PayPal fees and alternative payment charges can have a tangible impact on the cost of selling for your e-commerce store. Although PayPal may seem like the obvious and only choice, there are actually a number of alternatives that may better suit your business. Here’s a look at PayPal fees and alternatives you can use in 2023 to maximise your profits.
PayPal has many advantages; it’s quick and easy to set up, everyone knows and trusts it, and most people have a personal account for e-commerce purposes before they set up a business. But with e-commerce margins, the fees can quickly eat into your profits, so it is worth exploring the alternatives.
PayPal fees 2023
If you are receiving funds from the UK, the fee is 2.9% + 30p per transaction. Funds from outside of the UK may rise to 3.4% + 30p per transaction, depending on the locale.
Domestic transactions using PayPal are charged at a standard rate depending on how the card payment is made and from which credit card provider.
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The Drawbacks
PayPal is building a bad reputation amongst sellers for freezing funds without warning. Losing access to funds can be catastrophic to a business, so we recommend not leaving funds sitting any longer than you need to. If you do use PayPal and are expecting an abnormally large amount of funds to arrive, contact PayPal in advance to make sure it doesn’t trigger a freeze.
PayPal Alternatives – Veem
We love Veem for international transactions. In almost all situations, it is entirely fee-free whether you are transferring money within the UK or internationally. Payments made with Veem are processed within two to three working days, depending on the country the money is being received.
The one drawback is that both parties need to have a Veem account. This makes it a frontrunner for payments to and from suppliers but less handy for taking payments from your customers.
It also syncs with Xero, reducing your admin time.
PayPal Alternatives – Google Pay
Google Pay is growing in popularity and features on an increasing number of e-commerce sites. It’s fast and simple; shoppers add their card payment details to their Google Pay account, giving them a secure and streamlined payment method.
It’s easy to hook up on your store and is free when payments are made by debit card or bank transfer. If a customer pays by credit card, you will be charged 2.9% of the transaction amount.
Google Pay is also a great alternative to PayPal in accordance with the rise in m-commerce. As more and more consumers look to make purchases from their smartphone, Google Pay makes mobile shopping simple, quick, and easy.
PayPal Alternatives – Stripe
Stripe is a very popular payment platform for e-commerce businesses and is also easily integrated with Xero. In fact, many e-commerce tools, such as Shopify, can be integrated with Stripe. It’s highly customisable and available across the globe.
Stripe fees are 1.5% + 20p per transaction for standard UK cards and 2.5% + 20p per transaction for European Union cards. This means domestic transactions come in considerably cheaper than PayPal, while international transactions are largely on par.
However, with Stripe, you can design a custom package for your business in accordance with payment volume, high-value transactions, and your business model.
PayPal Alternatives – Shopify Payments
Our list wouldn’t be complete without the obvious option for e-commerce entrepreneurs – Shopify payments. If you are hosting your store on Shopify, their payment platform allows you to receive funds without the need for a third-party.
Customers can sign up for Shopify Pay for easy payment in future, it’s quick and easy to set up on your Shopify store, and it keeps everything under one roof.
Shopify Payments can also be used on other platforms (providing you have a Shopify subscription) such as Amazon Marketplace, eBay, and Facebook.
To use Shopify Payments, you will need a Shopify subscription, which starts at £25 a month. Once that is in place, credit card fees start at 2% + 25p per transaction. As you increase your subscription package, your Shopify Payment fees will become less.
There are no transaction fees for stores using Shopify Payments, however, if you choose a third-party provider, there are additional fees to be paid. You will be charged 2%, 1% or 0.5% of each transaction depending on your subscription plan.
Next Steps
If you use the Shopify platform for your e-commerce store, Shopify Payments is a good place to start. But if you sell through third-party platforms such as Amazon, or host your own site outside of Shopify, Stripe, Veem, and PayPal are all safe and trusted options.
Little expenses can add up but putting your business in the hands of an e-commerce specialist accountant can help your bottom line improve year on year. If you would like to discuss the growth of your business or would like help moving to Xero, the accounting app designed for e-commerce businesses, our team will be happy to help.
The best time to act is now.
Related articles
https://unicornaccounting.co.uk/blog/a-guide-to-etsy-fees-for-uk-sellers/
https://unicornaccounting.co.uk/blog/the-5-e-commerce-tools-every-small-business-needs/
https://unicornaccounting.co.uk/blog/5-easy-tips-to-save-costs-for-your-ecommerce-business/
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