Our evaluation(4/5)
PayPal Business is an e-money account with selling features and financial tools to support your business.
Features
  • Name: PayPal Business

  • Type of account: E-money account allowing you to receive and send money online

  • Payments: Ecommerce, invoicing, over the phone, payment links, card reader

  • Intended for: Registered businesses, self-employed or freelancers

  • Monthly fee: None

  • Debit card: Free

  • IBAN: Does not have an IBAN

PayPal Business Debit Mastercard
PayPal Business Debit Mastercard can be used online and in person and is linked to the PayPal account.

PayPal Business is an e-money account with a wide umbrella of payment features.

Not only does it allow sellers to accept payments in online shops, by links, email invoices, over the phone, even face-to-face – it also has the advantage of being a two-decades-old brand famous for its security and convenience. Buyers only need to log in with an email address and password to make a payment online, instead of entering card details on every checkout page.

While customers only need a PayPal Personal account to make payments, transfer money or sell casually (i.e. not for business), registered businesses, freelancers and self-employed users need to sign up for a PayPal Business account to use features related to their business.

Apart from international payments and money transfers, PayPal Business also offers cash advances, a debit Mastercard, seller and buyer protection and strict fraud protection measures.

eBay used to require signing up with a PayPal account to make or receive transactions on the platform, which had a huge impact on initial growth. Since the beginning of this popular auction website, PayPal has expanded its reach to almost 300 million users and is used on over 900,000 websites globally.

Costs and fees

Common to all PayPal Business services are the lack of contractual commitment and setup fee. It doesn’t cost anything to create a PayPal Business account, nor is there any charge for closing the account.

Only the Virtual Terminal and advanced checkout solution (Web Payments Pro) have a monthly fee on top of transaction fees, while others have only pay-as-you-go fees.

That being said, individual cost structures vary a lot in complexity. Some of PayPal’s services look deceptively simple, but a deep look at the fine print reveals different transaction costs depending on the merchant’s agreement with PayPal and the payment method. Let’s look at the simplest PayPal Business fees first.

PayPal Business services Fees
  • Web Payments Standard (pay buttons on your site)
  • PayPal Checkout (integrated checkout on your site)
  • Email invoices
  • PayPal.Me (payment links)

2.9% + 30p per transaction

+ 0.5%-2% cross-border fee applies to non-UK cards

+ 2.5% fee applies to currency conversion

Chargebacks £14 each if not covered by Seller Protection
PayPal
Business
services
Fees
  • Web Payments Standard (pay buttons on your site)
  • PayPal Checkout (integrated checkout on your site)
  • Email invoices
  • PayPal.Me (payment links)

2.9% + 30p per transaction

+ 0.5%-2% cross-border fee applies to non-UK cards

+ 2.5% fee applies to currency conversion

Chargebacks £14 each if not covered by Seller Protection

Invoicing, PayPal.Me, Web Payments Standard and PayPal Checkout have the same fees: 2.9% + 30p + currency conversion and cross-border fees where applicable. For any of these services, you can apply for custom fees if your monthly turnover is over £50k.

These rates are for domestic cards in GBP currency only. Accepting other currencies incurs a currency conversion fee of 2.5% above the base exchange rate in addition to a 0.5%-2% cross-border fee (percentage depends on country of issue) if it’s a foreign card.

The Virtual Terminal, Web Payments Pro and PayPal Here card reader have the most complicated costs and are subject to an application, eligibility and approval by PayPal. In fact, you may apply for a different fee structure in relation to these services even if your monthly PayPal turnover is less that £50k.

The Virtual Terminal on its own costs £20 per month (cancellable any time) with a standard transaction rate of 2.9% + 30p using domestic payment cards. With a Blended Pricing Fee Structure, you pay 1.2% + 30p per domestic card payment via the Virtual Terminal. With an Interchange Plus Fee Structure, it costs an interchange fee (0.2%-2% depending on card) + 1.2% + 30p per transaction. The two latter fee structures only apply to Visa, Mastercard and Maestro payments, not American Express.

