This week, PayPal Fees changed in the UK. From the 19th of August, instead of paying 3.4% plus 20p per transaction with lower Merchant Rates for sellers turning over more than £1,500 per month, PayPal introduced new flat fees with Tiered rates only available for merchants with a turnover greater than £20,000 per month.
The new PayPal fees for most smaller merchants will now be 2.9% plus a 30p fixed fee. This will adversely impact sellers with very low average selling prices as the increase from 20p to 30p would be a greater proportion of the selling price than the 2.9% fee.
It’s also worth noting that if you fully refund a Commercial Transaction payment, PayPal will retain the 30p Fixed Fee portion of the Commercial Transaction Fee. You need to be aware of your returns and refunds rates and if they are high build the cost of 30p per return into your prices.
If your average selling prices are very low, you may wish to apply for PayPal Micropayments for which the base rates are 5% plus a 5p fixed fee.
What about tiered rates?
The current PayPal Fees section of the User Agreement notes that PayPal Merchant Rates have now ended but mention nothing of the new PayPal tiered rates. PayPal emailed some users back in June informing them of the new tiered rates, so if you take more than £20,000 per month through your PayPal account we would suggest giving them a call to check that you are getting discounted rates. If you’re turning over less than £20,000 then you’ll be stuck on the new 2.9% rate regardless.
When you might still pay the old 3.4% fees
So the fees are changing and the 2.9% plus 30p will be what you pay when you sell on eBay, and it might or might not be what you pay on your website depending upon which PayPal option you have implemented. Some users will still pay the older 3.4% website fees which will be a surprise, especially if you were on a Merchant rate with a significant discount:
- PayPal Web Payments Standard and PayPal Checkout fees are 2.90% + £0.30 per transaction.
- PayPal Web Payments Pro fees are 3.40% + £0.20 per transaction plus a £20 monthly fee.
It’s worth noting that PayPal have a myriad of different fees, many of which you might not notice (like currency conversion and currency spread) but which will impact your business. It’s worth keeping a check on your fees, especially since the recent PayPal Fees change, to make sure your costs are inline with your expectations.
Finally, if you are based in Ireland you may still benefit from paying the 20p fixed fee, however PayPal have already announced this will be going up to 30p in the near future.