PayPal Credit Card Processing: How to Accept Card Payments With PayPal

How do you accept credit card payments with PayPal?

Setting up PayPal as your payment processor is relatively straightforward. However, the process will differ depending on your business and transaction types. Here’s how it works.

E-commerce payment processing setup steps

If you run an e-commerce business, follow these steps to start accepting card payments with PayPal:

1. Set up a PayPal business account: Your first step is setting up a PayPal business account by visiting PayPal’s business account setup page. Enter your legal name, business name, bank account information and email address; you’ll also set up a password during this step. PayPal does not run a hard credit check and requires minimal documentation upfront. However, PayPal may later request verification documents, such as your business registration or tax identification number, especially as your transaction volume increases.
2. Connect to PayPal’s payment gateway: You can access PayPal’s payment gateway from within your merchant account and use it to connect your website’s payment page to your PayPal account. PayPal offers different integration options, including PayPal Checkout for quick payment buttons, PayPal Payments Standard for basic online transactions, and PayPal Payments Pro for a customizable checkout experience. After setting this up, your website can accept credit cards through PayPal.

In-person payment processing setup steps

Follow these steps to start accepting card payments with PayPal if you have a brick-and-mortar store:

1. Set up a PayPal business account: If you have not already done so, set up a PayPal business account by visiting PayPal’s business account setup page. Enter your legal name, business name, bank account information and email address; you’ll also set up a password during this step. PayPal does not run a credit check or require any documentation. However, PayPal may later request verification documents, such as your business registration or tax identification number, especially as your transaction volume increases.
2. Get set up with Zettle online or via the app: You’ll use PayPal Zettle technology to accept card payments. You can get set up with Zettle via your online account or the Zettle app for iOS or Android:
   • Online: Go to the Zettle registration page and enter your business’s employer identification number and your mobile number. Read the PayPal Zettle terms and conditions and privacy statement. If you agree, select Submit.
   • In-app: Alternatively, download the iOS PayPal Zettle app from the App Store or get the Zettle app for Android from Google Play and complete this step on your mobile device.
3. Set up product details: Set up your products and their details, including prices, in the Zettle app or online in your account.
4. Purchase a card reader: If you’d like to purchase a card reader or POS system, visit the Zettle Shop. You’ll receive the equipment in the mail, usually within a week.
5. Set up your reader: Setting up your card reader is straightforward:
   • Turn on the card reader and charge it with the enclosed charger cable.
   • Log in to your Zettle app. Under Payment Settings, find PayPal and tap Activate.
   • The app or online account will connect to the reader via Bluetooth. To finalize the connection, type in the code shown on the app using the buttons on the reader. Your reader is now synced with your PayPal Zettle account and ready to take in-person payments.
6. Ring up a purchase: After ringing up a customer’s purchase, tap Charge. Choose Card as the payment method, and hand the reader to the customer. The customer will use the reader to tap or insert their credit or debit card. The reader has a numeric pad for customers to input their debit card PIN, if necessary. (If the customer is paying with their PayPal account or Venmo, choose PayPal or Venmo as the payment method.) Tap Done.
7. Have the customer finish the transaction: Ask the customer to open their phone camera or their PayPal or Venmo app. Present the customer with your QR code to scan. Once it’s scanned, ask them to tap Confirm.

Card-not-present transactions

Follow steps one through five above for in-person payment processing, and then take the following steps to accept credit card payments over the phone or by mail:

1. Ready your system for manual transactions: Before your first manual card entry, you must have already taken a payment with your card reader or POS system via chip or tap. Once you complete this transaction, wait at least three hours for the system to be ready for manual entries.
2. Set up a manual transaction: Go to the app or online account menu, select Manual Card Entry and press Activate. This will enable the Manual Card Entry option as a payment option for future transactions.
3. Conduct a manual transaction: To accept a sale when the customer’s card is not present, select Manual Card Entry on the reader. Use the app or your online account to manually enter the customer’s payment details and the transaction amount into the app for processing.

Note: Funds from manual card entry transactions will not appear in your PayPal Zettle daily deposit email or on the PayPal Zettle deposits page. Instead, they’ll go directly into your PayPal account.

What is a PayPal business account?

A PayPal business account is an account you set up with PayPal for your business that allows you to send and receive payments. Its functionality differs from that of a PayPal personal account.

Your PayPal business account gives you access to PayPal’s Commerce Platform, which includes various services and features for businesses of all sizes.

What services does the PayPal Commerce Platform provide?

