PayPal Transaction Fees India: All You Need to Know

Since its launch in 2000, PayPal has become a go-to platform for businesses handling international payments. Its strong reputation and global reach make it a popular choice for Indian businesses as well.

If you're exploring PayPal for your business and not sure if it’s the right fit for you, then you’ve come to the right place.  We have done a quick but detailed analysis of PayPal’s transaction fees and more so you know how much you pay for each transaction. We will also suggest a more cost-effective alternative to PayPal at the end of the blog.

PayPal in India: A Brief Overview

PayPal stands out for its seamless integrations with platforms like Shopify and Magento, along with its robust buyer and seller protection programs. Buyers are covered if items don’t arrive or match the description, while sellers are protected from unauthorized transactions and lost shipments. Additionally, its built-in invoicing feature and user-friendly interface make it a top choice for both businesses and freelancers

However, it is important to note that a lot of PayPal’s features aren’t available in India. For example, PayPal cannot be used for domestic transactions, and PayPal credit isn’t available to Indian businesses as well. And not to mention, PayPal’s usability comes with a steep price tag, PayPal’s transaction fees, coupled with its currency conversion charges, can make it a rather expensive option for Indian businesses to receive international payments. In the next section, we will break down Paypal’s transaction fees and all other associated charges. 

PayPal Transaction Fees India: A Quick Breakdown

There are three categories of fees: transaction fee, fixed fee, and currency conversion fee

Transaction Fee

Every time you receive a payment in India from an international client, PayPal charges a 4.4% transaction fee. For example, if a US-based client sends $10,000 for your services, PayPal will deduct 4.4% of the amount, which is $440 (4.4% X 10,000) as transaction fees. You can decide to pay this transaction fee by yourself, split it with your client, or ask them to bear it on the basis of your relationship with the client. 

Fixed Fee

In addition to the transaction fees, PayPal charges a fixed fee based on the currency. Here are a few examples of fixed fees on different currencies:

Click on this link to view the fixed fee for the entire range of currencies.

Currency Conversion Fees

PayPal also adds a 4% markup on the prevailing exchange rate while converting foreign currencies to Indian rupees. For example, If the current exchange rate is USD 1= INR 85, then PayPal will levy a 4% markup on this, making the effective exchange rate INR 81.6.

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PayPal Transaction Fees from USA to India: How Much Will You Pay?

So far we covered the different fees PayPal applies to international money transfers. But how does all of that translate in a real-life scenario? Here's an example to help you with that.

Imagine you're a business owner receiving a payment of $5,000 from a client in the USA via PayPal. First, PayPal will deduct a transaction fee of 4.4%.

Transaction fee = 4.4% X 5000 = $220

PayPal will also charge a fixed fee of $0.30 based on the above table of fixed fees for different currencies.

So the total fee applied on the amount is $220 + $0.30 = $220.3. We are left with a balance of $4779.7 which will be converted to Indian rupee.

While converting the currency, PayPal will charge 4% markup on the prevailing exchange rate as currency conversion fee. Considering the current rate to be 1 USD to INR 85, the fee is Rs. 3.4 and the effective exchange rate is Rs. 81.6.

In summary, the balance of $4779.7 will be converted to INR at the exchange rate of Rs. 81.6. The amount that can expect to receive is Rs. 390,023.52

So how much did you end up paying in fees?

The actual value of the transaction amount in INR is Rs. 425,000, however, you received Rs. 390,023.52 resulting in a difference of Rs. 34,976.48 (or $411). This difference is the total fee for receiving the payment through PayPal.

Skydo: An Affordable and Seamless PayPal Alternative to Receive International Payments

PayPal has built a solid global reputation as the right payment partner for emerging businesses. Its user-friendly interface, smart features, and integrations are the biggest reasons behind 435 million active PayPal accounts. However, its steep charges can make it unaffordable or expensive for many Indian businesses and individuals. Moreover, PayPal India doesn't offer many services to Indian customers, for example, the wallet feature is not available for Indian users and it also doesn't have an India based support team. 

If PayPal fees and limited support are concerning factors, exploring Skydo is worth it. Like PayPal, Skydo simplifies accepting payments from international clients. It offers virtual bank accounts with a unique 18-digit number that accepts payments and credits them to your linked bank account. The process is fast and there are no SWIFT charges like in the case of normal bank transfers.

Skydo charges USD 19 for payments under USD 2000, USD 29 for payments between USD 2001-10,000 and 0.3% for payments above USD 10,000. Skydo also offers live forex rate without any forex markup. Meaning if the live exchange rate is 1USD = 85 INR, Skydo will convert your payment at that rate without taking a cut.

Here’s a quick comparison of how much will you pay to receive USD 5000 with Skydo vs PayPal:

Skydo trumps PayPal's fees by offering a flat fee structure and live forex rate. As you can see in the above table, there is no fixed fee or markup on the market exchange rate meaning the currency is converted at the current rate. You only have to bear $29 as fees and save Rs. 32,511.48 compared to PayPal’s fee structure. Further Skydo’s India based customer support song with superfast onboarding process makes it a more viable option for businesses to receive international payments. So switch to Skydo today and experience the difference