PayPal Fees Explained: The Complete UK Guide for 2026

PayPal does not charge a fee for most personal transactions between UK users. But the moment money moves in a commercial context, the fees kick in, and they can range from 1.2% to 5% depending on what you are doing and where the money is coming from.

This guide covers every PayPal fee that matters to UK consumers and businesses in 2026: goods and services fees, business transaction rates, instant transfer costs, currency conversion charges, and the less visible fees that catch merchants off guard.

Is PayPal Free?

It depends on the transaction type. PayPal is free in these situations:

• Buying from a seller using your PayPal balance or linked bank account (with no currency conversion needed)
• Sending money to friends and family in the UK from your PayPal balance or bank account
• Receiving personal payments from another UK user
• Withdrawing funds to a UK bank account (standard transfer)

PayPal charges fees when money moves commercially. If you receive payment for goods or services, send money abroad, convert currencies, or process payments through a business account, fees apply.

PayPal Goods and Services Fees (G&S)

This is the most-searched PayPal fee category for good reason. Goods and services (G&S) is the payment type that triggers buyer protection on PayPal, and it costs the recipient a fee.

G&S is the correct option for any commercial transaction. Selling a product, running a service, accepting payment as a freelancer, or collecting money through a business account all fall under this category. Using the "friends and family" option to avoid fees for commercial sales is a violation of PayPal's user agreement and removes buyer protection.

The UK PayPal G&S fee structure for domestic transactions:

The fixed fee per transaction varies by currency. For GBP transactions, it is 0.30 GBP.

The default rate most sellers encounter is 2.9% + 0.30 GBP. The card-funded rate of 1.2% is lower because the transaction is funded directly from a card, and PayPal prices this type separately. Alternative Payment Methods such as Apple Pay or Google Pay carry the 1.29% APM rate.

Who pays the G&S fee? The seller pays. Buyers do not pay a PayPal fee when sending a G&S payment from their PayPal balance or bank account. If a buyer pays using a credit card, there is no additional buyer-side charge, but it does affect which seller rate applies.

What this costs in practice: on a 50 GBP sale at the standard rate, the seller pays 1.45 GBP + 0.30 GBP = 1.75 GBP. On a 200 GBP sale, the cost is 5.80 GBP + 0.30 GBP = 6.10 GBP. For sellers operating on platforms like eBay, Depop, or Vinted, these costs compound quickly.

PayPal Business Transaction Fees for UK Merchants

If you operate a business account and accept payments from customers, these are the rates you will see.

Standard Commercial Transaction Rate

The default rate for receiving commercial payments through online checkout, invoices, or payment links is 2.9% + 0.30 GBP per transaction for standard domestic UK payments.

Card Payment Fees

Merchants using PayPal's Advanced Credit and Debit Card Payments product see the following rates:

American Express sits materially higher than Visa and Mastercard. If a significant share of your customer base pays with Amex, this is worth building into your margin assumptions. The 3.5% rate applies to Amex transactions processed through PayPal's card payment products.

PayPal Invoice Fee

Payments made in response to a PayPal invoice are charged at the standard commercial transaction rate. For UK domestic payments, that is 2.9% + 0.30 GBP per transaction. There is no separate invoicing fee layered on top of this. The cost of getting paid via invoice is the same as the cost of getting paid through checkout.

QR Code Payments

Merchants using PayPal QR codes for in-person transactions pay 1.5% + fixed fee for transactions above 10.01 GBP, and 2% + fixed fee for transactions at or below 10.00 GBP. QR code payments are designed for market stalls, pop-ups, and similar settings where card readers are not in use.

Charity and Donation Rates

Registered charities receive a reduced domestic rate of 1.4% + fixed fee for commercial transactions. QR code transactions and listed fundraisers use commercial transaction rates. Unlisted PayPal fundraisers carry no fee to receive donations.

PayPal International Transaction Fees

International transactions carry an additional percentage on top of the standard domestic rate.

A UK merchant receiving a standard payment from a French buyer, for example, would pay 2.9% + 1.29% + 0.30 GBP fixed fee. The additional percentage is applied on top of whichever domestic rate applies to the transaction type.

Post-Brexit cross-border considerations

Since the UK left the EU, UK-issued cards are no longer classified as EEA cards by card networks or by PayPal. A UK buyer paying a merchant based in Germany is now a cross-border transaction, attracting the additional 1.29% EEA fee. The same logic applies in reverse: a French buyer paying a UK merchant triggers cross-border charges. If you process meaningful volumes across the UK and Europe, this post-Brexit reclassification has a real cost impact that was not present before 2021.

Sending personal payments internationally

UK users sending personal payments to someone abroad pay 5% of the transaction amount. There is no fee for receiving personal payments from abroad unless a currency conversion is required.

PayPal Instant Transfer and Withdrawal Fees

Standard withdrawal from your PayPal account to a UK bank account is free. Standard bank transfers typically clear within one to three business days. PayPal does not charge for this.

If you need funds faster, PayPal offers an instant transfer option to an eligible UK debit card. This option carries a separate fee. PayPal updates this rate periodically, so check the current fee schedule in your PayPal account settings or at paypal.com/uk before relying on a specific figure.

Currency conversion is charged separately from the transfer itself. If your PayPal balance is held in a foreign currency and you withdraw to a GBP account, PayPal applies its currency conversion charge before releasing funds to your bank.

PayPal Currency Conversion Fees

PayPal charges 3% above the base exchange rate for all currency conversions. This applies when:

• You receive a payment in a currency different from your account's primary currency
• You withdraw funds that require conversion to GBP
• You send or spend in a currency you do not hold

A 3% margin above the interbank rate is substantially more expensive than specialist FX providers. For merchants regularly receiving payments in USD, EUR, or other currencies, holding balances in the received currency and converting via a lower-cost FX service when rates are favourable can reduce this cost meaningfully over time.

PayPal Micropayments Pricing

For merchants selling low-value items where the standard 0.30 GBP fixed fee would take a disproportionate share of each sale, PayPal offers a Micropayments pricing option by application.

Micropayments rates:

• Domestic: 5% + reduced fixed fee
• International: 6% + reduced fixed fee

The percentage rate is higher than the standard rate, but the fixed fee per transaction is lower. This structure benefits sellers with average transaction values below approximately 10 GBP, such as those selling digital downloads, individual articles, or in-game items. You need to apply to PayPal separately to access this pricing tier.

Additional PayPal Fees UK Merchants Should Know

A number of less visible fees can appear on UK business accounts. The table below covers the ones most likely to catch merchants off guard.

The high-risk account surcharge is the one that surprises merchants most. If PayPal classifies your account as high-risk due to elevated chargeback rates, your business category, or other factors, it can add up to 5% per transaction on top of your standard rate. In that scenario, PayPal's effective cost can exceed any other mainstream payment provider. If your business operates in a category that any processor might consider elevated-risk, knowing your risk classification before choosing your payment stack is essential.

Is PayPal the Right Payment Solution for Your Business?

PayPal works well for businesses in the early stages, for markets where PayPal has strong consumer trust, and for merchants who benefit from PayPal's name recognition at checkout. Its standard rates are competitive at low volumes, and setup requires no underwriting in most cases.

At higher processing volumes, the economics shift. A dedicated merchant account through a mainstream payment processor typically offers lower effective rates, a cleaner integration, and better access to your own data. PayPal also classifies certain business types differently, which can mean restricted accounts or unexpected surcharges with little warning.

If you are growing past the stage where a default payment button was enough, the question of whether PayPal, a dedicated gateway, or a blended setup makes more sense is worth answering properly.

Frequently Asked Questions