How to set up a PayPal business account: fees & requirements

Panna Kemenes

If you’re thinking of creating a PayPal business account, it’s worth understanding the terms and conditions - particularly if you intend to use your account to buy and sell overseas.

This article will walk through how to set up a PayPal business account, including the fees and beenfits involved. You'll also be able to discover Wise Business as an alternative choice for managing overseas business payments.

Pay vendors and bills for up to 19x cheaper than PayPal

Here’s all you need to know about setting up a PayPal business accounts in the US.

How to set up and create a PayPal business account

This article uses information relating to US-based PayPal business accounts. Although the way PayPal works is fairly uniform across different markets, if you’re located elsewhere, it’s worth checking the details and small print for your particular country.

You can set up your PayPal business account quite quickly, as long as you have some basic information available. You’ll need to select the type of business account that suits your needs first - different levels of account come with different features and charges.

Here’s how you can create your PayPal business account:¹

  • Go to the sign up page to create a business account

  • Enter your legal full name

  • Enter the email address you want your PayPal business account to be linked to

  • Choose and enter the password you'll use to access your account

After completing this initial sign up process, you may have to complete the following on your profile:

  • Choose a login, and enter the basic details of your business including the registered address

  • Enter some information about the type of business you run, and the actual or anticipated turnover

  • Add your Employer Identification Number (EIN), also known as the Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number

  • Enter your social security number and date of birth, so that PayPal can confirm your identity

Once you’ve entered all your details, your account can be approved, and will be ready to use.

How much is a PayPal business account? What are the fees? Are they free or do they cost?

There are different fees levied for different services - check out the merchant fees page in the source section below for full details. Here’s a round-up of some of the most important costs you need to know about:

PayPal business serviceCost
Opening a PayPal business accountThere is no fee to open a PayPal account
Selling with PayPal business
  • For US based sales, to send/receive Money for Goods and Services - 2.99% of the transaction value
  • International sales - an additional 1.50% + a fixed fee based on the currency you receive + 3.00%, or such other amount as may be disclosed to you during the transaction for any currency conversion
  • Fees might be different if your volumes are higher, you choose card as a payment method, you run a charity, or if you qualify for ‘micropayments’
International payments
  • Fees for international payments are higher, including both a percentage fee and in some cases a fixed cost, too.
  • For international sales, PayPal notes that there’s a 1.5% international transaction fee to receive payments from another country + 4% currency conversion fee if it’s needed
Withdrawing money
  • Withdraw to your linked US-based bank account for free
  • Withdraw using a check - $1.50
  • Move money to your bank account using a linked debit card - $0.25-$15 per transfer
Making personal payments to friends and family
  • Local transfers are free of charge, if you use your PayPal balance or a linked bank account to fund the payment
  • Using a debit or credit card to fund the payment within the US - 2.99% of the transaction fee
  • International payments cost more: 4.00%, or such other amount as may be disclosed to you during the transaction if currency conversion occurs
Receiving personal payments from friends and family
  • Free within the US, if the sender uses their PayPal balance or a linked bank account to fund the payment


Sending money to or receiving money from another country? You’ll want to be aware of PayPal’s international transfer fees and currency conversion.

If you’re using PayPal for any international transaction, you’ll want to really make sure you know the costs involved, because they add up. Probably a lot more than you realize.

The international fees themselves are split in many categories, and depend on where your account is based, where the recipient’s account is based, and what method is used to pay for the transfer.

Transfers funded only by a linked bank account or with a PayPal balance are cheaper. But the moment you add in a payment in part or whole with a credit or debit card, you’ll find yourself facing fees from 3-4% of the sending amount.⁴

Check out our guide on US-based PayPal international fees for more information.

But it’s not just the fees you need to pay attention to.

For example, in regards to PayPal’s currency conversion rates, did you know PayPal adds a percentage based spread on top of the wholesale exchange rate it uses? That price often surpasses the fees stated upfront.

You’ll want to know what you’re getting into before you commit.

Sending or receiving money from other countries through your PayPal business account? Wise could save you up to 8x as much

Banks and money transfer providers often give you a bad exchange rate to make extra profits.

Wise is different. Its smart new technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save up to 19x compared to PayPal when you use Wise to make business payments abroad.

Check out how to make your first transfer with Wise. And give it a try.

Oh, and while you’re at it, check out the Wise Business account. Where you can manage and send dozens of currencies all from the same account with ease.

Check how it compares with PayPal below:

The true cost of sending USD to GBP

Benefits of PayPal business accounts

Make sure you weigh up the pros and cons when you’re considering whether or not to open a PayPal business account.

PayPal business debit cards

If you have a PayPal business account, you can also activate a PayPal business debit card, to withdraw cash from ATMs, make payments and earn points. To activate your card, you’ll need to log into your business account and follow the steps set out there.

Though there’s no annual fees for using your PayPal debit card and you can earn rewards, it’s good to keep in mind that there still are a few fees involved.

  • $2.50 per ATM withdrawal within and outside of the U.S. (plus any amounts charged by the ATM owner).
  • $3.00 for over the counter withdrawals if a signature is required
  • 2.5% foreign transaction fee of the purchase amount, from a non-U.S. merchant or use at a non-U.S. ATM. This fee will apply even if the transaction does not require a currency conversion.⁵

PayPal personal vs business accounts

There are various different types of PayPal account you can choose from, depending on your needs.

  • PayPal personal accounts are ideal if you want to shop online, and send or receive personal payments to friends and family
  • PayPal premier accounts are for people who may be casual sellers but are not registered as official businesses.
  • PayPal business accounts are for registered businesses and offer additional features like giving your employees limited access to your account.

Deactivating, closing and deleting your PayPal business account

Before you close your PayPal business account, you’ll need to transfer out all the balance held in it, either electronically or by requesting a check. Then take the following steps:

  • Log in to your account
  • Click ‘Profile and settings’
  • Click ‘My settings’
  • Click ‘close account’
Read the full article on how to delte a PayPal business account.

Whatever your reason for choosing a PayPal business account, it’s important that you understand the fees and charges involved with various different types of transactions.

Make sure, especially, if you have customers or suppliers overseas, that you’re familiar with the charges for international transactions, and the markup applied to the currency conversion rate. Compare the service PayPal offers with other providers like Wise Business, to make sure you’re getting the best possible deal, and protect yourself from nasty surprises.


  1. PayPal setup
  2. Source 1 - fees
  3. Source 2 - fees
  4. Source 3 - fees
  5. Source 4 - fees
  6. Source 1 - international fees
  7. Source 2 - international fees
  8. Source 3 - international fees
  9. Business account benefits
  10. Personal vs business
  11. Close account

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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