Have you checked your PayPal fees recently? Claim the Merchant Rate.

For many sellers the Merchant Rate will save on fees but be aware that for sellers of mainly low value items the Micropayments rate may make better sense as despite the rate being 5% the fee per transaction is only 5p.

I can not say exactly where the point of saving is for you, that will depend on many factors: Transaction Amount (item value with shipping paid), Monthly Transaction Total, UK or International, Buyers Funding Method, etc… You will need to do the maths.

As a rough guideline, I would calculate that with the Merchant rate and for those that fall into the over £1,500 a month but less than £6,000 per month category, I would calculate that whilst you will only pay 2.9%, when you add on the 20p transaction charge I would question its benefit for transactions that are mainly under £30.

So if your typical UK sale value is under £30 then Micropayments is probably a better option but bear in mind international fees as cross border transactions carry a higher fee (as well as an inflated exchange rate) and a currency conversion fee may also apply. In addition, the buyers choice of funding method (credit cards) can also further increase fees so you may get hammered if for example a buyer in Australia uses a credit card.

With the Merchant Rate, on a monthly transaction total of under £6,000 and selling to the UK you will save half a percent (50p on every £100). Hardly life changing!!

You will need to do the maths and its not as simple as it looks. 🙂

2 Responses

Tony C says:

25 June 2014 at 7:16 am

There is also the Micropayments rate, which was blogged here back in January:

https://tamebaynew.wpengine.com/2014/01/could-paypal-micropayments-save-you-money-on-fees.html
Alex says:

25 June 2014 at 11:32 am

For many sellers the Merchant Rate will save on fees but be aware that for sellers of mainly low value items the Micropayments rate may make better sense as despite the rate being 5% the fee per transaction is only 5p.

I can not say exactly where the point of saving is for you, that will depend on many factors: Transaction Amount (item value with shipping paid), Monthly Transaction Total, UK or International, Buyers Funding Method, etc… You will need to do the maths.

As a rough guideline, I would calculate that with the Merchant rate and for those that fall into the over £1,500 a month but less than £6,000 per month category, I would calculate that whilst you will only pay 2.9%, when you add on the 20p transaction charge I would question its benefit for transactions that are mainly under £30.

So if your typical UK sale value is under £30 then Micropayments is probably a better option but bear in mind international fees as cross border transactions carry a higher fee (as well as an inflated exchange rate) and a currency conversion fee may also apply. In addition, the buyers choice of funding method (credit cards) can also further increase fees so you may get hammered if for example a buyer in Australia uses a credit card.

With the Merchant Rate, on a monthly transaction total of under £6,000 and selling to the UK you will save half a percent (50p on every £100). Hardly life changing!!

You will need to do the maths and its not as simple as it looks. 🙂