Some of PayPal’s services look deceptively simple, but a deep look at the fine print reveals different transaction costs depending on the merchant’s agreement with PayPal and the payment method.

It is also required to complete the necessary PCI-DSS compliance paperwork and pay annual fees for that, which PayPal can help set up. PCI costs vary, as there are several ways to set this up.

Web Payments Pro has similar fee structures. Firstly, the package has a monthly cost of £20 which includes a Virtual Terminal alongside premium online checkout tools. The standard transaction rate is, by default, 2.9% + 30p for domestic payment cards.

The Blended Pricing Fee Structure for Pro is more costly, though: you pay 3.4% + 30p per domestic card payment. Furthermore, the Interchange Plus Fee Structure charges an interchange fee (0.2%-2% depending on card) + 2.9% + 30p per Pro transaction for domestic cards.

For both Virtual Terminal and Web Payment Pro, a cross-border fee applies only to the Standard and Blended Pricing fees, not the Interchange Plus fees. The 0.2%-2% interchange rate basically replaces the cross-border fee in the latter case.

The PayPal Here card reader also has a choice between Blended and Interchange fees, but there’s a distinction between ‘Standard’ and ‘Merchant’ rates. The following Standard rates are the default transaction fees that do not require in-depth approval by PayPal. The following are the Standard rates for the Blended Pricing Fee Structure.

PayPal Here, Standard fees for domestic cards Blended fees/transaction
Visa, Mastercard, Maestro, Amex – chip, contactless 2.75%
Visa, Mastercard, Maestro, Amex – keyed, swipe 3.4% + 20p
PayPal Here,
Standard
fees for
domestic
cards
Blended fees
/transaction
Visa, Mastercard, Maestro, Amex – chip, contactless 2.75%
Visa, Mastercard, Maestro, Amex – keyed, swipe 3.4% + 20p

Then we have the following Standard rates for the Interchange Plus Fee Structure.

PayPal Here, Standard fees for domestic cards Interchange Plus fees/transaction
Visa, Mastercard, Maestro – chip, contactless IC* + 2.5%
Amex – chip, contactless 2.75%
Visa, Mastercard, Maestro – keyed, swipe IC* + 3.15% + 20p
Amex – keyed, swipe 3.4% + 20p

*IC = card interchange rate ranging between 0.2% to 2.0%. Only applicable to Visa, Mastercard and Maestro cards.

PayPal Here,
Standard
fees for
domestic
cards
Interchange
Plus fees
/transaction
Visa, Mastercard, Maestro – chip, contactless IC* + 2.5%
Amex – chip, contactless 2.75%
Visa, Mastercard, Maestro – keyed, swipe IC* + 3.15% + 20p
Amex – keyed, swipe 3.4% + 20p

*IC = card interchange rate ranging between 0.2% to 2.0%. Only applicable to Visa, Mastercard and Maestro cards.

Eligible businesses can get Merchant rates for PayPal Here, subject to application and approval by PayPal. The following are Merchant rates for PayPal Here transactions with Visa, Mastercard and Maestro via chip or contactless function on the card reader.

PayPal Here, monthly sales volume Blended Merchant fee/transaction Interchange Plus Merchant fees/transaction
Up to £1,500 2.75% IC* + 2.5%
£1,500.01 – £6,000 1.75% IC* + 1.5%
£6,000.01 – £15,000 1.5% IC* + 1.25%
£15,000.01+ 1% IC* + 0.75%

*IC = card interchange rate ranging between 0.2% to 2.0%. Only applicable to Visa, Mastercard and Maestro cards.

PayPal
Here,
monthly
sales
volume
Blended
Merchant
fee
/transaction
Interchange
Plus
Merchant
fees
/transaction
Up to £1,500 2.75% IC* + 2.5%
£1,500.01 – £6,000 1.75% IC* + 1.5%
£6,000.01 – £15,000 1.5% IC* + 1.25%
£15,000.01+ 1% IC* + 0.75%

*IC = card interchange rate ranging between 0.2% to 2.0%. Only applicable to Visa, Mastercard and Maestro cards.

