Man Using PayPal on Smartphone

As good as PayPal is, one of its disadvantages is the fact that you need to pay fees. Their size depends on location and your operations, but they can become quite high in some situations.

It’s impossible to remove those service fees altogether (the company needs to sustain itself somehow). Luckily, there are ways to reduce the amount of money you need to pay for every transaction.

How to Decrease PayPal Fees?

Depending on how you use the service, we have compiled five different ways to save money. They are:

  1. Use a business discount
  2. Include the tax into the price of your services or items sold
  3. If possible, send invoices less often
  4. Include the fees as an expense if you’re a freelancer
  5. Use PayPal debit card or external methods like TransferWise for cheaper transactions

Now, let us explain everything step by step.

1. The Merchant Discounts

If you’re a business owner who sells stuff online and uses PayPal to receive payments, use a Merchant Discount. It’s a plan that PayPal offers to people like you who make money online.

Unfortunately, not everyone can use it as there are certain prerequisites you have to meet first. Essentially, the more money you make every month, the better the discount you can receive.

The current offers are:

  • 4% + 20p for those who sell up to £1,500 monthly (default)
  • 9% + 20p for those who sell £1,500 – £6,000 monthly
  • 4% + 20p for those who sell £6,000 – £15,000 monthly
  • 9% + 20p for those who sell £15,000 – £55,000 monthly
  • Individual fees for those who sell more than £55,000 per month

2. Include the Tax into the Price

Another and a much simpler solution to the fees is just to include them into your invoices. It works just fine whether you’re selling items or your skills for services.

Just add a percentage to the amount your customers have to pay and they’ll cover it all immediately. Most people won’t even mind paying a little extra. You, however, will save lots of money in the long run.

3. Make Fewer Transactions

A third solution to the same issue is also pretty straight-forward. If you have the opportunity to do it, just use the service less often. Make fewer transactions and send out fewer invoices. Instead, add up several deals or micro-transactions to be covered in one payment.

The logic behind this is simple. You have to deduct taxes for every transaction you make. By using PayPal fewer times, it will deduct a fee from your earnings less often. So, since there’s a flat fee involved, reducing the times you have to pay it will help you save too.

This method also works for those who pay with PayPal to buy items or, say, play PayPal casino games. By buying in bunches or depositing larger sums instead of single item purchases or small deposits, one can save a lot.

4. Fees as Expenses for the Self-Employed

A great way to completely negate the service fee is to include it as an expense in your yearly tax return. This way, you’ll get back all of your fees in a way simply by paying lesser taxes for your freelance business.

We realise that this option isn’t available to everyone. However, if you already choose to include various expenses for your activities, it’s one legit solution.

5. PayPal Debit Card & Third-Party Solutions

Finally, additional methods like TransferWise allow transferring funds from your PayPal account for free. Or, at least, for a reduced price.

If you don’t want to rely on services other than PayPal, however, you can request a PayPal debit card. It allows using your e-wallet funds in outlets directly. Naturally, you may take the funds out as cash at ATMs.