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PayPal Credit Card Processing Review

Lori Fairbanks
Lori Fairbanks
  • PayPal is our pick as the best credit card processor for freelancers and solopreneurs in 2021.
  • Pay-as-you-go pricing with no additional fees for its basic services makes it affordable for even very small businesses that don't regularly accept credit card payments.
  • There's no monthly minimum and no contract, so you're not penalized for not processing a certain amount each month or for closing your account.
  • This review is for freelancers and solopreneurs who want to learn about PayPal's processing services for small businesses and why it's our best pick for them.

We've selected PayPal as the best credit card processor for freelancers and solopreneurs because it makes it easy and inexpensive for individuals and very small businesses to start accepting credit cards in person and online. It only charges for the processing you use, and there are no recurring account fees for its basic processing services. You aren't required to process a certain amount of sales each month, and there's no penalty if there are entire months when you don't process anything at all, which may be an important consideration for seasonal businesses. There's also no contract, so you can cancel your account at any time without penalty.

PayPal Credit Card Processing

PayPal Credit Card Processing

The Verdict

PayPal is our pick as the best credit card processor for freelancers and solopreneurs because of its budget-friendly, pay-as-you-go terms no matter how you accept payments: in person, online or over the phone.


Small business owners love PayPal because of its affordable, transparent pricing, and its lack of account fees and monthly minimums. Here's a breakdown of PayPal's transaction fees:

  • In-person sales accepted using the PayPal Here app and a card reader cost 2.7% per transaction.
  • In-person sales made using PayPal's QR codes cost 2.2% per transaction until March 31, 2021. After this date, they'll cost the same as other card-present sales (2.7% per transaction).
  • Online transactions (invoice and e-commerce) cost 2.9% + $0.30 per transaction.
  • Cards that you accept using PayPal's virtual terminal cost 3.1% + $0.30 per transaction except for American Express cards, which cost 3.5%. 
  • Cards that you manually key into the app cost 3.5% + $0.15 per transaction.
  • Registered charitable organizations can apply for discounts on online donation transactions. These cost 2.2% + $0.30 per transaction.

PayPal doesn't charge application or setup fees, monthly fees, or PCI compliance fees. If a customer disputes a charge, there is a $20 chargeback fee. Some of PayPal's advanced services carry monthly fees, but they're optional. The company doesn't require long-term contracts, so you won't be hit with a hefty early-termination fee if you decide the service no longer suits your business.

In comparison, many credit card processors charge $20 or more for various monthly fees, lock you into multiyear service contracts and penalize you with hundreds of dollars' worth of termination fees if you close your account early.

Key takeaways: PayPal has flat rates, and there are no monthly or annual fees for its basic processing service. Advanced services are available at an extra cost.


Editor's note: Looking for information on credit card processors? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.



Ease of Use

PayPal makes it easy to start accepting payments. There aren't any hoops to jump through to set up your account, and you don't need any technical skills to use the service. The registration process is straightforward, taking just minutes to complete.

Unlike many credit card processors, both businesses and individuals can use PayPal. You don't need to apply for a merchant account, wait for a credit check or complete complicated paperwork to open an account. You also don't need to learn new software or set up complex checkout systems, either. Regardless of which payment method you choose, you'll have a plug-and-play service that lets you get started in just a few steps.

To sign up, you will need to apply for a PayPal Business account rather than a personal account, but it is open to individuals such as sole proprietors and freelancers. If you don't have an employer ID number, you can enter your Social Security number. You'll also need to sign up for PayPal Here and download the app if you want to accept payments in person using your smartphone or tablet with a card reader.

Key takeaway: It's easy to start accepting credit cards with PayPal. To get started, you sign up for a PayPal Business account. If you don't have an employer ID number, you can use your Social Security number.


One of the best things about PayPal is that it offers small businesses several ways to accept credit cards. Whether you're a consultant, service provider, or freelancer, or your business is an online store, small boutique, a home-based business, or any other type of microbusiness, you can accept credit cards in person and online.

Online Credit Card Processing

There are several ways you can accept an online payment made using any major credit card.

Accept online payments for invoices. Just go to your PayPal dashboard to email customers an invoice. To pay, your customer only needs to click on the link in the email, and PayPal takes care of the rest. Alternatively, if customers already know your email address and have their own PayPal account, they can send you the funds directly by entering your email address via the Send Money section in their dashboard.

Accept invoice payments in Facebook Messenger. If you interact with customers using Facebook, PayPal allows you to create and send invoices in Messenger. Your customers can then click on the invoice message and pay with their PayPal account.

Accept payments on social media channels. With PayPal's "Pay on Social" feature, you create links for your product listing and share them on your social media pages, in online chats and via email. Your customers click on the links to purchase your products.

Accept credit card and PayPal payments on your website. You can place buy buttons throughout your website, blog or online store. Although this option requires some coding, you don't need programming skills. Just set up your inventory by inputting information like product numbers, description, cost, and other variations – PayPal will then automatically generate the buy-button code that you can copy and paste into your website.

