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PayPal invoicing can be a quick and easy way to issue invoices, and receive payments from customers. However, this service comes at a cost - especially if you work in a global marketplace.
This handy PayPal invoice guide will help you get started and cover the costs involved.
|This article will cover
PayPal invoices allow you to customize your invoice and include full details of the goods or services you’re selling. This service is designed for merchants invoicing their customers and clients - and comes at a fee.
PayPal request money is intended for personal use. Splitting a restaurant bill with friends, for example. You can send a text or email request for cash, which can then be paid via PayPal. This service isn’t intended to be used for business purposes.
To create an invoice using the PayPal business website, you’ll need to take the following steps:
Each invoice is assigned an invoice number automatically. You can alter this number if you prefer - but it can be a useful way to keep track of which invoices you have sent to which customers.
If you prefer a mobile experience, you can download the PayPal business app and send your PayPal invoices from there. In both cases, templates are preloaded and can be customized however you’d like. You can add your logo, a delivery message, or a thank-you note, for example.¹
If you’re sending an invoice from the PayPal website, follow the steps above to create your invoice. You can then preview it to make sure it includes all the details you need. After this, simply hit the ‘send’ button.
The PayPal invoice will be delivered directly to your customer, using the email address you’ve already entered.
Once you’ve sent the invoice, your customer will receive an e-invoice notification.
When the invoice has been received, your customer can decide how they want to pay it. If they already have a PayPal account, they can select their PayPal balance or a linked bank account.
They can simply click through from the invoice email, to view and pay the invoice within PayPal.²
If they’d rather pay offline, that’s possible too.
Even if your customer doesn’t have a PayPal account, they can pay offline using a credit or debit card. Or a payment service provider such as Wise.
To pay an invoice offline means that you pay the invoice via a means other than PayPal.
If your customer chooses to pay you outside of PayPal, you can still reconcile the invoice within your PayPal business account. This will show it as paid and make sure your accounts stay accurate.
Yes, it is possible to pay a PayPal invoice by credit card. Customers won’t need a PayPal account to pay you using credit or debit cards.³
PayPal doesn’t charge fees for setting up and sending invoices, or for canceling them. So, does PayPal charge a fee for invoices? There’s no monthly charge, but if your customer pays online, there’s a fee for each invoice paid based on the amount of the purchase:
|Alternative Payment Method (APM) through Invoicing
|2.99% + fixed fee
|All Other Commercial Transactions
|3.49% + fixed fee
|PayPal Checkout/ PayPal Guest Checkout
|3.49% + fixed fee
|Pay with Venmo
|3.49% + fixed fee
|Send/Receive Money for Goods and Services
|Standard Credit and Debit Card Payments
|2.99% + fixed fee
|Additional percentage-based fee for international commercial transactions
|1.50% on top of domestic fee + fixed fee depending on the currency received
Anything involving foreign currencies can get expensive. It’s hard to figure out how much you’re paying unless you look at independent research. These can show the real cost of PayPal business international transfers
|🔍 Read more about PayPal invoice fees.
It's best to make sure you understand the costs involved before you choose the invoicing platform that’s right for your business.
If PayPal carries out a currency conversion for you, you can expect to pay fees for the service.
In most cases, the seller can decide whether they or the buyer will pick up the costs involved with the international transfer.
International transfer fees depend on what currency you receive, and how the transfer is funded.
With a US PayPal account, international transfers will cost you 1.50% on top of the domestic fee, plus a fixed fee depending on the currency received.
|🔍 You can check out this handy article, which covers PayPal’s international fees - and how you can avoid paying more than you need to.
If you decide to make an international payment from your PayPal account, the exchange rate used by PayPal includes a markup added to the wholesale exchange rate.
The wholesale rate - also known as the interbank rate, or the mid-market rate - is the rate that PayPal gets from a third party when they convert currencies. This will apply in any circumstance in which PayPal exchanges currency on your behalf.
PayPal takes the wholesale rate and adds a currency spread. This is an extra charge of 3-4%, depending on what type of transaction you’re carrying out.⁵
You can check if you’re happy with the exchange rate by comparing it to the mid-market rate using a currency converter online. This will help you get an idea of how much extra you’re being charged through the PayPal currency conversion spread.
You can also look at a case study showing what real businesses were charged for PayPal international transactions.
Banks and money transfer providers often add a markup to the 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. Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies.
With the Wise Business account, you can get major account details for a one-off fee, to receive invoice payments like a local. For example, you can get UK account details, even as a US citizen. This means your customers can pay directly in their own currency. You can then keep, convert, and manage your currencies - all from the same account. This can help you receive international invoice payments faster.
If you use invoicing software, such as QuickBooks, you can also add your Wise account details to the invoice to get paid with ease. Your bill payments and any other Wise transactions will be synced, matched and categorized in QuickBooks for simple reconciliation.
PayPal offers protection to both buyers⁶ and sellers⁷, depending on the circumstances of the transaction. The PayPal dispute resolution center is the first point of call if you have a problem.
PayPal will help to resolve the issue if possible and, if not, may issue a refund. As a seller, it’s important to be aware of some fairly common scams from buyers.
A buyer can open a dispute with PayPal, falsely claiming that an item that they purchased from you never arrived, wasn’t as described, or was damaged upon arrival. The PayPal team has to then decide if the claim is genuine, and whether the buyer or seller was at fault.
The buyer protections are often considered to be stronger. Some PayPal business users claim to have fallen victim to scams. In this case, the seller can have money deducted from their PayPal account to refund the buyer if PayPal believes their story.
There are a few things you can do as a PayPal seller to help avoid this issue. Common sense tactics such as photographing items and packaging, using registered mail, and accurate descriptions when selling online can all help limit the likelihood of there being a problem.
The PayPal invoice service is quick and convenient, but it’s worth comparing the costs against other options.
Nobody wants to pay more than they have to - and the fees involved in receiving invoice payments through PayPal invoicing can add up quickly.
If you do international business, you may consider using an alternative option - such as Wise Business to receive invoice payments.
|💡 For all you need to know about invoices, don't forget to read and bookmark the ultimate guide to invoicing from Wise!
*. 4.85% Annual Percentage Yield (APY) on USD balances is current as of 01/01/2024 and is subject to change see Program Agreement for details
**. Feature not available to residents of New York or Alaska at this time. Please see eligibility criteria.
***. The current Program Bank is JPMorgan Chase Bank, N.A., see Appendix 1 of the Program Agreement for the most updated list of Program Bank(s). Eligible customers must opt in to the interest feature. Participants will have the balance of their USD funds held in their Wise Account "swept" into a Federal Deposit Insurance Corporation ("FDIC") insured interest-bearing account at one or more participating banks (each, a "Program Bank") that will hold and pay interest on the deposit funds. For more information on FDIC insurance coverage, please visit FDIC.gov. Customers are responsible for monitoring their total assets at each of the Program Bank(s) to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The Program is not intended to be a long-term investment option, checking or savings account, investment contract or security.
- Create & Send an Online Invoice for Free | PayPal - US
- how do-i-pay-for-a-payment-request-or-invoice
- when i-send-a-paypal-invoice,-what-payment-methods-can-my-customers-use
- Request Payments | Receive Money | PayPal US
- Fees | Merchant and Business | PayPal US
- PayPal Purchase Protection for Buyers
- PayPal User Agreement - PayPal US
All sources checked February 1, 2022.
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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