- Highs: No lock-in or monthly fees, also allows you to send electronic invoices.
- Lows: Complex fee structure and least competitive fees.
PayPal Here, PayPal’s Chip and PIN reader has a lot in common with the UK’s other leading mobile Chip & PIN card readers like iZettle and SumUp, but there are some differences in price, cards accepted and functionality that you want to know about before making a decision. We’ll look at how PayPal compares to the UK competition (Text continues below the table).
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|Solution Type||Contactless Chip & PIN reader + mobile app||Contactless Chip & PIN reader + mobile app||Contactless Chip & PIN reader + mobile app|
|Device price (upfront cost)||£62.5 ex. VAT|
|Debit/Credit Chip card transaction cost||2.75% – 1.50% depending on volume (reduces from £6000 in monthly card transactions).*||2.75% – 1.0% depending on volume (reduces from £2020 in monthly card transactions (calculate your rate)||1.95%|
|Swipe||3.40% + 20p||2.75% – 1.00% depending on volume||1.95%|
|Device size||10.3 cm x 7.1 cm x 1.8 cm. Weight: 118 g||11 cm x 7 cm x 2 cm. Weight: 130 g||7cm x 7cm x 2.5cm|
|Transaction limits||Minimum £1, maximum £150 for payments made via PayPal check-in. PayPal reserves its right to place reserves on the account or other “protective actions”||Minimum £1, maximum £200,000/day for business account, and £5,000 per card and transaction. £100 daily for transactions using the magnetic stripe.||Minimum €1, maximum limit varies individually.|
|Backup methods||Magnetic stripe reader, Manual entry||Magnetic stripe reader||Magnetic stripe reader|
|Printer support||Star Micronics SM-L200, Star SM-S230i. Additional options for iOS.||Star TSP100LAN, Star TSP654II, Star SM-S220i, Star SM-T300i, Star SM-T400i, Star SM-L200. Additional options for iOS.||Bixolon SPP-R200IIiK/BEGE / SPP-R210iK/BEGE, Star SM-L200, Star TSP100LAN.|
|Product inventory||Yes, through app||Yes, can be edited through app or website||Yes|
|Settlement delay||Instantly to PayPal account. Additional time to withdraw to bank account. Not all funds might be available straight away.||3 business days in most cases||3 business days in most cases|
The PayPal Here device is similar to what iZettle used to offer before it upgraded to the iZettle Reader mid 2016. It is black and rather bulky compared to the sleeker iZettle and SumUp devices.
If you are an Android user, make sure it has Bluetooth 2.0 or higher. Samsung Galaxy users should be aware that PayPal Here does NOT work with many of the models, such as Galaxy Ace, Galaxy Ace Advance and Galaxy Pocket. Windows phones are not compatible.
How does it work?
PayPal Here allows small businesses to take payments anywhere. It is suitable for any business who would like a card reader with low initial cost and no monthly fees, but is particularly suitable for mobile businesses, such as food delivery services, market stall vendors and tradepersons.
You need to get one a PayPal Here card reader and download the free app to your mobile phone. The card reader must be connected to your mobile via Bluetooth. PayPal Here is available for Android phones, iPhone and iPad.
The standard Chip & PIN PayPal Here card reader v.1 was launched in 2013 and is now phased out for the v.2 card reader launched in mid 2015 which also accepts contactless payments.
PayPal Here’s contactless card reader connects with Bluetooth to a smartphone or tablet with the PayPal Here app
PayPal Here is only for businesses and you need an approved PayPal business account to qualify.
Standard cards supported
PayPal Here supports Visa, MasterCard, Maestro and American Express. For amounts up to £30 customers can tap their contactless card on the device without entering their PIN. Manual entry and swiping og a magnetic stripe card is also possible, but this comes with added fees (see below).
PayPal’s card offering is similar to SumUp, with the difference that SumUp also offers V Pay. With iZettle you also get Union Pay, which is desirable for businesses catering to Chinese tourists.
Apple Pay and Android Pay are both compatible with PayPal Here, though not yet Samsung Pay.
PayPal Here charges and fees
This is a big topic, and it is where PayPal Here falls short of its competitors. Firstly, because the fees are higher, and secondly, because the fee structure is very complex for a “simple” pay as you go system.
Getting the card reader is the easy part. It costs £75 including VAT. Given that that you then own the terminal and have no further monthly rental charges, it is affordable. Shipping is included for UK addresses. The app for iPhone, iPad or Android devices is free.
The transaction fees is where things start to get difficult. The table to the right gives you an idea. Your rates will depend on your monthly volume, the type of cards used, and whether the card payment was made with Chip, tap, swipe or manual entry. Whether the card was issued in the UK or not is another cost factor.
Visa and MasterCard can qualify you for a lower processing rates than 2.75% if your monthly sales total from cards is over £6,000. Amex is always processed at the top rate of 2.75%, and higher if the swipe or manual entry method is used.
Chip and contactless
Chip and contactless
Manual entry and swipe
|Foreign cards||+ variable fees|
The simplified table with rates by card shows the blended pricing rate. There are however two types of pricing structures to choose from: a Blended pricing, and an Interchange Plus plan.
The interchange plus fee structure contains two elements – the fee set by Visa and MasterCard, and the fee set by PayPal. The Blended pricing is more predictable – you pay one rate regardless of the type of interchange fee charged by Visa and MasterCard.
PayPal Here transaction fees for MasterCard and Visa
|Total monthly sales||Blended fee||Interchange Plus|
|Up to £6,000||2.75%||IC + 2.5%|
|£6,000.01 – £15,000||2.0%||IC + 1.75%|
|£15,000.01 – £55,000||1.5%||IC + 1.25%|
|£55,000+||by arrangement||by arrangement|
IC = card interchange rate. Varies from 0.2% to 2.0%
Exclusions to fee rates
- Manual entry of cards details or swiping magnetic strip: 3.40% + 20p (Blended fee), or IC + 3.15% + 20p (Interchange Plus)
- American Express are charged at 2.75% for chip and contactless payments, and 3.40% + 20p for manual entry and swipe.
