The Best Way to Use PayPal for Business

What is PayPal for business? Is it the right choice for your company? Keep reading to learn about PayPal accounts for business and how to use them.

If not accepted already, setting up PayPal payments to accept payments online can be a valuable addition for small businesses.

PayPal is just one of many ways for customers to pay (a key point that we’ll return to later on). However, it has an established reputation, a generally positive reception, and a large user base. Accepting PayPal payments from those existing users creates a positive and familiar customer experience. That’s crucial when it comes to fighting shopping cart abandonment and securing revenue.

Why should businesses use PayPal? Which type of PayPal business account should your organization create? Can a PayPal account serve as the default or only way to accept payments for your company? Keep reading to learn the answers to these questions.

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Why Consider a PayPal for Business Account?

1. Broad Customer Reach and Trust: With over 431 million active users globally as of 2023, PayPal has significant market reach. It’s also the most widely used digital wallet for online purchases, with a large percentage of U.S. shoppers selecting PayPal as their preferred mobile payment app. This familiarity and trust boost consumer confidence during checkout, potentially increasing conversion rates by up to 25% when businesses offer PayPal as a payment option.
2. Enhanced Customer Experience: Offering PayPal for payments provides a seamless experience for both account holders and non-account holders, supporting diverse payment methods like credit cards, debit cards, and PayPal’s “Pay in 4” (BNPL) service. Businesses that use PayPal business accounts report increased completed checkouts compared to traditional methods.
3. International Reach and Flexibility: PayPal supports transactions in over 202 countries and 25 currencies, making it an ideal choice for businesses with international clientele. Its fees are competitive for cross-border payments, and it often provides better conversion rates than traditional methods.
4. Business-Specific Tools and Security: PayPal for Business accounts allow up to 200 employees to access account features, support for invoicing, and recurring billing, which streamlines operations for companies. Additionally, PayPal’s security tools, like fraud detection and 24/7 monitoring, make it a secure option, highly trusted by consumers (even more than traditional banks) for storing payment credentials.
5. Flexible Payment and Cost Management: Though PayPal charges a 2.99% + $0.49 fee per domestic transaction, it does not have startup or monthly fees, making it accessible for smaller businesses with limited resources. However, businesses processing high volumes may benefit from diversifying payment providers to manage costs effectively.

Building a Balanced Payment Strategy

While PayPal is an effective tool for businesses aiming to improve online and mobile payment experiences, incorporating additional options like credit card processing through merchant accounts or integrating payment options like Google Pay, Apple Pay, and other BNPL services can further enhance customer satisfaction and reduce costs. For a complete business payments strategy that optimizes for customer reach and cost-effectiveness, consult with payment specialists to explore alternatives and integrations that suit your business model.

By offering PayPal and complementing it with other payment options, businesses can provide a smooth checkout experience, increase sales potential, and maintain flexibility in cost management.

What's the Difference Between a Regular PayPal Account and a PayPal Business Account?

PayPal itself explains that both business and personal accounts allow users to send and receive payments. So, why should organizations opt for a business account?

A PayPal business account puts your company in a position to take advantage of a variety of business-focused services, as PayPal explains. While you don't want to sign up for additional services simply because PayPal offers them, having the option can be valuable.

Additionally, a PayPal account for business offers valuable functionality not included in personal accounts. With PayPal for business, companies can:

• Allow as many as 200 employees to access the account
• Set up recurring shipments, and the associated recurring payments, for customers
• Accept a broader range of payment types, like payments received by sending invoices
• Access to tools that can help manage your business and track performance
• A PayPal Business account has the power to accept payments from customers who don't use PayPal

In our opinion, it's worth it to set up a PayPal Business account if your company wants to accept PayPal payments. The option to access additional features and support offered by PayPal is valuable. That's true even if your company only uses a few of them or uses them rarely.

Setting Up a PayPal Business Account

Setting up a PayPal business account is a straightforward process that can be completed in just a few steps. Whether you’re a small business owner or managing a larger enterprise, having a PayPal business account can streamline your payment processes and provide access to a range of business-specific tools. Here’s how to get started.

Requirements for Opening a PayPal Business Account

To open a PayPal business account, you’ll need to gather some basic information about your business. This includes your business name, address, and tax ID number. Additionally, you’ll need to have a linked bank account to verify your identity and facilitate the transfer of funds. Having these details ready will make the setup process quick and efficient.

Verifying Your PayPal Business Account

Verifying your PayPal business account is a crucial step to ensure your account is secure and fully functional. To verify your account, you’ll need to confirm your email address and provide additional information about your business, such as your business license or articles of incorporation. This verification process helps PayPal confirm your identity and protect your account from unauthorized access.

Linking a Bank Account to Your PayPal Account

Linking a bank account to your PayPal account is essential for receiving payments and transferring funds. To link a bank account, simply log in to your PayPal account, navigate to the account settings, and enter your bank account information, including your account number and routing number. This step ensures that you can seamlessly move funds between your PayPal account and your bank account.

Managing Your PayPal Business Account

Once you’ve set up your PayPal business account, regular management is key to ensuring it runs smoothly. This includes monitoring transactions, updating account settings, and making adjustments as your business needs change. One important aspect of managing your account is knowing how to upgrade or downgrade it based on your business requirements.