  • If you want to keep your customers on your website and host the checkout pages yourself, you can do so using PayPal Payments Pro. It costs $30 per month and includes a virtual terminal so you can also accept payments made over the phone or by fax.
  • If you need a payment gateway for your website, you can use PayPal's Payflow payment gateway. There's no setup fee and no monthly fees to Payflow Link, which provides you with an embeddable payment template – all you pay is $0.10 per transaction in addition to processing fees. If you want a fully customizable option, you can choose Payflo Pro, which costs $25 per month, plus there's a $99 setup fee.

Accept credit card payments using a virtual terminal. If you take payments over the phone or via fax or mail, you can use PayPal's virtual terminal to key in your customers' credit card information. It costs $30 per month, but is included for no extra fee with PayPal Payments Pro.

In-Person Credit Card Processing

PayPal Here, PayPal's mobile credit card processing and point-of-sale (POS) system, lets you accept credit cards in person anytime, anywhere. Download the PayPal Here mobile app to your phone or tablet, connect a card reader, and start accepting credit cards at your brick-and-mortar location, at home, or on the go. It also supports QR codes, which allow you to accept touch-free payments.

This mobile app can scan barcodes, send invoices and receipts, allow customers to enter debit card PINs and sign for credit cards. PayPal Here is available for iOS and Android mobile devices. [See Related Story: Credit Card Machines: Answers to Frequently Asked Questions]

If you need a more advanced POS system, PayPal integrates with several well-known systems such as Lavu, NCR Silver, Revel Systems, TouchBistro and Vend.

Multichannel Credit Card Processing

A PayPal representative told us that you can use more than one payment-acceptance method at the same time for multichannel sales at no extra cost, and all funds go into a single PayPal account.

For instance, if you own a handmade jewelry business, you can sell your creations on your website using PayPal's buy buttons (or via email) and easily process credit card sales in person at your store or trade shows using PayPal Here. You'll use the same PayPal account for both methods, so you can easily manage all transactions and withdraw money from a single dashboard.

Key takeaway: Using PayPal as your processor, you can accept payments in person and online.


Editor's note: Looking for information on credit card processors for your business? Use the questionnaire below, and our vendor partners will contact you to provide you with the information you need.



In addition to credit card processing, PayPal is packed with features to help you grow your business. Here are a few that matter the most for freelancers, solopreneurs and other small businesses:

Choice of Processing Equipment

PayPal gives you three card readers to choose from, and each is compatible with third-party receipt printers, cash drawers, stands, and cases. You can start small, with just your phone and a card reader, or add accessories to build a checkout station. Here are the card readers PayPal offers:

  • Chip and swipe reader. This card reader connects to your phone or tablet via Bluetooth. With it, you can accept both magnetic stripe and chip cards. It costs $24.99.
  • Chip and tap reader. This card reader uses Bluetooth to connect to your phone or tablet. With it, you can accept magnetic stripe, chip, and contactless cards, as well as mobile wallets, such as Apple Pay and Google Pay. It costs $59.99. If you buy it bundled with the charging stand, the cost is $79.99.
  • Chip card reader. This card reader also connects to your phone or tablet using Bluetooth and can accept magnetic stripe, chip, and contactless payments. It has a screen and PIN pad, so you can accept PIN debit cards. It costs $99.99.

PayPal Business Debit Mastercard

In addition to transferring funds to your bank account, you can manage your earnings using PayPal's Business Debit Mastercard. If you qualify, you can use this debit card to make purchases at any store using your PayPal funds, just as you would with any other debit card. It comes with perks like 1% cash back on certain purchases and the ability to immediately withdraw cash from approved ATMs. There's no annual fee for this business debit card.


PayPal integrates with many business solutions. In addition to the POS systems mentioned above, it integrates with shopping carts and e-commerce platforms like BigCommerce and Shopifyaccounting software like QuickBooks and Xero, and marketing solutions like Constant Contact and Eventbrite.

Other Benefits

PayPal offers some unique services to its customers, such as the following:

  • International transaction support. Using PayPal as your processor, you can sell your products to international customers, and PayPal takes care of currency conversion. It processes and converts transactions in 25 currencies from more than 200 countries. In addition to the standard transaction fee, you pay 3% for currency conversion and a 1.5% international transaction fee.
  • PayPal Marketing Solutions. Online stores can get insights into customer behavior using this free tool. To install it, you copy and paste a small piece of code into your website.
  • Multiple user support. You can grant limited access to your PayPal business account to as many as 200 employees.
  • Extend credit to customers. You can offer financing options to customers with PayPal Credit and Pay in 4. Not many credit card processors offer this service, making PayPal a good option if you want to increase sales and customer loyalty by offering flexible payment plans.
  • Business financing. PayPal offers working capital and small business loans to eligible merchants. PayPal Working Capital is for businesses that have processed at least $15,000 with PayPal over the past year and need a loan of $1,000 to $125,000. PayPal Business Loan is for businesses that have at least $42,000 in annual revenue and need between $5,000 and $500,000 in financing.

