Is PayPal Free For Business? Fees & Alternatives

Many entrepreneurs and small business owners want to open up a business account to make handling money as smooth as possible. Is PayPal the right business account for your business?

In this article, we’ll look at whether PayPal is free for business, any additional fees, and other low-cost business accounts that meet your needs. In addition, we will talk about Wise Business as a great alternative to PayPal.

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Is PayPal free for business?

It is completely free to sign up for a PayPal Business Account. There aren’t any monthly fees, cancellation fees, or set-up costs.

With their range of PayPal merchant account fees, you’ll instead be charged for each transaction rather than a recurring amount each month.¹

List of Additional PayPal Fees and Costs

PayPal is upfront about any fees and costs that you’ll incur through your business account. These can depend on where you’re located, so we’ll be looking solely at the U.S.-associated costs². Let’s get an overview of them:

• Accept Credit and Debit Cards Online 2.59% + $0.49 per transaction
• Take Card Payments in Person 2.29% + $0.09 per transaction
• Accept Online Payments Using PayPal Methods3.49% + $0.49 per transaction
• Accept Payments Through QR Code2.29% + $0.09 per transaction
• Additional Fee for International Commercial Transactions ³ 1.50% per transaction
• Currency Conversions 3 - 4% spread (PayPal’s markup)⁴

PayPal charges fees based on where the merchant is located and the payment type. When it comes to international transactions, merchants are charged threefold – there’s the base acceptance fee, the additional fee, and then the currency conversion fee, which can be costly for businesses that conduct operations overseas.

Other Low-Cost or Free Business Accounts

If you’re not too keen on PayPal’s fee structure or want to find other options that might suit your business better, there are a range of other cost-effective business accounts that we’ll go over below.

1. Wise Business - Great for managing your international business

Banks and money transfer providers often add a markup on the exchange rate to make extra profits.

Wise is different. Its smart new technology skips hefty international transfer fees by connecting local accounts all around the world. Which means you can save money when you use Wise to make business payments abroad.

Check how it compares with PayPal below:

2. Shopify Balance Account

The Shopify Balance Account is a top choice for independent and small businesses, especially those that already use the Shopify platform. This business account and card were designed to cater to the financial needs of entrepreneurs who are looking for low-cost solutions for a growing business. Being built into the Shopify Admin and Shopify app, it's easy for Shopify sellers to stay on top of their finances, get paid faster, and grow their earnings.

Features⁵

• Automatically set aside sales tax.
• Earn 3.86% APY on all money held in the Balance account.
• Comprehensive dashboards and reports for a full view of business finances.
• Physical and virtual business spending cards.
• Earn cashback (2% on eligible business purchases) and get access to Visa benefits.
• Shopify sales earnings deposit as fast as one business day.
• Deposits up to $250,000 FDIC insured.

Fees

Shopify Balances charges no monthly, account, or transfer fees. However, there are daily account transaction limits depending on the transaction type and your set limits. You can also only transfer funds in USD, which means that there aren’t any currency conversion capabilities, and you’d have to deal with conversions on your own.⁶

3. Relay

Relay aims to put small business owners in control of their cash flow with their online banking and money management platform. With their user-friendly, easy-to-use dashboard, they can see exactly what they’re earning, spending, and saving, so bookkeeping and tax payments are made simple.

Features¹¹

• Open up to 20 checking accounts to separate and organize cash.
• Issue physical and virtual spending cards for you and your team – up to 50 Visa debit cards.
• Automate transfers to your accounts using percentages or dollar amounts.
• Send ACH payments, domestic and international wires, and checks.
• Sync with accounting, payroll, and other money apps such as Xero, QuickBooks, Wave, Gusto, and more.
• Accounts Payable feature to pay bills.
• Role-based logins for team members, bookkeepers, and accountants.
• Earn 1% - 3% with the Relay Business savings account.¹²

Fees

Relay offers a free plan with no account fees, $5 outgoing domestic wires, and $10 outgoing international wires. However, if you’re looking for free wire transfers, the accounts payable feature, payment consolidation, faster ACH payments, and more, the Relay Pro plan costs $30/month.¹³ Relay uses a live rate for currency conversions based on the foreign exchange market and applies an extra 1%+ fee.¹⁴

4. Lili

Lili is a digital banking app that has all the banking features a small business owner needs, including accounting software, a range of resources like statement sheets, and online banking tools. The dashboard provides a modular, consolidated overview that will help anyone take better care of their business finances.

Features^15,16

• Savings account with 4.15% APY.
• Visa business debit card with cashback.
• Multi-user access.
• Automatically generated financial insights and reports.
• Smart bookkeeping with Lili AI.
• Integrate with external accounting apps like Freshbooks.
• Automated tax savings throughout the year and pre-filled tax forms.
• Customizable invoicing software.

Fees

Lili offers four different tiered plans. Lili Basic is their free plan that comes with basic banking capabilities. For $9/month, the Lili Pro plan comes with expense management features and interest on savings, among other extras. At $20/month, the Lili Smart plan has a whole host of features, such as smart bookkeeping, bill pay, tax reports, and more. Their most costly plan is the Lili Premium plan at $35/month, which comes with all the features Lili has to offer.¹⁷

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Sources

1 - PayPal Business
2 - PayPal Business - Pricing
3 - PayPal - Merchant Fees
4 - PayPal - Merchant Fees
5 - Shopify Balance
6 - Shopify Help - Transactions
11 - Relay Main Page
12 - Relay Savings Accounts
13 - Relay - Pricing
14 - Relay Support - How to Convert Currency in Relay
15 - Lili Bank
16 - Lili Bank - Accounting
17 - Lili Bank - Plans
18 - Wise Trustpilot