PayPal is one of the most popular payment gateways used in the world. Founded in 1998, PayPal has expanded its customer base to 286 million active accounts and has processed a whopping 3 billion transactions in the second quarter of 2019 alone.
If that’s enough to convince you that PayPal is a household name, I don’t know what is.
Table of contents
- Personal PayPal Transactions
- 1. Sending Money to Friends and Family in Australia Through PayPal
- 2. Sending Money to People in Other Countries
- 3. Receiving Money in Australia as a Business
- 4. Receiving Recurring Payments on Your eCommerce Site
- 5. Miscellaneous Merchant Fees
- 6. Merchant Integrations
- Final Thoughts
In Australia, PayPal is the best option anyone can use to send and receive money online. In fact, most internet marketers trust this payment option. And it’s well-known that consumers all over the world, including in Australia, use PayPal to pay for their online purchases.
But what is it that makes PayPal so appealing to online customers, and more importantly eCommerce shop owners?
One of the biggest draws PayPal has is its multitude of features that cater to both consumers and online shop owners. As an eCommerce site owner, PayPal gives you the control you want over online payments made on your website.
And as a customer, PayPal offers you the security needed to finalize purchases without fear your sensitive data will be intercepted. Plus, it’s just easy to use.
But the thing is, if you’re a regular PayPal user, you should know that there are some fees attached to PayPal payments being made in Australia. Of course, most of these only affect eCommerce shop owners, and not customers. But it’s worth looking at it all so no matter what role you play in the online consumer world, you know just what you’re paying when you use PayPal.
So, let’s take a look.
Personal PayPal Transactions
Sometimes you need to conduct personal transactions using PayPal. You might need to send money to a friend or family member. And this person may or may not live in Australia with you.
Whatever the case may be, the circumstances surrounding the location of the receiver, the currency you use, and the method you use to send money will all play a role in how much you’ll pay on top of your initial transaction.
1. Sending Money to Friends and Family in Australia Through PayPal
Sending Australian money to your relatives or friends in Australia is free if you’re pulling from the current balance of your PayPal account. In other words, if PayPal is holding money for you (much like a bank does) you can send that Australian money to friends and family free of charge. The receivers of your money (aka your friends and family) will not be charged either.
However, if you need to use your credit or debit card to send money to friends and family in Australia, you’re going to be charged a fee for doing so. This fee amounts to 2.6% of the transaction total, as well as an additional flat rate of $0.30.
Sending Money to People in Australian to Pay for Goods or Services
If you’re sending money to people (friends, family, or strangers) in Australia to pay for goods and services, you will not incur any fees. Simply pay the price quoted for the product or service and finalize your transaction.
The person on the receiving end of your money, as a business, will incur PayPal fees, which we’ll get into later.
2. Sending Money to People in Other Countries
If you need to send money to friends or family outside of Australia, there will be fees based on the method you use and the amount you’re sending.
For example, if you use your PayPal account or Australian bank account to send money, the following fees will apply:
- 5% of the send amount (minimum $.99 AUD and maximum $5.99 AUD charge)
- No funding fee will be applied
If you need to use your credit or debit card to send money, the following fees will apply:
- 5% of the send amount (minimum $.99 AUD and maximum $5.99 AUD charge)
- 2.6% of the transaction amount plus a fixed fee based on the currency to cover the funding fee
Here’s a table of some currencies, specifically the Australian dollar, and their fixed currency funding fee amounts:
As you can see, if you’re using Australian currency to send money to friends and family outside of Australia, the fixed currency funding fee will be $.30.
3. Receiving Money in Australia as a Business
If you’re living in Australia, and you are on the receiving end of a business transaction, then you can expect to have to pay some PayPal fees.
However, the amount of fees you’ll have to pay will depend on the nature of the transaction. There are so many different scenarios that can play out.
For example, PayPal wants to know the following before applying a fee:
- Receiving country (e.g., you in Australia)
- Payment method (e.g., credit card, PayPal account, linked bank account, etc.)
- Amount of transaction
- Currency exchange fees
Determining the exact fee structure for every single kind of online business transaction you can process on your eCommerce site is nearly impossible. After all, online shops are available to people spanning the globe. Everyone uses different payment methods and currencies. Not to mention, each transaction will be a unique total.
