Jul 162013

If you think Paypal’s fees are too high then you are not alone. If you’re a seller who deals in discounted or low-cost merchandise you know that those fees are especially taxing. What most people don’t know is that Paypal offers better rates if you know how to get them. You can significantly reduce your Paypal fees using two methods. First, you can apply for a discounted merchant rate. Second you can get a Paypal Debit Card which will give you cash back on your purchases. Together they can cut your Paypal fees in half from 2.9% to 1.5% or even 1.2%!

How to Lower Your Paypal Fees by Getting a Reduced Merchant Rate

To get a reduced merchant rate you have to do two things. You have to have $3000 in sales per month and ask for a reduced rate. Yep, just ask them for it. They won’t lower your rate until you request it and you’ll have to know where to apply.  They don’t make that easy to find. But I will.

  • Log into PayPal .
  • Go to “Profile” and click the “my settings” sub-menu.
  • Go to the “My Money” link in box on the left side.
  • Go to the “Merchant Fees” link at the bottom of the page.
  • Click on “Apply Now”.
  • Fill out the form and submit it.

Where to apply for reduced paypal fees on their website.

Just a note, I’ve had to revise this article with new instructions because they keep moving that link. If they move it again keep looking until you find it. And please leave me a comment below if it needs updated again.

PayPal Debit Card

How to Earn Cash Back With a Paypal Debit Card

Although this isn’t technically a fee discount it amounts to the same thing, You can save another 1% on your money by applying for a PayPal Debit Card.

You can use it to spend money from your Paypal balance and get paid for doing it. Paypal gives you 1% cash back on any purchase that you make while using the card as a “credit card”. All that means is that you’ll have to sign for your transaction instead of entering the pin number. When you’re at Walmart buying some packaging tape and the cashier asks you “debit or credit?” You just say “credit” and you’ll get 1% back on the purchase. What you want to avoid is using it as an ATM card. You won’t get your cash back that way.

Another tip: when ordering online you’re sometimes given the option of paying directly with your Paypal account or by credit card. Don’t pay directly. Always run your card. Although you’re not physically signing for the transaction it still counts and you’ll get 1% back on it.

So if you’re paying the top 2.9% rate you can cut that to 2.5% just by asking for the merchant discount. You can then cut another 1% by using your debit card making your rate effectively 1.5% If you start selling more than $10,000 a month online you can again ask Paypal to reduce your transaction fees to 2.2%.  That coupled with the 1% on your debit card will make your rate effectively 1.2%.

UPDATE: The links provided above were are for US Residents. If you live in the UK you can sign up a card in your country here.

  8 Responses to “Reduce Your Paypal Fees and Get a Discount Merchant Rate”

  1. Great info for sure! PayPal takes a huge chunk along with eBay. It is best to open a merchant account to really get some good rates.

  2. Do they still offer this? with the changes in paypal the steps are different and I cant find this anymore?

  3. As a Seller/Buyer on Ebay, I use PayPal at least 20 plus times per month. It is good to know that good information like thus still exist… Very helpful!

  4. Here is the point you all are missing about these lowered fee’s on Paypal, Yes it sounds good but Paypal is not stupid, They lure you into there specials by offering reduced fee’s in exchange for your personal information!
    Long Story Short They Want Your Social Security Number which might not seam like much to give but they do try everything to get it, that is the single most important peace of information to them.

    They are a financial institution since they own Paypal, Think About how much they can screw you over as a financial institution.

    • Personal information and privacy should always be considered. However, Paypal would say that in order to prevent fraud they need that information. It’s also worth pointing out that you would have to provide that information to a bank in order to set up a merchant account. Unless you believe that Paypal specifically does something nefarious with your information that I’m not aware of?

  5. Wow, I just went and clicked a few buttons and now have a lower Paypal rate (15% lower). I will check out the credit card too. I just looked at my total monthly fees for Ebay and Paypal and it was like $600! This will make a big difference.

  6. Seriously I was not aware about such a great information about saving money on PayPal transactions, thanks for posting it out here.

  7. Wow I didn’t know you can earn cash back with the paypal card?!

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