Upgrading or Downgrading Your PayPal Business Account

Upgrading or downgrading your PayPal business account is a simple process that can be done online. If you need to upgrade your account to access more features, log in to your PayPal account and click on the “Upgrade” button. Conversely, if you need to downgrade your account, you can contact PayPal customer support for assistance. This flexibility allows you to tailor your PayPal business account to best suit your evolving business needs.

The Ideal Payment Processing Setup Includes, but is Not Limited to, PayPal

A PayPal for business account gives your company access to a variety of resources that aren’t available to users of personal accounts. Most importantly, a PayPal business account offers a familiar, simple, and trusted interface to a potentially large group of your customers.

Additionally, the PayPal business debit card enables businesses to withdraw cash, make payments, and earn cash back on eligible purchases, with no annual fees and easy access to funds directly from a PayPal account.

Those are excellent reasons to incorporate PayPal into your company’s payments strategy. However, your organization should look for other workflows and processes to handle transactions that don’t originate from a PayPal account, like credit card payments.

Why is it important to go beyond a PayPal account for your business in your broader payments strategy? There are a few key reasons to keep in mind, including:

A Consistently Positive Experience for All Customers

PayPal is a great payment option for customers who already have PayPal accounts. If they’re looking for opportunities to use their account, they probably trust the provider and enjoy the process. Additionally, the PayPal business debit card offers benefits such as withdrawing cash from ATMs, making payments, and earning rewards, all without annual fees, though other fees may apply.

You also need to consider customers who don’t use this service, however. While PayPal makes it possible for non-members to complete a transaction with a business’s account, it’s not the most streamlined or simple experience.

You could run into concerns with cart abandonment and general dissatisfaction if customers are confused or feel like checking out takes too long. That’s a clear reason why PayPal should be a payment option provided by your business, just not the only option.

PayPal Business Rates and Fees

Using PayPal as the primary method for accepting payments can be convenient, but it can also carry higher costs compared to a traditional merchant account, particularly for larger businesses or those with high transaction volumes, due to both percentage-based and fixed fees. Here’s an overview of current fees and options:

Currency conversion fees may apply when transferring funds to linked bank accounts or eligible cards, indicating a potential cost associated with currency conversion during the transaction.

Transaction Fees:

• PayPal charges between 2.99% + $0.49 for standard credit/debit card payments and 3.49% + $0.49 for digital payments, such as invoicing or checkout with Venmo or PayPal Credit. This can add up significantly if you process a high volume of transactions. For in-person payments using PayPal Zettle, the rate is lower at 2.29% + $0.09 for card-present transactions.

Additional Fees:

• PayPal offers optional services for advanced features, including Payments Advanced ($5/month) and Payments Pro ($30/month), which allow you to keep the checkout process on your site and use PayPal’s virtual terminal. These plans are ideal for businesses that need seamless, on-site payments or phone order capabilities.
• International transactions incur an additional 1.5% fee on top of domestic rates, which can impact businesses with global customers. Instant withdrawals are also available for a 1.5% fee of the transfer amount with a minimum of $0.50 per transaction.

Comparison with Merchant Accounts:

• While PayPal doesn’t charge a monthly fee for a basic business account, traditional merchant accounts often offer lower per-transaction fees, especially with high volumes. Merchant accounts may come with monthly fees, but these costs are sometimes offset by lower rates on individual transactions. Businesses with low transaction volumes may find PayPal’s lack of monthly fees beneficial, but those processing large sums might save with a merchant account.

Managing Costs:

• Businesses that anticipate significant processing volume might explore alternative payment options or consider a blend of PayPal with other providers to reduce fees. Tools like Interchange++ pricing may also help large e-commerce businesses track and manage fees more effectively, as it separates and itemizes card network fees, interchange fees, and PayPal’s markup.

This fee structure makes PayPal a strong, user-friendly choice for smaller businesses, though businesses processing high volumes may benefit from exploring additional providers for a balanced payment strategy.

Developing a Payment Strategy that Supports Your Business

Selecting PayPal as a standalone provider of all things payment processing can seem like an easy path forward. However, the potential costs to your business mean a more robust strategy can lead to significant savings — and a better customer experience.

Consider the benefits of the PayPal Business Debit Mastercard, which allows businesses to earn 1 percent cash back on eligible purchases, provides easy access to funds in a PayPal account, and eliminates the need for transfers to a bank account. This card is usable anywhere Mastercard is accepted and has no annual fees once certain payment thresholds are met.

By all means, incorporate PayPal as an option and feature it for your customers. But don’t stop there. Open a merchant account to take advantage of the savings on processing payments. Look at competitors to PayPal, like Stripe, and compare their offerings.

Consider including options like Google Pay and Apple Pay as well. These services also have growing user bases that enjoy the payment experience offered. Similarly, working with a Buy Now, Pay Later service provider can offer more customer support and encourage sales.

Swipesum is here to help you develop a complete payments strategy that aligns with the needs of your business. We are platform and provider agnostic, meaning we’ll only ever suggest solutions that make sense for your company.

Ready to learn more about how we can help you build a successful approach to payment processing? Book a Free Consultation