Thu, 06 Oct 2022

PayPal hikes merchant fees as it dominates market

Robert Besser
22 Jun 2021, 05:10 GMT+10

SAN JOSE, California: PayPal is raising merchant fees one half percent to merchants as it solidifies its dominant position in the digital payment industry.

Product fees to be increased include PayPal Checkout, Pay with Venmo, PayPal Credit, and its new buy-now-pay-later offering Pay in 4.

PayPal's long-held fee to merchants of a flat rate of 2.9 percent of a transaction's price plus a 30-cent fee for its services will now increase to 3.49 percent plus 49 cents for sellers using its payment products.

The rate hike is targeted to small-to-medium sized businesses.

"We think it's a bold price to come out with," said Dan Leberman, PayPal's senior vice president for small and medium business and partners, as quoted by Reuters.

"We are changing prices to help our customers understand even more clearly where we provide value," he added.

At the same time, PayPal is reducing basic transaction processing rates for online payments made with Visa and Mastercard debit and credit cards from other companies to 2.59 percent of a transaction's value plus 49 cents to better compete with rivals, such as Stripe and

The reduced fees will help PayPal gain more customers, Leberman said.

Also, PayPal will charge lower prices for in-person transactions using its network to 1.90 percent plus 10 cents for purchases over $10 and 2.40 percent plus 5 cents for lower value purchases to take on Square.

"It's more than just pricing. They are making sure the market understands that they should be thinking of PayPal as a comprehensive payments strategy and not just one form of payment," said Aaron Press, an analyst at research company IDC, as reported by Reuters.

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