Should you use PayPal for Small Business?

Panna Kemenes
4 minute read

PayPal is a payment processor that allows businesses to send and accept online payments. Although PayPal caters to a number of large enterprises, you can also use PayPal for small business.

It’s straightforward to set up and you can accept online payments for your small business. Flexible checkout and secure transactions can also help you accept payments without friction.

There are some cons, and some fees to bear in mind though.

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Is PayPal good for small businesses?

As PayPal also caters to large enterprises, you may find yourself wondering ‘can I use PayPal for my small business?’ The answer is yes. PayPal is an easy-to-use payment service provider which offers payment solutions for small-to-medium sized businesses.

Here are some PayPal features which your small business can benefit from:

Flexible checkout

These days, customers want options when they reach the checkout page. PayPal meets this demand by offering various payment methods. This includes the popular BNPL (buy now pay later) option.

Robust security

Security can be the final hurdle for some customers, since they want assurance that their money is safe. PayPal offers secure transactions to customers and protects you from fraudulent payments.

Various integrations

PayPal offers integrations with third-party tools to help you organize incoming payments, balance your books, and more.

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Cons of using PayPal for small businesses

Hefty chargeback fees

CNP (card-not-present) fraud is a real issue, and can affect your bottom line as fraudulent payments lead to chargebacks. Using PayPal for small businesses can mean you face high chargeback fees.

High processing fees

PayPal also has high processing fees, so for each transaction they take a significant cut which can diminish your profit margins.

Processing time

Receiving funds through PayPal can take up to two business days. This can slow down cash flow that’s crucial in the early stages of growing your business.

PayPal for small business fees

Here’s what you can expect to pay for receiving different types of transactions:

Transaction typeFee¹
Invoicing3.49% + fixed fee (based on currency)
PayPal Checkout3.49% + fixed fee (based on currency)
Standard Credit and Debit Card Payments2.99% + fixed fee (based on currency)
Send/Receive Money for Goods and Services2.99%
Pay with Venmo3.49% + fixed fee (based on currency)
Extra percentage-based fee for international commercial transactions1.50%

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PayPal products for small businesses

PayPal caters to small business needs with a variety of products. The following is a list of some of the most useful products PayPal offers, though it isn’t exhaustive:

Payment processing

One of the main functions of PayPal is to act as a payment processor for your business.

Once a customer buys a product from your store with a card, the payment processor checks with the customer’s issuing bank to make sure they have the funds. If they do, the issuer approves the sale and the payment processor moves the funds into your account.

As such, payment processing is a crucial part of the online card payment process as the processor acts as a mediator between you and the customer.

Using a payment processor you can start accepting online payments and avoid the hefty fees of setting up a merchant account with a bank. However, you will have to pay transaction fees as a result and can deal with issues such as an account freeze.

PayPal integrations

PayPal offers small businesses access to a variety of integrations, which can make balancing books and managing business cash flow easier.

PayPal has integrations for the following:

  • Ecommerce stores
  • Automations
  • Checkout
  • API solutions

Integrations increase your options and let you offer a greater customer experience while helping you manage backend operations.

You will need to invest in the third-party tools to make the most of the integrations, though, and there’s a chance PayPal doesn’t support software you currently use.

Card readers

PayPal has a portable card reader that you can sync with the Point of Sale app to easily accept and view in-person payments. Customers can use the reader to pay by swiping, tapping, or inserting their card in store.

This offers another payment option to customers, and makes it easy to sync up all of your sales. It’s worth noting though that funds from sales will go straight to your PayPal account rather than your business bank account.

Invoicing

PayPal has a variety of invoicing templates that you can use to quickly issue invoices to customers. You can customize the invoices with your logo and brand assets to make it look professional, and then send the invoices without separate invoicing software.

PayPal Marketing Solutions

As a small business owner, you can use PayPal to expand your reach through its marketing solutions. PayPal lets you view consumer behavior with the Shopper Insights feature, so you can capitalize on the most productive trends.

PayPal can also help you increase conversions with banners on your website that pop up and make the purchase seem more attractive to customers.

Looking for PayPal alternatives for small businesses? Meet Wise

Wise Business is a stress-free account for international businesses that allows you to send and receive money at the real mid-market rate.

With the Wise Business account, you can get local account details for 10 major currencies. This means you can receive AUD, CAD, EUR, GBP, HUF, NZD, RON, SGD, TRY and USD payments for free. All to one account.

The Wise Business account is also up to 19x cheaper than PayPal for business payments. So if PayPal fees threaten to stifle your growth, Wise Business is a great option.

You can register a Wise Business account for free, and get access to batch payments, QuickBooks integration, an invoice generator, and more - at no extra cost. No monthly fees and subscription packages to worry about.

Wise is safe and regulated, and already used by 13 million people and businesses. $8bn in cross-border transactions are processed by Wise Business every month, saving customers over $1bn a year compared to using a bank.

Don’t just take our word for it, try Wise Business to see how much time and money you can save.

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  • PayPal Business vs Personal: Which one is best for you?
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  • Top ways to accept payments online in 2022

  • Sources:

    Fees | Merchant and Business | PayPal US

    All sources checked September 22, 2022.


    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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