If you’re using PayPal to receive commercial payments, you’ll need a PayPal business account. This account type allows you to make and receive domestic and international business payments, although there are fees for some services which you’ll want to know about before you sign up.
Research shows that there may be a cheaper alternative if you’re making and receiving international payments with PayPal business. In fact, the multi-currency account for business from TransferWise can be up to 14x cheaper for some transactions. There’s more on this - and full details of how to open and operate a PayPal business account - coming up.
Here’s your full guide to PayPal’s business account.
To sign up for a PayPal business account you’ll need to go to the sign up page and follow the prompts on screen.¹ You need an email address to get started, and you’ll also be asked to provide some details about yourself, your business, and a linked payment method like a bank account or debit card.²
If you have a personal PayPal account already, then you can simply upgrade your personal to a business account.³
You can choose to have a separate personal and business account, you will just need a unique email address to set up your business account. You’ll have to validate your email address, and view and lift the limits on your account before you can start using it. Log into your account and click the profile and settings button to view and manage your account details.⁴
If you’re considering getting a PayPal business account you’ll want to know about the fees which are applied for using it.
PayPal charges a fee for receiving payments into a business account, as well as charges related to currency conversion if you’re making or receiving an international transfer.⁵ These cross border fees can mean that your overseas transactions can cost more than you expect. In fact, research conducted by TransferWise has shown that receiving a payment of 2000 EUR into your UK based, sterling denominated PayPal business account can cost you £63.68.
If your business is trading internationally, or you’re planning on growing into overseas markets in future, you might be able to find a cheaper route for cross border payments than PayPal, by using an international payment specialist like TransferWise. You’ll be able to activate local bank details to receive international payments made in euros, US, New Zealand and Australian dollars, into your borderless account for free, which means that receiving that same 2000 EUR payment into a TransferWise borderless account costs nothing at all.
It’s worth doing some research into the costs associated with a PayPal business account, before you sign up, so you can make a comparison with other options. The fees⁵ you need to know about for international payments made via PayPal business are as follows:
|Fee type||PayPal UK business account cost|
|Cross border commercial payment fee||A percentage fee of the total transaction amount is charged for receiving international commercial payments, depending on where the payment is made from: Northern Europe: 0.4% Europe I: 0.5%US and Canada: 1%Europe II: 1.3%Rest of world: 2%|
|Fixed fee according to currency paid||You’ll also pay a small fixed transaction fee which is determined by the currency the payment is made in. This is 0.35 EUR for euro payments, or 0.30 CAD for transfers made in Canadian dollars for example.|
|Currency conversion fee||When your payment requires currency conversion, PayPal will add a markup to the exchange rate used. This can vary, depending on the currency and type of transaction. If you’re switching the currency of a balance you hold in your account the exchange rate used will be include a 2.5% markup. Other transactions, such as sending pounds from your account to a bank account held in a different currency, will include a markup which varies according to the currency. If you’re sending a EUR or CAD payment, the exchange rate will include a 3.5% markup, for example.|
There are also PayPal charges for other account services. Here are some of the most important costs to consider:
|Fee type||PayPal UK business account cost|
|Fee for buying something using your PayPal business account||No fee⁶|
|Sending money to friends and family in the UK||No fee for sterling payments|
|Sending money to friends and family abroad||Payments in the EEA in euros or Swedish Krona - no fee Payments to other countries - £0.99-£3.99 + currency conversion fees if applicable|
|Selling with PayPal - online||Costs vary depending on total sales volume from 1.9%-3.4% + £0.20 per transaction There is a different payment structure for micropayments under £5 and for different payment options like debit or credit card payments received online|
|Selling with PayPal - by phone||Different payment options are available depending on your business sales volume|
|Selling with PayPal - in person||1%-2.75% for chip and PIN or contactless payments Payments made by swiping the card’s magnetic strip or manually entering the card details cost 3.4% + 20p per transaction|
|Accepting donations with PayPal||If you have a registered charity, donations received are charged at 1.4% + £0.20 per donation There are additional fees for donations received in foreign currencies⁷|
Receiving or sending money from other countries through your PayPal business account? TransferWise could be up to 14x cheaper
When you have to pay employees or suppliers overseas it might seem convenient to do this with your bank or a provider like PayPal. You may already have an account there, they have all your information, so it just seems easier. Although these are valid reasons, easier certainly doesn’t mean cheaper.
PayPal inflates exchange rates when you send and receive international payments, making it hard to see what you're actually being charged.
Most banks and providers won’t convert your money with the mid-market exchange rate when you make an international payment. Instead they add a mark-up and charge you a hidden fee that way.
TransferWise is different. Its smart technology skips hefty international transfer fees by connecting local bank accounts all around the world. Which means you can save up to 14x by using TransferWise rather than PayPal when you send or receive your money abroad.
TransferWise also has a lot of additional features for business users. You can connect with Xero to make your life easier, upload a batch of payments in one go or even automate your payments by integrating with our API. And there’s more to come in the future.
Need more information, or want to talk to a member of the PayPal team? Here’s all you need.⁸
- PayPal provides a range of FAQs⁹ online which can answer many of your questions about managing your account
- If you want to talk to a PayPal representative, you can go online to input your details and ask for a call back
- Visit the PayPal UK website to access their live online chat service and get advice from a service team member
Getting your PayPal UK business account set up is pretty straightforward. However, before you start there are associated fees and charges you should know about, particularly if you send and receive international payments frequently.
If you’re dealing with customers, employees or suppliers based overseas, PayPal can prove to be fairly expensive due to cross border and currency conversion fees.
It’s worth checking out specialist alternatives like the multi-currency account for business from TransferWise, which is designed especially for businesses with global aspirations. Finding the cheapest way to manage your finances cross different currencies will make life easier and leave you with more time - and money - to concentrate on growing your business.
Sources checked on 11-April 2019.
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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