How Much Does PayPal Business Really Cost UK Merchants?

PayPal is one of the UK's most recognised payment brands, founded in 1998 and now processing payments for millions of UK businesses. Its Business account lets you accept card payments online, in person via a card reader, and through a hosted checkout. PayPal business transaction fees in the UK are a flat 2.9% plus 30p per transaction for standard UK and European personal Visa and Mastercard payments. There is no monthly fee for the standard Business account and setup takes minutes. The PayPal Zettle card reader costs £29 plus VAT for your first device and charges a flat 1.75% per in-person transaction. The name alone converts browsers into buyers at checkout, which is its single biggest selling point for UK merchants.

Updated August 2026

Key Facts: PayPal UK

Who Is This Page For?

This page is for UK business owners comparing PayPal as a payment processor. It covers PayPal Business account fees, PayPal Zettle card reader fees and costs, PayPal Payments Pro, settlement times, account freeze risks, and how PayPal compares to alternatives such as Stripe, Square, and dedicated merchant accounts. It is aimed at sole traders, freelancers, small online retailers, and market traders trying to decide whether PayPal is the right fit for their business in 2026.

Who Is PayPal For?

PayPal suits businesses that sell primarily online and want a payment option their customers already trust. Studies consistently show that displaying the PayPal button at checkout increases conversion rates, particularly for first-time buyers who are reluctant to enter card details on an unfamiliar site. If your customers include older shoppers or occasional online buyers, PayPal is often their preferred payment method.

It also works well for sole traders, freelancers, and small online retailers who need to start accepting payments quickly and have modest monthly volumes below £5,000. At those volumes, the per-transaction fees are manageable and the absence of a monthly fee keeps costs predictable. Businesses processing above £50,000 a month should compare PayPal carefully against dedicated merchant accounts, where blended or interchange-plus pricing can be significantly cheaper.

PayPal Zettle, its in-person card reader product, targets small retail, market traders, and food and drink businesses that want a simple portable reader without a long-term contract. It is not designed for businesses running multiple tills or needing deep integration with an EPOS system. See our dedicated PayPal Zettle review for a deeper look at the card reader product.

PayPal Features

• PayPal Checkout button: Lets customers pay using their stored PayPal balance or linked card without re-entering details. Consistently cited as a checkout conversion booster for UK ecommerce stores.
• Pay Later (Pay in 3 and Pay Monthly): Built-in buy now, pay later options funded by PayPal, not the merchant. You receive the full amount upfront; PayPal takes the credit risk. Read more about buy now pay later for UK merchants.
• PayPal Zettle card reader: A contactless card reader for face-to-face payments, sold for a one-off hardware cost of £29 plus VAT for the first reader. Accepts Visa, Mastercard, Amex, Apple Pay, and Google Pay.
• Pay by Link: Generate a payment link and send it by email, WhatsApp, or SMS. Useful for service businesses and tradespeople who invoice clients directly. See our guide to pay by link services in the UK.
• Invoicing: Send branded invoices from the PayPal dashboard and get paid directly into your PayPal account. Free to use with standard transaction fees applying on payment.
• Multi-currency acceptance: Accept payments in over 25 currencies. Currency conversion fees apply, typically around 3–4% above the base exchange rate, which adds up for businesses with frequent international sales.
• Seller Protection: Covers eligible transactions against chargebacks and reversals. Conditions apply and high-risk categories are excluded, so read the policy carefully before relying on it.
• Zettle POS app: A free point-of-sale app for iOS and Android that pairs with the Zettle card reader and tracks sales, inventory, and receipts.

PayPal Fees and Pricing

PayPal uses blended pricing, meaning one rate covers most card types rather than breaking out debit, credit, and premium cards separately. This makes fees easy to predict but can mean you overpay compared to interchange-plus pricing at higher volumes.

Online transaction fees (PayPal Business account, August 2026)

PayPal's published UK fee schedule is a flat rate rather than a volume-tiered one — there is no public discount structure for higher-turnover merchants. Larger businesses can sometimes negotiate a custom rate directly with PayPal, but this is not advertised and must be requested.

These rates apply to standard UK and European personal Visa and Mastercard transactions. American Express cards and international cards outside Europe attract higher fees, typically around 3.49% plus 30p per transaction. Always check PayPal's published fee schedule for your specific card mix, as the blended rate can climb quickly if a large share of your customers pay with Amex or non-European cards.

PayPal Zettle card reader fees and costs (August 2026)

The Zettle in-person rate of 1.75% applies to every card type, which simplifies cost planning. At £10,000 monthly card turnover through the reader, that works out to £175 in transaction fees with no monthly fee on top. A traditional merchant account at 0.8% plus a £20 monthly fee would cost around £100 at the same volume, so Zettle becomes more expensive as volumes rise. For a direct comparison, see our Zettle vs Square and Zettle vs SumUp pages.

Is PayPal free to use?

PayPal is free to set up and there is no monthly fee for the standard Business account. You only pay when you take a payment. Transaction fees are a flat 2.9% plus 30p for online card payments. There is no cost to create an account, send invoices, or generate payment links. Receiving personal payments funded by a PayPal balance or bank account is also free, though that method cannot legally be used for commercial sales.

PayPal monthly fee: what do you actually pay?

The standard PayPal Business account has no monthly fee. PayPal Payments Pro, which gives you a fully customised checkout on your own domain, costs £20 per month on top of standard transaction fees. PayPal Zettle also carries no monthly subscription. The only recurring cost most businesses face is per-transaction fees, which vary by volume as shown in the table above.

