PayPal is a popular tool for businesses all over the world, providing a quick, easy and secure way to pay suppliers and get paid. PayPal offers a dedicated business account, plus solutions that can turn your website into an online store. There’s even a PayPal Business app for managing sales and issuing invoices on the move.
Here, we’ll delve into the details of the PayPal Business account, including the features on offer. Crucially, we’ll also look at the fees involved. It could be that for some business transactions, an alternative solution could save you money.
For example, get a free Wise Business account and you can receive money for zero fees and send money worldwide for up to 19x cheaper than PayPal¹. But more on that later.
PayPal offers a dedicated business account, and there’s good news – it is available in Australia. It’s relatively easy to set up, but it does take a little time to confirm your email address, link a bank account and run through some security settings.
Once you’re all set up as a business user, you can then consider taking advantage of some of PayPal’s other business solutions if they meet your needs. For example, Website Payments Pro (a hosted solution), a PayPal Here card reader and the PayPal Business app.
The PayPal Business account offers a number of features and benefits², including:
- Multiple ways to accept payments from your customers – including online via your website or PayPal Business app, or in person with a virtual terminal or PayPal Here card reader
- Mobile-optimised payment experience
- Access to a PayPal Working Capital business loan if you need it
- Send customisable online invoices
- Integration with third-party solutions such as accounting software
- mCommerce Index³ – insights into mobile commerce trends in Australia
- PCI compliant checkout.
When deciding whether a PayPal Business account is right for you, this is what it all comes down to – how much it costs. PayPal doesn’t charge any setup, withdrawal or cancellation fees, nor does it tie you into a long-term contract⁴. But it does charge individual fees for transactions and services when you use the account.
Let’s take a look at how the figures stack up when making transactions within Australia:
|Transactions within Australia||PayPal fee⁵|
|Online payments||2.6% +$0.30|
|Website Payments Pro (hosted solution)||1.75% +$0.30 + $25 monthly fee|
|PayPal Here card reader/manual entry||1.95%/2.9% +$0.30|
|Virtual Terminal||3.6% + $0.30 + $25 monthly fee|
Now, what about international transfers with your PayPal Business account? If your business trades worldwide, these fees are going to be pretty crucial.
Here’s what PayPal charges for sending and receiving global payments, compared to an alternative provider such as Wise. Let’s use a hypothetical payment of $1,000 in order to compare properly.
|Provider||Fee for receiving $,1000 EUR from France||Fee for sending $1000 AUD to France||Exchange rate|
|PayPal⁶||3.6% +$0.30||4% currency conversion fee||Exchange rate + mark-up|
|Wise⁷||None||$5.11 AUD||‘Real’ mid-market exchange rate|
As you can see, it could cost you far more to use PayPal for both sending and receiving internationally – and that’s before you factor in the mark-up on the exchange rate.
This is the amount that a provider like PayPal adds on top of the mid-market rate that you’ll find on currency sites like XE.com or on Google. It can make your transaction a whole lot more expensive.
Another thing to bear in mind is that details of all PayPal’s fees can be a little complicated to unravel. You could find that a transaction costs you more than you expect, unless you’re willing to pore over the small print beforehand.
PayPal is a great tool for many businesses, but it is far from the online solution out there. It’s also not the cheapest for every type of transaction, such as sending and receiving money internationally, for example. Here’s a rundown of some of the alternatives available.
Owned by PayPal but seeming to operate fairly independently, Braintree offers both a payment gateway and a merchant account. As it offers discounts for businesses with larger monthly revenue through the platform, it’s best suited to larger and established online retailers, especially those that trade internationally. However, fees for international payments are a tad steep at 3.90% + $0.30 per transaction⁹.
Braintree supports digital wallets like Apple Pay and of course, PayPal, along with 130+ currencies. Sign up with Braintree and you’ll also get reporting functions, third party integrations and a choice of basic and advanced fraud tools.
OFX has business solutions for organisations of all sizes, plus options for online sellers. It’s geared towards helping businesses to save money on international transfers, offering fast and secure payments.
OFX offers what it describes as ‘bank-beating’ rates¹⁰, but these still include a margin added on top¹¹ so may still not be the cheapest out there. There’s also a minimum transfer value of $250, and a transfer fee of $15 if you transfer less than $10,000¹² – so it may not be the best choice for small businesses.
Some providers can make fees for international business payments a headache, but Wise aims to simplify it all. Get a free Wise Business account and you’ll pay one small, transparent fee for international transfers, and are guaranteed the real exchange rate (with no costly mark-up added on top) every time.
You can even receive payments in multiple currencies for free, and only pay a small fee if you need to convert currency. When you factor in all fees and exchange rates, Wise can be as much as 19x cheaper than PayPal.
Other perks include a free Wise Platinum Business Mastercard® and seamless integration with third party applications such as Xero accounting software. There are also solutions available for all business sizes, including a self-service account for small and medium-sized firms, and an open API for large or enterprise level businesses.
So now you have the lowdown on the PayPal Business account, including all of its features and fees, you should have a better idea of whether it’s right for you. Remember that there are lots of alternatives available, some of which could save you money – especially when it comes to taking your business global.
- TransfeWise for Business
- Paypal - Business Solutions
- Paypal - My Paypal for Business
- Paypal - Business Solutions
- Paypal - Seller Fees
- Paypal - Fees and Charges
- TransfeWise for Business
- Braintree - Pricing
- Paypal Alternative - Braintree
- OFX - Exchange Rates
- OFX - Consumer Rate
- Alternatives to Paypal
- TransfeWise for Business
Sources checked on 20-July 2020.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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