The monthly sales volume refers to the total of what was made the month before through PayPal, so the first month will always incur the maximum fee. The rates you’re paying during any given month is based on the sales volume in the previous calendar month.

Higher Merchant fees apply to American Express (2.75% via contactless or chip, 3.4% + 20p via key-in or swipe). Keyed and swiped transactions with Visa, Mastercard and Maestro cost 3.4% + 20p on Blended and interchange rate + 3.15% + 20p on Interchange Plus.

Businesses normally accepting transactions below £5 can apply for the Micropayments rate of 5-6% + 5p. The lower fixed fee will greatly reduce the overall proportion of the transaction fee.

It doesn’t cost anything to transfer (‘withdraw’) money from the PayPal Business account to your UK payment card or bank account associated with the PayPal account, though currency conversion fees apply if the transfer is from a non-GBP balance.

In all cases where your balance or received transaction is converted into a different currency, a currency conversion fee of 2.5% above the base exchange rate is applied.
For outgoing payments, the currency conversion fee is 3.75-4% (depending on recipient currency) above the base exchange rate.

The £14 chargeback fee can also be applied to any business transaction disputed by the buyer, unless covered by Seller Protection.

The only costs associated with the PayPal Business Debit Mastercard is a £1 cash withdrawal fee. It has no monthly fees. You also earn 0.5% cash back on every purchase made with the card, plus there are no foreign exchange fees on international payments in different currencies.

The PayPal Working Capital cash advance only costs a fixed fee deducted from future PayPal transactions alongside the advance repayments.

Account

PayPal Business is an online account that merchants can use for sending and receiving payments internationally as part of their business.

The account can store money (electronic money or ‘e-money’), which can be withdrawn to a bank account or credit/debit card that must be in your – or your company’s – name. Once attached, you can transfer money from one of your associated cards or bank accounts to the PayPal account.

Type of account

PayPal has alternative banking licences suitable for e-money institutions. It is not a full-fledged bank account, nor can it function as a standalone business bank account. Instead, it is a multi-functional payment platform for managing ecommerce, invoices and in-person payments under one roof.

Whichever way you transfer, this must be done manually in the PayPal account, so payouts from online and in-person transactions cannot clear in your bank account automatically. Therefore, if you need payouts settle in your bank account directly, this is not the solution.

Unlike a traditional bank account, PayPal Business does not have an IBAN, so other people cannot transfer money from their bank account to your PayPal account.

However, others are able to transfer money from their own PayPal account to yours using just your email address. You can also transfer internationally to other PayPal users via just their email address.

PayPal Business debit card

The PayPal Business Debit Mastercard is a debit card that allows you to spend money straight from the online account. You are only allowed to use it for business expenses – it is not for personal use. The card can be used anywhere that accepts Mastercard, whether online or in stores.

Given the fact that transactions received in the PayPal account arrive almost immediately after a payment, you’ll be able to access money quickly, even over a weekend where banks would normally not make payouts with a traditional payment system.

Credit: PayPal

The Mastercard-branded PayPal Business card is free.

If the PayPal account runs out of a positive balance, it will use money from your primary payment card or bank account when you spend money with the Debit Mastercard without having to top up this balance manually.

The card is a very attractive option for those travelling or purchasing stock from abroad, because it does not charge cross-border or currency conversion fees, plus it avoids the hassle of choosing which card to use for the most favourable fees.

Ecommerce

PayPal is known for online payments, so it is unsurprising to learn there are several types of ecommerce payments with PayPal, grouped into the following three solutions.

Most basic solution: Web Payments Standard

Customise PayPal Buttons from your PayPal account, copy the HTML code and add it to your online shop. Some website builders allow you to edit the buttons from their platform directly.

Payment flow: These integrated buttons, displayed at your online store checkout, will open a pop-up window where the customer can log in to their PayPal account to finalise the transaction. After a successful payment, the customer is led back to the order confirmation page on your website.

PayPal Business pay buttons

Selection of payment buttons that can be customised and pasted in to your online store.

