PayPal Micropayment System Explained

PayPal Micropayment

Low Value Transactions Do Not Need to Cost As Much

Low payment transactions make many entrepreneurs suffer. In land-based retail, some companies outright refuse to process a payment that is lower than $10 if it is on a credit card because of the fees they must pay their merchant services. E-commerce online is really no different when it comes to credit card merchants because processing such a small amount means more expense regarding making any money after the fees have been taken by all the merchant expenses.

What is a Low Value Transaction?

Most credit card merchants consider a low value transaction or micropayment to be anything less than $10. Typically, the fees charged by credit card merchants are based on an amount that allows a nice return. Additionally, the fees need to cover the expenses for processing. A micropayment barely covers the employment expenses and office overhead. It’s one reason that credit card merchants might charge more for the lower value transactions. They don’t want them, and if they charge high fees, you usually don’t either.

PayPal Micropayment Clears Up High Fees

PayPal offers a way for sellers to find lower fees: the PayPal micropayment system. Here, you can accept a micropayment without too much expense. For anyone who has low value items to sell, such as a 99-cent eBook, the PayPal micropayment system can be the solution.

How Does PayPal Micropayment Work?

When you sign up for micropayment through PayPal, you are charged 5 percent plus 5 cents. This applies to all the PayPal solutions like Express Checkout, Buy Now Buttons, Website Pro and Send and Request Money. The merchant rate, for example, if you have a payment of $2, would cost you 15 cents with micropayment solutions, and 100 payments costs $15. Using the regular merchant rate with a $2 payment size, you would pay out 36 cents—$36 for 100 payments. You save more than half the fees you are usually charged when you accept PayPal micropayment solutions.

What About Foreign Transactions and Micropayment?

With PayPal, different currencies can have different fees because of the currency conversions. If you want to use PayPal Micropayment and accept a different currency, you’ll be charged for the currency conversion into your currency plus a 2.5 percent fee. Cross-border transactions have a 1 percent additional fee. You may save a little with micropayment choices this way, but not as much as you would by accepting one currency, such as U.S. dollars. If you do that, buyers convert their money before sending it to you. The micropayment system saves your online business money. Your merchant accounts with the PayPal micropayment system allow you to take home more profit. works seamlessly with your PayPal account to make this even easier.

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