- Additional cross border fees for cards issued outside the UK.
The Interchange Plus option can be considered for businesses accepting predominately debit cards. Most MasterCard, Visa and Maestro debit cards issued in the UK and the European Economic Area carry a 0.20% interchange fee. This would make the total transaction charge 2.70% for monthly volume below £6,000 if you only accept UK issued debit cards.
As soon as you start to accept credit cards, and especially corporate cards, the charges become less affordable, and in some cases acceptable to most businesses. Corporate MasterCards typically apply a 1.60% to 1.90% interchange rate. If you accept such cards under the Interchange Plus plan you pay 4.10% to 4.40% per transaction for monthly sales under £6,000.
Another difference is that if you select the interchange plus plan, your funds will take 1-2 business days to reach your PayPal account, while payments on the blended rate plan will be credited to your PayPal account immediately.
SumUp charge a flat fee of 1.95% for all transactions regardless of cards, and iZettle apply a sliding rate starting at 2.75% like PayPal. In comparison, the iZettle fee lowers at monthly volume of £2,015. With PayPal your fee will lower to 2.00% only when you reach £6,000 in monthly sales, while with iZettle you will get 1.78% a the same monthly sales volume.
Additional fees for foreign cards, which can be a deal breaker for some businesses.
The PayPal Here app experience
The PayPal Here app has been developed since it was launched in the UK in 2013. The functions mimics a basic Point of Sale system. You can set up a product list with images, add them to categories, and set variants, VAT rates and discounts.
To enter a new sale in the app, you can either enter the amount manually, or select and item from the product list. PayPal refers to their product list as an inventory, but there are no inventory management functions to keep track of your stock.
You can use the PayPal Here app to track payments, including cheques and cash, and issue invoices and receipts. On your PayPal account you will see both online PayPal sales and sales through PayPal Here. For vendors who already do business online with PayPal, this might be an attractive prospect.
Receipt printer options
PayPal Here works with Star Micronics receipt printers that can be connected either via Bluetooth or WiFi depending on which model you choose. Star SM-S220i, SM-T300i and SM-T400i are portable receipt printers that connects to your phone via Bluetooth. The paper width is 57mm, 80mm or 112mm depending on model you choose. These printers also work with iZettle, and you can read our mobile printer review for more information.
There are two desktop options, one that connects via Bluetooth, Star TSP654IIBi and one via WiFi, Star TSP100LAN/TSP143LAN.
If you have decided from the outset that you need a receipt printer, you might be better off buying a bundle with the device and a printer that matches your need. Bundles with the PayPal Here card reader and mobile Bluetooth printer sell for £315 and up depending on the model.
The real advantage: PayPal integration
As we have seen, PayPal does not have the most competitive pricing model. Its device is slightly more expensive, and if your transaction volume reaches a certain limit per month, you do not get the benefit from the sliding transaction fees of iZettle.
What does make PayPal an attractive option for some is the integration with an existing PayPal account using for online sales or their virtual terminal for phone payments. If you already get a significant portion of your revenue through PayPal and/or eBay and like the sales tracking it offers, it can make life easier to be able to track mPOS payments as well.
What about customer service?
It is no secret that PayPal has received a lot of stiff criticism in terms of the performance of the company’s customer service. PayPal is a big operation with the processes to match. A strong point is their website, which gives answers to most questions customers may have when setting up and using PayPal Here.
When PayPal Here was launched in the UK, the call centre was based in Ireland. The customer service team is now UK based and available over the phone from Monday to Friday from 10 am to 10 pm and weekends 9 am to 9 pm.
Getting through on the phone can be a bit of a hassle, similar to trying to resolve an issue with an online account. The biggest issue is account holds if processing more than £400 in payments per week (see below).
The PayPal account limitation extending to PayPal Here
Many users of PayPals online payment service have gotten the dreaded PayPal email about their accounts being limited, and not being able to access their account, or withdraw money, until the “issue” has been resolved.
In the first six weeks after PayPal Here was launched in the UK, there were many reports of such account limitations being put in place after PayPal users downloaded the app for PayPal Here, leading to existing funds on the PayPal account being frozen for 10-30 days. We will continue to monitor this issue, and update the review as we get more information.
Online payment giant goes face to face
Almost anyone who has paid online has used or heard about PayPal. With a 2016 revenue of £8.7 billion, PayPal is the industry leader in online money transfer. Founded in 1998, the company was acquired by eBay in 2002 then split in 2015. It operates out of San Jose, California. The UK is PayPal Here’s first attempt to penetrate the European mobile payment market, the UK already being PayPal’s second biggest market outside the United States.
PayPal Here has gotten less attention in the UK than market leader in app based payments, iZettle. During 2016 PayPal seemed to have focused on developing its app to make it on par with iZettle in Europe and with Square in the US. The result is a more attractive payment app, but the complex and less competitive fee scale makes it less of an attractive offering.
- Can integrate payments from card (Chip & PIN, NFC contactless, swipe and manual entry), cash, cheques, PayPal and eBay.
- The app experience has gotten better.
- Easy to use, good user resources on the website.
- The best rate of 1.9% + 20p (£15,000 minimum monthly card payments) is not the best for high volume businesses. iZettle fees go down to 1.0% and SumUp offers a flat rate of 1.95% for any sized merchant.
- Account holds and limitations is an issue for many also with PayPal Here
- Interaction with customer service can sometimes be a pain.