PayPal friends and family: how it works, fees, and much more

Adam Rozsa

PayPal is already the most widely-used payment processor for businesses and individuals, but the Friends and Family (PayPal F&F) service adds features that make it more useful.

This article will cover all features that PayPal Friends and Family has to offer, and also show how Wise can be helpful for you.

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What is PayPal Friends and Family?

As the name suggests, PayPal Friends and Family was created in order to be used specifically as a way to transfer money between friends and family members.

It allows close networks of people to send and receive funds for personal use, as opposed to using PayPal for payment by businesses or for business-related transactions.

However, the Friends and Family method is attractive because of the benefits it offers for personal transfers.

💡 Since July 28th 2022, you can only receive funds with a personal PayPal account via Friends & Family⁵. To receive a business payment, you need to use PayPal’s Goods & Services (G&S) feature - but more on this later.

How does PayPal Friends And Family work?

Using PayPal Friends and Family doesn’t require PayPal users to change how they interact with the payment platform.

When preparing to send money to friends or family, PayPal asks the user to choose the purpose of the transaction, either “Sending to a friend” or “Paying for an item or service,” and the selection made determines whether the PayPal F&F option is used or not.

Based on that, the payment solution will automatically adjust the transaction to correspond to the correct transfer protocols.

How to use PayPal Friends and Family?

You don’t need any special configurations to send money to friends and family with PayPal – sending funds using PayPal F&F should be simple if you follow the steps:

  1. Log into the PayPal account
  2. Select “Send & Request”
  3. Input the recipient’s details using either the name, email address or phone number in the “Send money” section
  4. Choose “Sending to a friend” when prompted
  5. Enter the payment amount and add a note, if desired
  6. Click Submit

Alternatively, you can also use to send money to friends and family with PayPal – creating a personalized link to request a payment to your account.

💡 Want to learn more? Read our full guide about receiving money with PayPal here.

How much does it cost to use PayPal Friends and Family?

Fees for international transactions

If money is going to be sent outside the US, the fee is 5% of the amount sent (+2.90% + fixed fee in case of card payment). However, PayPal sets a limit on that 5% fee, which is currently $4.99¹.

Be aware, though, that you’ll also have a 4% spread on the exchange rate. Let’s make a comparison between PayPal and Wise to send, for example, $1000 to EUR:

Fee for sending $1,000 to EUR$7.30$4.99
Exchange rate mark-up$0$40 (4%)
Total cost to send $1,000 to EUR$7.30$44.99

With Wise, you can send money to 50+ currencies, without a mark-up on the exchange rate. You pay just a small upfront fee⁶, knowing exactly how much you send and receive.

A low-cost international alternative to PayPal Friends and Family


With Wise, you can send money overseas to friends, family or businesses only paying a small upfront fee⁶. You don't pay the mark-up charged by PayPal to convert your money, and you don't pay the intermediary fees charged by banks to send money internationally.

This is how you can save with Wise:

  1. Register for free
  2. Choose an amount to send
  3. Add the recipient details
  4. Pay for your transfer (with ACH debit, wire transfer or card)

And that's it!⁷ The exact amount you were told will be sent to the receiving bank account in the destination country.

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Fees for domestic transactions

If you’re using PayPal Friends and Family to send money within the US, you should have fees only when you pay with your card (or if you send in different currencies)¹:

  • Paying with PayPal balance or a bank account: no fee
  • With Card: 2.9% + fixed fee
  • With Amex Send Account: no fee

PayPal Friends and Family limits

If your account on PayPal has been verified already, then you only have a limit per transaction, which can go up to $60,000 but may be limited to $10,000.² PayPal doesn’t place a limit on the total amount of money, or the number of transactions, that can be sent using the PayPal Friends and Family service on a daily, weekly or monthly basis.

This means that for transactions within the US, it’s possible to send two $10,000 transactions to the same recipient in a single day. However, this implies that the sender has a verified PayPal account.

Sending money to international recipients will have different limitations, which depend on the destination country and the status of the recipient account (verified or unverified) on PayPal.

In case you don’t have a PayPal account, you’re able to do a one-time transfer of up to $4,000².

PayPal Friends and Family vs PayPal Goods and Services

PayPal Friends and Family

PayPal Friends and Family is PayPal’s option for sending money or gift cards for all non-commercial activity between friends and family.

Nonetheless, to pay for goods or services, it’s not the best option. It could lead to the loss of money and/or goods. Just before you pay to finish the payment, you can choose whether to pay it or to change the payment to a Goods and Services payment, therefore passing the fee onto the recipient.³

PayPal Goods and Services

The Goods and Services option is used to buy services or items, and includes payment protection from PayPal. It charges the seller a fee to receive your money, and therefore the payments are automatically covered by PayPal protection policy in case anything goes wrong.³

Does PayPal report to the IRS on Friends and Family?

In theory, only commercial transactions will be reported to the IRS, so this shouldn’t happen with Friends and Family operations. However, as a payments' processor, PayPal monitors all of its transactions in order to comply with government financial regulations, and it has the ability to determine if users are taking advantage of the PayPal Friends and Family option to circumvent required tax reporting obligations.

For buying goods and services, PayPal reports transactions from sellers who receive more than $20,000 in gross payments and more than 200 separate payments within the tax year⁴.

Is it possible to get scammed with PayPal Friends and Family?

Yes. As with any other payment processor, or anything else dealing with sending or receiving money, it is always important to be hyper-vigilant with the details when using PayPal Friends and Family.

The service is safe, but there might be someone willing to try to take advantage of others. Learning to recognize and avoid them will make transactions with PayPal safer and more pleasant.

Sellers might ask consumers to choose the personal payment option when making a purchase online. This is because of the absence of fees, as well as the possibility of circumventing tax reporting guidelines. Apart from being in violation of PayPal’s Terms and Conditions, in such cases the seller might try to scam buyers too.

Does PayPal refund payment request frauds?

PayPal Friends and Family transactions aren’t inherently protected by PayPal (the option has to be chosen when sending money), therefore buyers do not have any recourse if something goes wrong when purchasing something using the PayPal F&F option.

PayPal’s Purchase Protection keeps most financial information private and prevents it from being shared with sellers.

All transactions are encrypted and monitored, and are covered under this protection, regardless of the origin and destination of the goods being purchased. This protection is not a basic component of PayPal F&F transactions, which means that unless you are sending to a verified and legitimate friend or family member, you won’t be covered if something goes wrong.

PayPal F&F is meant to be used for the user’s family and friends – not the family and friends of other PayPal users. There can be cases where a user makes contact with someone and asks that they use the PayPal Friends and Family option and request an item being purchased be sent to “a friend” at a different address as a gift.

However, the buyer can submit a claim to PayPal saying that the item was never received, and a refund can be provided.

Learn more about Wise

Sources used:
  1. PayPal fees
  2. PayPal limits
  3. PayPal: What's the difference between Friends and Family or Goods and Services
  4. PayPal - Tax information reporting for online sellers
  5. PayPal - Upcoming Changes to Goods & Services Payments
  6. Please see Terms of Use for your region or visit Wise Fees & Pricing: Only Pay for What You Use for the most up to date pricing and fee information.
  7. Eligibility is subject to verification of customers identity.

All sources checked on 14 November 2022

Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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