Every reseller who has taken a payment outside a marketplace has had this conversation: “Can you send it as friends and family so I don’t pay the fee?” Sometimes it’s innocent. Sometimes it’s the setup for a scam. Either way, the fee you’d save is smaller than most people think and the protection you’d lose is larger.
What each type costs
For a US account receiving US dollars, as of PayPal’s current fee schedule:
| Payment type | Fee to the receiver |
|---|---|
| Goods and services | 2.99% + $0.49 |
| PayPal Checkout or an invoice you sent | 3.49% + $0.49 |
| Card payment on your own website | 2.99% + $0.49 |
| Micropayments account (under about $10) | 4.99% + $0.09 |
| Friends and family, funded by bank or balance | Free |
| Friends and family, funded by card | 2.9% + $0.30, paid by the sender |
| Add for a sender outside the US | 1.50% |
On a $60 goods and services payment the fee is $2.28 and you receive $57.72. On $250 it’s $7.97 and you receive $242.03. The fixed $0.49 is why small payments have a higher effective rate: on $10 it’s 7.9%, on $100 it’s 3.5%.
What the fee buys
The 2.99% pays for two things that friends and family doesn’t include.
Seller protection. If a goods and services buyer claims the item never arrived or files a chargeback, and you can show tracking to the address on the transaction, PayPal covers you. Friends and family payments have no seller protection, and PayPal’s own terms say the sender shouldn’t use it for a purchase.
Buyer protection. The same in reverse. A buyer paying goods and services can open a dispute if the item doesn’t arrive or isn’t as described. A buyer who pays friends and family has given a gift, and PayPal treats it as one.
That is the trade a buyer is proposing when they ask for friends and family: they save you $2.28 and give up every remedy if you don’t ship. Honest buyers rarely want that once they understand it. Scammers want it very much, in both directions. A common version: the “buyer” pays friends and family from a stolen account, you ship, the real account holder reverses the payment, and you have neither the item nor the money.
Who pays the fee
PayPal charges the fee to whoever receives a goods and services payment. You can’t pass it to the buyer as a line called “PayPal fee”; that’s against PayPal’s terms and most state surcharge rules. What you can do is price for it.
To net an exact amount, divide by (1 − 0.0299) and add the fixed fee. To keep $60.00:
$(60.00 + 0.49) ÷ 0.9701 = $62.35$
The PayPal fee calculator has a mode for this that rounds up to the next cent so you never land under your target.
Micropayments
If you sell many items under about $10, PayPal offers a micropayments rate of 4.99% + $0.09 on request. On a $5 payment that’s $0.34 instead of $0.64. On a $50 payment it’s $2.59 instead of $1.99, so it only pays if nearly everything you take is small.
International payments
A sender outside the US adds 1.50% to the goods and services rate, so 4.49% + $0.49. If the payment arrives in another currency and PayPal converts it, there’s a currency conversion spread on top, typically 3% to 4% above the wholesale rate. Where you can, ask international buyers to pay in USD.
Tax: does PayPal report my sales?
PayPal issues a Form 1099-K to sellers whose goods and services payments cross the federal reporting threshold, and files a copy with the IRS. Congress changed that threshold twice in recent years; check the IRS page on Form 1099-K for the figure that applies to the current tax year, and note that several states set lower thresholds of their own.
Two things don’t change regardless of the threshold:
- Friends and family payments are not reported on a 1099-K, because they’re not supposed to be sales. Using them to hide sales is tax evasion, not a loophole.
- Whether or not you receive a 1099-K, profit from selling as a business is taxable. The freelance tax calculator estimates what to set aside.
Practical rules
- Take goods and services for anything you’re selling, every time, and price for the fee.
- Ship only to the address on the PayPal transaction, with tracking, and keep the receipt.
- Never accept a friends and family payment from someone you don’t know for something you’re going to ship.
- If a platform like eBay or Mercari handles the payment, none of this applies; their fee includes processing and their protection replaces PayPal’s.
Sources
PayPal merchant fees, checked 13 September 2026. The calculator uses the same table.