How does PayPal Make Money?

There was a time transferring money overseas is a daunting task. Thanks to PayPal!!! PayPal is the popular and largest online payment processors across the globe. People can easily send and receive payments in a secure way. The application accepts global and local payments.

People are buying products or services online without using a credit card. They’re choosing PayPal payment while processing the transaction. It improves their financial security. Also, PayPal allows buyers to order products in different currencies to make international purchases easier. Currently, PayPal has 325 million active users across the world. Simply put, PayPal is offering excellent services to its customers. Also, earning great profits on transactions and other value-added services. 

Let’s dig deeper!!!

How does PayPal make money?

Transaction Fees

Its no secret there are two types of PayPal accounts are created. According to the requirements, people create an account on PayPal.

  1. Personal Account
  2. Business Account

If you create a personal account on PayPal, you can use it for various purposes. It includes – Sending or receiving money, create a money pool, donate money to a cause, send money as a gift, buy products or services online and more. You don’t get charged when you use PayPal for personal purposes.

There are few people who sell products or services through their personal accounts. It’s not a good idea to use a personal account for business. It is advised to create a business PayPal account in such cases.

  1. If you’re sending money to your friends or family members through debit card, credit card or available PayPal balance, in such cases, PayPal will charge 9% and extra $0.30 within the United States.
  2. Consider sales done within the United States, the selling changes will be 2.9% and extra $0.30 applied on every transaction.
  3. PayPal charges 1% on every transaction done to the bank account.
  4. The payment application provides a customized checkout webpage to business. These attractive features are available only on PayPal Payments Pro. The business needs to pay $30 per month as an additional subscription fee.
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International Payments

When you get an international payment for your orders online, you’re charged a standard fee and an additional fee. These charges are applied when a PayPal need to convert the currency to complete the transaction. PayPal charges an extra fee when the user receives international payments. The charges may differ from one currency to another.

The PayPal fixed fee are as follows

  • Australia is 0.30 AUD
  • Canada is 0.30 CAD
  • Japan is 40 JPY
  • US – 0.30 USD
  • Thai – 11.00 THB
  • New Zealand – 0.45 NZD

Funds transferred via PayPal balance are charged 5% of the transferred amount. The minimum charge is $0.99 USD and the maximum is $4.99 USD.

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Payflow Payment Gateway Fee

A payment gateway is a well-known service that sends transaction information from a website to the network. Payflow Payment Gateway is a secure, safe and open payment gateway developed by PayPal. If you’re using PayPal business account, then it’s time to integrate PayPal Payment Gateway into your website.

Customization can be done on your checkout pages. PayPal offers two types of plans such as Payflow Pro and Payflow Link.

Payflow Pro – Business owners are provided with an opportunity to design their checkout page according to their requirements and needs. The service is priced at $25.

Payflow link – No additional charges are applied on Payflow link. This will be hosted by PayPal, customers can easily enter their payment information without hassles.

Payflow Pro and Payflow link will charge $0.10 during credit card transactions as payment gateway fees.

PayPal has the ability to find out whether the buyer is authorized or not. Also, detect hackers and frauds. If you want to protect your business from fraud and unauthorized users, you need to pay extra for value-added services.

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Business in a Box

If you’re a small business owner, Business in a box is the best solution for you. Simply put, “Business in a box” is a comprehensive e-commerce solution for all small businesses. There are various partner services available on PayPal. A business owner can make great use of the services for several reasons – planning, setting an online store, financial decision and more.   Small businesses can integrate these services and grow their business. The popular services are GoDaddy, Xero, Woo Commerce, Intuit and more. These services will strive to make the business task easier. PayPal earns pretty good commission from available partner services. The affiliate commission may vary depending on the service.

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Internet Earn from PayPal Balance

PayPal earns interest from money deposited in the PayPal accounts. Over millions of users deposit their amount in PayPal wallet. The money deposited into PayPal amount is deposited by certain companies in turns of liquid investment. It is one of the most effective ways to make money. This interest is a primary source of PayPal revenue. Here the interest amount will not be shared with the user.

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PayPal Credit Interest

Planning to create a PayPal Credit account? Yes!!! You can enjoy excellent promotional rates during the initial 6 months period. When you place an order value of $99 and more, you don’t need to pay interest. After completion of the promotional period i.e 6 months, PayPal Credit will charge 25.49% as interest on the remaining balance. The minimum interest rate is $2.

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PayPal Here Fee

“PayPal Here” helps to run, manage and grow a successful business. This service is considered as a credit card readers. The service allows businesses to accept any type of plastic card payments. PayPal Here offers 3 types of readers such as mobile card reader, chip and swipe reader and chip and tap reader. The fee may start from 1.5% to 3.5% + fixed price per transaction.

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Conclusion

PayPal is the largest payment processor around the world. Sending and receiving money is easier with a PayPal account. On the other hand, PayPal makes money by processing transactions locally and globally. Also, PayPal is offering other value-added services such as Payflow, Business in a Box, PayPal Credit, PayPal Here and more. PayPal is running other companies such as Xoom, Venmo, Braintree and more. Also, this will add additional revenue to PayPal.

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