That said, we’ve outlined the most common that you can relate to, so you can get an idea of what to expect as an online business accepting PayPal transactions:
|Payment Type||Transaction within Australia||International Transaction|
|Online payments finalized through your eCommerce shop||2.6% + $0.30||3.6% + fixed currency fee|
|Website Payments Pro (a hosted solution that comes with a $30 monthly fee)||1.75% + $0.30||3.6% + fixed currency fee|
|Invoices you send out to customers||2.6% + $0.30||3.6% + fixed currency fee|
|PayPal Here card reader (for in-person transactions)||1.95%||1.95%|
|PayPal Here (manual entry)||2.9% + $0.30||2.9% + fixed currency fee|
|Virtual Terminal (accept credit and debit card payments over the phone, fax, mail orders, or when the customer is not present; comes with a $30 monthly fee)||3.6% + $0.30||4.6% + fixed currency fee|
|Donations (must have prior approval through PayPal)||1.1% + $0.30||2.1% + fixed currency fee|
It’s important to note that any time you receive money from a customer that uses a currency other than Australian dollars, PayPal will convert it at 3% above the base rate when you withdraw your money to a linked bank account.
4. Receiving Recurring Payments on Your eCommerce Site
If you’re an online business, and you’re receiving payments on a monthly basis, then the fee structure will vary according to the amount received.
- For up to $5000, the fee will be 3.4% + $0.45
- If the payment is between $5000-$15000, the fee will be 2.9% + $0.45
- For recurring payments between $15,000-$150,000, the fee will be 2.7% + $0.45
- Any amount above $150,000 will be charged a fee of 2.4% + $0.45
If the recurring payment is paid with a bank transfer, and the amount is above $150, then you won’t be charged any fees. However, if the payment is below $150, then PayPal will charge you $1 AUD .
5. Miscellaneous Merchant Fees
When you get right down to it, PayPal has an extensive and complex fee structure for what seems like endless transaction scenarios.
Here are some of the more common miscellaneous PayPal fees in Australia you might find yourself paying as an online merchant:
- Chargeback Fees: if a chargeback is approved, you’ll owe $22 AUD.
- Uncaptured Authorization: if your customer authorizes PayPal to process their purchase, but you do not finalize the purchase on your end using PayPal, you’ll be charged a $.30 fee.
- Card Verification Transactions: if you want to verify a cardholder’s standing before processing the transaction, you’ll be charged a $.30 fee.
- Refund Fee: refunds, either partial or full, are not charged additional fees. However, the original seller fees you paid to process the transaction will not be refunded to you.
- Instant Bank Account Transfers: if you need your PayPal money transferred to your bank account right away (rather than waiting the typical 2-3 business days), you can enable an instant transfer for a fee of 1% of the transfer amount (will not exceed $10).
- PayPal Payments Advanced: if you want to keep the checkout process on your website (rather than redirecting customers to the PayPal website to complete a transaction) you can add-on PayPal Payments Advanced for a $5 monthly fee.
- PayPal Payments Pro: if you want to custom design your online shop’s checkout page and host it yourself, you can invest in the PayPal Payments Pro add-on for a $30 monthly fee.
- American Express® Card Usage Fees: for PayPal Payments Pro, PayPal Payments Advanced, and Virtual Terminal, you’ll incur a 3.5% per transaction fee any time someone used their American Express® credit card.
6. Merchant Integrations
Sometimes online businesses need more than just a way to process transactions in their online shops. Luckily, PayPal has a comprehensive set of tools you can access with your business account to make managing your online store a cinch.
For example, you can integrate PayPal with:
- Multiple payment options such as credit and debit cards, PayPal, PayPal Credit, Venmo, online, and in-person solutions
- Widely used and highly scalable shopping cart solutions that will work seamlessly with your website platform (e.g., Wix, Shopify, BigCommerce, and WooCommerce)
- Third-party customer relationship management (CRM) solutions like Salesforce for managing leads, contact information, marketing campaigns, communication, and more
- POS systems for selling in-person (great for those that have brick and mortar shops or attend fairs, conventions, etc.)
- PayPal Business Debit MasterCard®, which allows you to use your PayPal balance to pay for things anywhere MasterCard is accepted (get cash out of ATMs and earn 1% cash back on eligible purchases)
- PayPal Shipping to print order labels and get in on shipping partner discounts
- PayPal Business App to send invoices, track payments, access customer information and much more
In the end, there’s a reason why PayPal is one of the most widely used payment gateways in the world by online businesses. It’s affordable, flexible enough to meet your growing needs, and provides your customers with an exceptional shopping experience that they can trust too.
If you know you want to use PayPal on your up-and-coming Australian eCommerce shop, but need help designing it, get in touch with us at Keen to Design.
We know what it takes to establish a strong online presence, especially in the eCommerce industry. And since we strive to listen to your needs, create a truly unique website, and aim to land you as many sales as possible, you can trust that your newly launched eCommerce site will be a success from the start with us by your side.