How PayPal Makes Money

PayPal is a payment processing company that was founded in 1998, and has since become one of the most popular ways to send money online. Many people wonder how PayPal makes money with its business model, but it’s actually quite simple.

PayPal makes money from 2 primary streams- transactions that is sending and receiving funds and other value added services like fees and interest on loans.

PayPal makes money by charging a fee for sending or receiving funds through their service – usually around 3% of the total transaction amount – and they also charge merchants who use their services to process payments.

Here is a short summary of the revenue of generated by PayPal in the last 5 years. In the financial year 2020, PayPal generated a revenue of 21.43 billion dollars.

paypal revenue


Now, let us have a look at the revenue streams PayPal has:

P2P Transaction Fees

One of the major source of revenue for PayPal is their P2P payments business. PayPal makes money by charging a fee for sending or receiving funds through their service – usually around 3% per transaction.

Merchant Fees

PayPal also charges merchants who use their services to process payments, and provides them with tools like PayFlow Pro that helps online businesses accept credit cards on the web. These fees range between 0.05 and 0.30% of the transaction volume depending on the type of card used to make payments on PayPal, as well as other factors like volume and risk management processes in place at a merchant’s business.

Value-added Services: Interests and Fees

In addition to these two major revenue streams from their Payers & Merchants services, PayPal also generates revenue from other value-added services like fees and interests on loans.

Payment Gateway

Payflow Pro is a payment gateway service that allows merchants to accept credit card payments on their website. They have 2 membership models for Payflow- Payflow link and Payflow Pro.

The Payflow Pro plan is charged at around $25 a month. Additionally, both the plans charge a gateway fee of $0.10 for credit card payments.

Additional Services

PayPal also offers value added services like Fraud protection, Recurring billing and Buyer authentication. These are all chargeable for around $10 per month as well as a cost per transaction.

Merchant tools

As an online merchant, PayPal offers services like the ability to accept cards on a website or mobile app, manage your account and track sales performance through reports sent via email. This plan is charged at $30 per month but it comes with a transaction fee of $0.30 per successful charge payment and a gateway service fee that is charged at $0.15 for card payments, plus an additional currency conversion rate which differs on the currency used to complete the transaction.

Consumer-Facing Solutions

For consumers who want to send money online using PayPal’s services, there are several services specifically designed for them.

One such service is the PayPal credit card which allows consumers to get access to short-term loans (maximum of $500) and there are no interest rates or monthly fees attached with it. The downside, however, is that you can only use this feature if you have a US bank account and a valid American Social Security number.

PayPal Credit Interest and Fees

You don’t have to pay anything unless your credit is worth $99 or more and you settle it in full in 6 months. However, for all other cases, PayPal charges an Annual Percentage Rate (APR) of 19.99 percent starting from the posting date (which is usually within a few days after the purchase date).

PayPal Here Fee Structure

For merchants who wish to accept card payments through their mobile device, PayPal offers the Paypal Here service. This is a free app which you can download from any Android or iOS store and it provides an easy way for accepting cards on-the-go. For each transaction, there are fees charges by Paypal.

The Bottom Line

write a conclusion for the blog post[how does paypal make money]PayPal is one of the most popular online payment methods. With more than two billion active accounts, it’s easy to see why PayPal is so successful in generating revenue for their company. One way they do this is by charging fees on all transactions processed through their service – usually around 3% per transaction. Additionally, merchants who use Paypal for processing payments are charged a fee as well that ranges from 0.05 and 0.30%. In other words, PayPal makes money off both ends!

Leave a Reply