Other fees to know

• Instant bank transfer: 1% of the transfer amount, minimum 25p, maximum £10, to move funds from your PayPal balance to your bank account immediately rather than waiting one to three business days.
• Chargeback fee: £14 per disputed transaction for UK merchants (waived if you win the dispute). For more on managing disputes, see our guide on how to dispute a chargeback in the UK.
• Currency conversion: 3–4% above the wholesale exchange rate, applied when you convert foreign currency balances to sterling.
• PayPal Payments Pro: £20 per month plus standard transaction fees, for a fully customised checkout experience on your own domain.
• Virtual terminal (MOTO payments): PayPal offers a virtual terminal for keyed-in telephone orders. Standard transaction fees apply. See our guide to MOTO payments in the UK for context on how this compares to other providers.

PayPal Card Reader and Zettle: What You Need to Know

PayPal Zettle is PayPal's in-person card reader product, sold outright rather than rented. The first reader costs £29 plus VAT, which is among the lowest hardware prices of any UK card machine provider. SumUp's Air reader also starts at around £29 plus VAT, while Square's Reader is £19 plus VAT. The key difference is the transaction fee: Zettle charges 1.75% on all card types, Square charges 1.75%, and SumUp charges 1.69%.

The Zettle reader accepts contactless payments, chip and PIN, Visa, Mastercard, Amex, Apple Pay, and Google Pay. It pairs with the free Zettle POS app on iOS or Android, which handles sales tracking, basic inventory, and digital receipts. There is no fixed contract and no exit fee. The hardware is yours outright from day one.

Zettle does not currently offer a multi-till system for larger retail environments. If you need more than two or three readers or want deep integration with an existing EPOS system, providers such as Dojo or a traditional merchant account terminal are worth comparing. See our card machines comparison for a broader look at options.

How much does Zettle charge per transaction?

Zettle charges 1.75% per transaction on all card types, including Visa, Mastercard, Amex, Apple Pay, and Google Pay. There is no flat per-transaction fee on top of the percentage. At £100 average transaction size, that is £1.75 per sale. There are no monthly fees and no minimum monthly transaction requirements.

PayPal Zettle vs other card readers: fee comparison

At low monthly volumes, Zettle, Square, and SumUp are closely matched on cost. At £5,000 monthly volume, SumUp saves around £3 per month over Zettle on transaction fees alone. Dojo becomes cheaper at higher volumes where the monthly fee is offset by lower per-transaction rates. For a direct comparison, visit our Zettle vs SumUp page.

Pros and Cons

Pros

• Instant account setup: You can start accepting payments within the same day. There is no underwriting delay of the kind you get with a traditional merchant account application.
• Strong brand trust: PayPal is recognised by the vast majority of UK online shoppers. Its presence at checkout genuinely increases completed purchases for many merchants.
• No monthly fee: The standard Business account carries no standing charge. You only pay when you take a payment.
• Built-in Pay Later: Pay in 3 and Pay Monthly are available at no extra cost to the merchant and can increase average order values.
• Zettle reader is affordable: At £29 plus VAT for the first reader, the hardware cost is among the lowest of any UK card machine provider.
• No fixed contract: Both online and in-person PayPal products have no minimum term, so you can stop at any time without an exit fee.

Cons

• Account freezes and holds: PayPal has a well-documented history of placing funds on hold or suspending accounts without much warning, particularly for newer businesses or sudden sales spikes. Holds can last up to 21 days and this is the most commonly reported complaint from UK merchants. It is the most significant operational risk of using PayPal as your primary payment processor.
• Settlement is slow by default: Funds sit in your PayPal balance rather than going directly to your bank. Moving money to your bank account takes one to three business days by default, or you pay the 1% instant transfer fee.
• Fees climb at volume: Once you process more than £10,000 a month, dedicated merchant accounts from providers such as Stripe, Dojo, or Worldpay typically offer lower effective rates, especially on debit card transactions.
• Weak customer support: Phone support is available but frequently criticised for long wait times and inconsistent resolution. Dispute resolution for account holds can take days or weeks.
• Chargeback fee of £14: Each disputed transaction costs £14 even if you win. Businesses with any volume of chargebacks will find this adds up quickly.
• Currency conversion costs are high: At 3–4% above the base rate, international sellers will pay a meaningful premium compared to providers such as Revolut or Stripe, which offer more competitive FX rates.

Is PayPal Right for Your Business?

PayPal makes most sense for businesses that are just starting out, sell occasionally online, or want to add a second payment method their customers specifically ask for. The zero monthly fee, instant setup, and recognised brand name make it genuinely useful in those situations. If PayPal is not your primary processor but sits alongside Stripe or a dedicated gateway, the conversion benefit often justifies the slightly higher per-transaction cost.

For businesses processing above £5,000 to £10,000 a month, the maths starts to shift. A dedicated merchant account at interchange-plus pricing can save a meaningful amount. At £20,000 monthly volume, moving from PayPal's flat 2.9% to a blended rate of 0.9% plus 10p saves roughly £4,800 a year. That is before you factor in the operational risk of account freezes, which can be genuinely damaging if PayPal is your only way to take payments. Our guide to interchange-plus vs blended pricing explains this in more detail.

Compare Card Fees is a free, independent advisory service that has helped UK businesses find better card payment deals since 2012. If you are spending more than a few hundred pounds a month on PayPal fees, or if a recent account hold has disrupted your cash flow, it is worth running a comparison. Getting quotes costs nothing and takes less than five minutes.