Key takeaway: PayPal offers a choice of card readers and gives you the option of accessing your funds using the PayPal Business Debit Mastercard.


Whether you make one sale per month or process thousands of transactions daily, all merchants are responsible for making sure that both their data and customers' information stays protected.

As a low-volume business, you likely don't have the resources or knowledge to secure transactions yourself. PayPal takes care of security for you. A PayPal representative told us this includes a wide range of safety measures, such as PCI compliance, end-to-end encryption, seller protection and 24-hour fraud protection. Plus, all of its card readers are EMV compliant, which prevents counterfeit fraud at the point of sale.

Key takeaway: PayPal takes data security seriously and employs multiple protocols to keep sensitive payment information safe.

Customer Support

PayPal has been around for nearly two decades, and some of its strongest points are customer service and merchant support. The company offers several ways to get the help you need when you need it.

If you need to reach a live person, PayPal gives you 24/7 access to phone support, though after-hours calls may be routed to one of the company's international call centers. Live chat and email support are also available.

Or, if you prefer to troubleshoot issues yourself, PayPal has a dedicated customer support center on its website. There, you'll find a searchable database of articles, how-to guides and frequently asked questions. The website also has a Resolution Center to help you handle customer disputes and a community forum, where you can browse common issues or ask other PayPal users for help.

Key takeaway: You can reach PayPal's support team 24/7 by phone, though after-hours calls may be routed to one of its international call centers.


Although PayPal has a lot of useful tools that make it easy for low-volume businesses to accept credit card payments, several features cost extra. For instance, if don't want your online customers routed to the PayPal website to complete the purchase (which can be inconvenient for them), you can customize the checkout process on your own website by upgrading to PayPal Payments Pro, but this add-on costs $30 per month. See also our full review of Square for more of the best credit card processing options for small businesses.

There are also multiple incidental fees and optional add-ons that can add up quickly. These fees include:

  • $0.30 per uncaptured authorization (when a credit card is authorized, but the purchase is not complete) on PayPal Payments Pro
  • $0.30 for card verification transactions (used to verify whether a cardholder's account is in good standing, but no purchase is made)
  • A 1% Instant Transfer fee for moving money from your PayPal balance to an eligible debit card in minutes rather than the standard time frame of one business day
  • 1.5% for cross-border payments, added to the 2.7% transaction fee, when you accept international credit cards in person using PayPal Here; a 3% fee for currency conversion may also apply
  • A 3.5% transaction fee for American Express payments on PayPal Payments Pro, PayPal Payments Advanced and virtual terminal transactions (compared to the 2.9% + $0.30 using the basic PayPal plan)
  • $10 per month for recurring billing
  • $10 per month plus $0.05 per transaction for advanced fraud protection services
  • $20 per month plus $0.05 per transaction for advanced fraud management filters
  • A $20 chargeback fee
  • $30 per month for a virtual terminal that lets you turn computers into credit card terminals and accept payments by phone

We appreciate that PayPal is very transparent about these fees on its website – and that the sales rep had no qualms about disclosing them to us – so there are no surprises if you take advantage of these features. To be fair, as a business with low-volume sales, you likely won't encounter many of these charges. But as your business grows and your transaction volume increases, you may eventually seek a processor with lower rates as a more budget-friendly service.

Also, like many other merchant aggregators, PayPal has a lot of complaints online about funds being held in reserve accounts or accounts being frozen. If you sell higher-risk items, or there's something unusual about your transactions, such as an abnormally high number of transactions or dollar amounts within a short amount of time, or if you have a lot of chargebacks, the company may hold your funds. [Want more options? Check out some Paypal alternatives]

By following PayPal's seller best practices, you can reduce your risk of having funds held. If the goods or services you sell are outside the company's acceptable use policy, your account may be frozen or closed without notice.

Key takeaway: If you use several of PayPal's advanced services, your costs can quickly increase.

Editor's note: Looking for information on credit card processors? Use the questionnaire below and our vendor partners will contact you to provide you with the information you need.

Image Credit: radifanil / Getty Images
PayPal Credit Card Processing

PayPal Credit Card Processing

The Verdict

PayPal is our pick as the best credit card processor for freelancers and solopreneurs because of its budget-friendly, pay-as-you-go terms no matter how you accept payments: in person, online or over the phone.

Lori Fairbanks
Lori Fairbanks
Business News Daily Staff
Lori Fairbanks is a writer and editor for and Business News Daily who has written about financial services for small businesses for more than seven years. Lori has spent hundreds of hours researching, analyzing and choosing the best options for critical financial-related small business services, including credit card processing services, point-of-sale (POS) systems and employee retirement plans. Lori's publishing experience is extensive, having worked as a magazine editor and then as a freelance writer and editor for a variety of companies.