks and everything's ready to go.

Simple, smart invoice creation

Acctual's invoicing tool is even easier than PayPal's. In addition, you get added flexibility without the crazy fees.

Whether you're a small business or a large organization, you can create an invoice tailored to your standards. When you create a new invoice, it's automatically filled with your branding, company name, email, address and tax numbers.

Then you can add customer details, which are saved for repeat clients to add in one click. Finally, add the items and price details along with payment information and terms. At this point, you can select the payment methods you want available, including crypto or fiat, which can include flexible payment options for your client.

When ready, send the invoice via a payment link or directly to the client over email.

Complete invoice management

Once you've created and sent the invoice, management is clean and trackable. The invoice management feature allows your team to mark as paid, resend or void invoices in one click. It keeps you organized throughout the payment process, so you always know where outstanding invoices and payments sit.

Invoice payments and fees

When your client pays your invoice, everything is handled for you. Acctual isn't just an invoicing tool.

Your client pays in their preferred method, whether that's their local currency or crypto stablecoins. Then, the money is automatically converted and transferred into your preferred bank or crypto wallet.

So if your client wants to pay in US dollars and you want to receive funds in GBP, everything happens automatically behind the scenes and money arrives in your bank account.

If a client pays in US dollars and you want to receive it in USDC stablecoin, funds arrive directly in your crypto wallet.

All of this happens for a flat 1% fee.

There's no need to hold multicurrency accounts on a platform or negotiate withdrawal fees and delays as you would on PayPal. Simply create an invoice, send it and get paid.

Fund transfers

If you’re handling dozens of international invoices and multiple currencies, then PayPal’s fees and multicurrency accounts are an unnecessary complication. Acctual’s transfer feature enables you to move funds directly between bank accounts and wallets in seconds. Or even switch stablecoins across blockchains. So you can go from one crypto wallet to another or make international transfers between fiat accounts seamlessly. 

Everything is automated and taken care of behind the scenes. So you can receive US dollars via a bank transfer and have it automatically converted into USDC on Ethereum… Or vice versa. It’s all super straightforward using the transfer feature to select source, destination and amount before confirming the transfer.

Made for teams

Acctual supports growing businesses with complete team collaboration built into the platform. As your company grows, you can invite and add team members with complete permission management. Any chosen team members can start creating and sending invoices.

As an admin, you'll have complete control over the access. So as your team changes, you don't have to worry about complex password management or funds going missing from an account.

Free invoice generator

If you want to get started quickly with Acctual, try the free invoice generator. You can send your first invoice without even needing an account. You can use all the flexibility of Acctual, including crypto and fiat payments, straight away.

While PayPal requires laborious account setup and the pain of spiraling fees, Acctual will have you sending bespoke invoices in less time than it takes to make a cup of coffee.

All with completely transparent pricing. You'll always know exactly what you're paying and when you're paying. A simple 1% fee covers everything, including giving your clients a choice in the way they pay.

Plus, funds always arrive directly into your chosen wallet or bank account. No withholding funds, currency conversion costs or withdrawal fees.

So if you're frustrated with PayPal invoice fees, Acctual is the best alternative.