The PayPal Commerce Platform supports an array of business types, including online sellers, brick-and-mortar stores, and even crowdfunding and nonprofit ventures. Together with your business account, the platform’s primary functions include the following:

• Accept payments: Accepting payments is a primary function of the PayPal Commerce Platform. Your business can accept payments with PayPal for online shopping, in-person purchases, and phone or email transactions. It can also accept Venmo and PayPal Credit payments as well as alternative payment methods.
• Make payments: Your business account allows your organization to make payments in several ways. Mastercard powers the debit option, which lets you spend from your PayPal balance and comes with rewards. The account also enables PayPal Credit payments and can link to a bank account to create a third payment option.
• Fraud and seller protection: Your PayPal business account offers protection services via the PayPal Commerce Platform. Fraud protection measures detect credit card fraud and stop it in its tracks. Additionally, seller protection works to minimize claims and avoid chargebacks. PayPal is uniquely empowered with this feature, as it sees both sides of any PayPal transaction.
• Capital loans: PayPal Working Capital is a business loan plan that helps secure funding for business investments. It’s paired with promotional resources and international selling to make ROI easier. (Read our review of PayPal business loans to learn more about PayPal’s lending options.)
• App Center: The App Center grants business customers access to exclusive apps. Each app can streamline business operations and improve growth and prospects.
• Cash flow and dispute management: PayPal provides businesses with a resource suite designed to help business operations in general. The first part of the suite is a cash flow management resource called Funds Now. It aims to improve flexibility with drawing and using funds. The dispute management program streamlines dispute processing beyond the standard business resource.
• Business insights: Business insights is an analytic resource that helps track performance, shopping and optimization in general. The full power of operations streamlining can help transform small businesses.

How much does PayPal charge for credit card processing?

Thomas Phillips, founder and CEO of DTC SEO Agency, noted that PayPal’s credit card fees can be relatively high, depending on the transaction type. “PayPal has high fees, and customers can easily do chargebacks, which is terrible for business,” Phillips explained. Still, PayPal checkout is a consumer convenience. “So many consumers use it, and they expect it,” Phillips noted. “Removing it from an e-com store [means] a drop in conversions.”

PayPal’s flat-rate pricing and pay-as-you-go terms are laid out transparently on its website. Here are the current rates for its credit card processing services:

• Credit card payments: 2.29% + $0.09 per transaction. This rate applies to credit cards, debit cards, and contactless payments (e.g., Apple Pay, Google Pay, Samsung Pay) processed using the PayPal Zettle app and card reader. PayPal works with all major credit card networks, including Visa, Mastercard, Discover and American Express.
• Manual-entry transactions: 3.49% + $0.09 per transaction. This applies to credit and debit card payments manually keyed in via the Zettle app or POS system.
• QR code payments: 2.29% + $0.09 per transaction. This rate applies to payments accepted via QR code for in-person purchases through the PayPal Zettle system.
• E-commerce transactions: 2.59% to 2.89% + $0.49 per transaction for payments using Visa, Mastercard, Discover or American Express. This rate applies to standard online card transactions on an e-commerce site.
• Virtual terminal: 3.09% + $0.49 per transaction. This rate applies to credit and debit card payments accepted through PayPal’s Virtual Terminal, where the seller manually enters card information.

Although PayPal’s transaction fees tend to be higher than many full-service credit card processors, the absence of account setup and maintenance fees easily offsets the costs. This makes PayPal a cost-effective option for small businesses that process a low volume of monthly transactions. Additionally, PayPal doesn’t require long-term contractual commitments.

Here are the other fees you won’t have to pay with PayPal:

• Application or setup fees
• Monthly fee for statements and customer support
• Monthly minimum processing requirement
• Gateway setup fee
• Monthly gateway fee
• Annual fee
• Annual or monthly PCI compliance fees
• Early-termination or account closure fees

However, some of PayPal’s services will cost more beyond the transaction rate and fee. These services include the following:

• Chargebacks: $20 per occurrence
• Recurring billing service: $10 per month
• Advanced fraud protection services: $0.07 per transaction
• PayPal Payments Pro: $30 per month (This option allows you to accept payments directly on your website and includes a virtual terminal.)
• Cross-border fee: PayPal adds 1.5% to the transaction fee when you accept payments from customers outside the U.S. If your cross-border payments require currency conversion, PayPal also adds a fixed fee that varies by currency.

In addition, eligible charitable organizations are charged 1.99% of each transaction plus $0.49 for online donations. In-person donations cost the same as regular business accounts at 2.29% + $0.09 per transaction. Businesses with transactions under $10 may qualify for PayPal’s micropayment fees, which cost 4.99% of each transaction plus $0.09 per transaction.

PayPal credit card processing makes it easy for your business to accept card payments

With relatively low rates and few fees, PayPal makes it easy for businesses of all sizes to process credit card payments. Even if you don’t conduct a high volume of credit card transactions each month, you can still benefit from PayPal’s credit card processing services.

PayPal offers affordable card readers and is compatible with many of the best POS systems. It has discounted rates for registered charities and businesses that conduct high volumes of small-ticket transactions and offers additional services for extra costs.

Credit and debit card transactions have become ubiquitous; consumers now expect businesses to accept these payment methods. To avoid falling behind in an increasingly digital marketplace, you must partner with a credit card processor, and PayPal is a great place to start.

Jennifer Dublino contributed to this article.