PayPal takes a percentage plus a fixed fee on each payment. That makes two calculations useful: the fee on a payment you receive, and the gross amount you must charge so that after fees you keep exactly what you want. The second one, called grossing up, is where most sellers go wrong.
The fee formula
Fee = payment x rate + fixed fee. The rate and fixed fee depend on your country, account type, and product: standard online payments, micropayments, and branded checkout can all differ. Published figures conflict because of this: you will see 2.99% + $0.49 and 3.49% + $0.49 quoted for different products, and older pages still show 2.9% + $0.30. Check the rate in your own PayPal account before calculating.
Example at 2.99% + $0.49: on a $100 payment the fee is $2.99 + $0.49 = $3.48, so you keep $96.52. On a $20 payment the fee is $0.60 + $0.49 = $1.09, keeping $18.91. Notice the fixed fee bites harder on small payments: it is 2.5% of a $20 payment but only 0.5% of a $100 one.
Grossing up
To receive an exact net amount, use: gross = (target net + fixed fee) / (1 – rate). To net exactly $100 at 2.99% + $0.49: gross = (100 + 0.49) / (1 – 0.0299) = 100.49 / 0.9701 = $103.59. Check: fee = 103.59 x 0.0299 + 0.49 = 3.10 + 0.49 = $3.59, and 103.59 – 3.59 = $100.00.
The naive approach, adding the fee on $100 ($3.48) and charging $103.48, leaves you short, because the fee is charged on the higher amount too. Always gross up with the formula, never by adding the fee on the net figure.
What else affects the fee
Currency conversion adds a fee when the payment currency differs from your account currency. International payments can carry an extra percentage. Chargebacks and disputes carry their own fees, and refunds return the payment but not always the original fee. Friends and family payments work differently from goods and services payments, and using the wrong type for a sale breaks PayPal’s rules and removes seller protection.
If you sell regularly, compare the fee structures: micropayment rates can beat standard rates for low-value sales, while standard rates win above roughly $10 to $12 depending on your exact figures. Run your real average sale through both.
Seller checklist
Confirm your exact rate and fixed fee in your account. Gross up with the formula for every price you set. Re-check rates when PayPal announces changes, since old blog figures linger for years. And remember fees are a cost of doing business: build them into prices rather than adding them as a surprise surcharge at checkout, which many payment rules restrict.
Friends and family versus goods and services
PayPal offers two payment types with very different rules. Goods and services payments carry buyer and seller protection and the standard fees. Friends and family payments are for personal transfers, usually carry no fee for domestic transfers from a balance or bank, and offer no purchase protection.
Using friends and family for a sale to dodge fees breaks PayPal’s rules and removes all protection for both sides. If the item never arrives or the payment is reversed, there is no claim path. For any sale, use goods and services, build the fee into the price with the gross-up formula, and keep the protection.
Try it faster with the tool
You can follow every step above by hand, but the free PayPal Fee Calculator — Fee on a Payment & the Gross-Up to Receive an Exact Net does the arithmetic for you. Enter your numbers and it gives the answer right away, so you can check your hand calculation or skip straight to the result.
Quick tips
- Fee = payment x rate + fixed fee.
- Gross = (target + fixed fee) / (1 – rate).
- Check your own account rate; published rates conflict.