Popular solution: PayPal Checkout

Create a faster, more seamless payment flow in your website by placing PayPal Checkout buttons directly on your product pages. You can also implement One Touch which enables customers to pay without logging in to their PayPal account or without filling in billing details at checkout.

Buyer and Seller Protection are applicable with PayPal Checkout, apart from being fully PCI-compliant.

Payment flow: Customers can choose to pay from the shopping cart page or directly from the product page. A secure pop-up window opens, where the customer reviews the payment details before confirming everything. PayPal will automatically pass the relevant shipping and contact information to your order management system so you can handle the rest.

Most advanced solution: Web Payments Pro

Package includes Express Checkout, Direct Payments API, Fraud Management Filters and Virtual Terminal. Optional add-ons include Fraud Protection, Advanced Fraud Management Filters and Recurring Payments Tool.

Customise your checkout experience with the help of a developer, or choose an ecommerce platform where Web Payments Pro is already integrated for easy customisation. Manage all your online transactions through any payment method in one PayPal account – even receive debit and credit card transactions within minutes directly in your PayPal account instead of your bank account.

Card security is also enhanced on this plan, where 3D Secure with Verified by Visa and Mastercard SecureCode are included alongside address verification checks and advanced fraud management filters.

Payment flow: Whether customers pick ‘credit or debit card’ or ‘PayPal’ at checkout, they can complete the payment on your website directly, not in a pop-up window. Pages, look and information can be personalised to suit your business.

Email invoices

A popular payment method for freelance professionals is email invoicing. With a PayPal Business account, you can create and send personalised invoices over email, which the client can pay for through either their PayPal email address or by entering their credit card information on a secure payment page.

PayPal invoice template

Customisation options in a PayPal email invoice draft.

There are quite a few customisation options to ensure the merchants can include all the legally required information, but also extras like automating invoices to send out at any frequency, options for partial payment, estimates, leaving a tip, invoicing multiple customers and attaching a personal memo to each invoice.

The PayPal Business app can send invoices from your phone, making it easy for professionals on the road to charge clients.

PayPal.Me payment links

Anyone with a PayPal account can create their own PayPal.Me link to use permanently for sending to others who need to pay you any amount. With a PayPal Business account, you get to use these buttons for business purposes.

Example of a PayPal.Me link.

The links are in a paypal.me/yourchosenname format, where the last part could be your business name. This URL will lead to a checkout page where anyone can enter any amount to pay in to your PayPal account using their own PayPal login as confirmation.

If you add a number at the end of the URL, the recipient will see a checkout page with that amount pre-specified to pay (e.g. “paypal.me/yourchosenname/40” for a £40 bill).

The links are ideal for mobile payments over text, email, social media or messaging apps like WhatsApp. The fact that others can enter any amount to pay makes them great for a website or page where donations are requested, whether for charity or fundraising purposes.

Virtual terminal

PayPal’s Virtual Terminal is for payments over the phone or by mail order. It is not available by default in the Business account – you have to speak to a sales rep on the phone to have it set up. Upon approval, it will be added to your account.

The virtual terminal is basically a web page where payment details are entered manually by the merchant whilst he or she talks to the customer on the phone. If using mail order, the merchant will process transactions using the card details noted by the customer in writing.

The details on the virtual terminal page include basic transaction information, customer and card details. PayPal has an edge over many other virtual terminals in that you can choose the currency of the transaction – handy if your customer base is international, but also expensive if you accept many foreign cards as they incur cross-border and currency conversion fees.

This is one of the few services with a monthly fee as well as the requirement to set up PCI-DSS compliance to ensure you are following security protocols as you are handling the customer’s sensitive card details.

PayPal Here card reader

Apart from all the online payment options, PayPal Business users can accept cards face to face through the PayPal Here card reader coupled with a mobile app.

Together, they accept cards using the network or WiFi connection of the phone or tablet.

After purchasing the card reader, you can download the PayPal Here app on a compatible iPhone, iPad or Android smartphone or tablet and connect it via Bluetooth with the card reader.

The app has enough point-of-sale (POS) features to function as a simple till in a small sh