PayPal accepts credit cards from your customers, but you handle the setup differently depending on whether you're selling online or in person
If you want customers to pay you by credit card through PayPal, you don't set up a separate credit card processor — you create a PayPal business account and let PayPal handle the card acceptance for you. PayPal's standard payment system accepts Visa, Mastercard, American Express, and Discover directly. The customer enters their card details into PayPal's payment form, PayPal processes it, and the money lands in your PayPal account. You pay a transaction fee (usually 2.2% plus $0.30 per transaction for standard online sales, though rates vary by business type and sales volume).
The actual steps depend on what you're selling and where. An online store works differently from an in-person transaction, and both differ from sending an invoice to a single customer. This guide covers the main routes and what each one requires.
Key Takeaways
- PayPal's standard business account accepts credit cards automatically — you don't need a separate merchant account or approval process beyond opening the business account itself.
- Online sales through PayPal Checkout or a PayPal-integrated shopping cart let customers enter their card details directly into PayPal's form, which handles the processing.
- In-person card payments require either a PayPal card reader (PayPal Here) or a point-of-sale system that connects to PayPal, not the standard online checkout.
- Transaction fees are typically 2.2% plus $0.30 per online transaction, but invoices sent through PayPal have different rates depending on whether the customer pays by card or bank transfer.
- Your customer's card information never touches your systems — PayPal encrypts and stores it, which reduces your fraud liability and compliance burden.
Setting up a PayPal business account to accept cards
Start by creating a PayPal business account at paypal.com if you don't already have one. You'll need your business name, address, tax ID (EIN for most U.S. businesses), and a bank account to link for payouts. PayPal will verify your information, which usually takes a few minutes to a few hours.
Once your account is active, credit card acceptance is already turned on — you don't need to request it or wait for approval. Any customer who pays you through PayPal can use a credit card as their payment method. PayPal's system automatically detects the card type and routes it through the appropriate network (Visa, Mastercard, etc.).
If you're selling online, you'll also need to decide how customers will reach your PayPal checkout. The three main routes are: a PayPal Checkout button on your own website, a shopping cart integration (like WooCommerce, Shopify, or BigCommerce), or PayPal's hosted checkout page that you link to from an email or social media.
Accepting credit cards on your website or online store
If you have your own website, the simplest route is a PayPal Checkout button. You log into your PayPal account, go to the Tools section, and generate a button code for the item or service you're selling. You paste that code into your website's HTML. When a customer clicks the button, they're taken to PayPal's checkout page, where they can enter a credit card or log in with their PayPal account.
If you use a shopping cart platform like Shopify, WooCommerce, or BigCommerce, PayPal integration is usually built in. You connect your PayPal account to your store's settings, and the platform handles the rest. Customers see a "Pay with PayPal" option at checkout alongside other payment methods. The platform passes the transaction to PayPal, which processes the card and returns a confirmation to your store.
In both cases, the customer never enters their card details on your website. They enter them on PayPal's encrypted page, which means you don't store card data and don't have to meet Payment Card Industry (PCI) compliance standards yourself. PayPal handles that liability.
Accepting credit cards in person with PayPal Here
If you need to accept cards face-to-face — at a market, a service appointment, or a retail location — you'll need a card reader. PayPal's own reader is called PayPal Here. It's a small device that plugs into your phone's headphone jack or connects via Bluetooth, and it reads chip cards, swipe cards, and contactless payments (Apple Pay, Google Pay).
You read the PayPal Here app, plug in the reader, and swipe or insert the customer's card. The app sends the transaction to PayPal, which processes it and deposits the money into your PayPal account. The fee for in-person card transactions is typically 2.7% plus $0.30, which is higher than online sales because the fraud risk is lower (the card is physically present).
PayPal Here requires a separate purchase — the reader itself costs money, though PayPal sometimes offers promotions. You'll also need a smartphone or tablet to run the app. If you're processing a high volume of in-person transactions, a dedicated point-of-sale system (like Square, Toast, or Clover) might be more practical, though those systems can also connect to PayPal for deposits.
Sending invoices that accept credit card payment
If you're billing a single customer or a small group, you can send a PayPal invoice. Log into your PayPal account, go to the Invoicing section, and create an invoice with the customer's email, the amount, and a description of what you're billing for. When you send it, the customer receives an email with a link to pay.
The customer can click the link and choose their payment method: PayPal account, credit card, or bank transfer. If they choose credit card, they enter the details on PayPal's page. The transaction fee for invoice payments is 2.2% plus $0.30 if the customer pays by card, but only 1% if they pay by bank transfer (with a $1 minimum and $20 maximum fee). This incentivizes bank transfers, which cost PayPal less to process.
Invoicing is useful for service providers, consultants, and small businesses that bill on a project or hourly basis rather than running a continuous store. It's also useful for collecting payment from a customer who doesn't have a PayPal account — they can pay by card without signing up.
Understanding PayPal's credit card fees and limits
PayPal's standard transaction fee for online credit card sales is 2.2% of the transaction amount plus $0.30. So a $100 sale costs you $2.50 in fees. The percentage can vary slightly depending on your business type and sales volume — high-volume sellers may negotiate lower rates, and nonprofits and certain other categories have different pricing.
In-person card transactions (using PayPal Here or a connected point-of-sale) are typically 2.7% plus $0.30. Invoice payments by card are 2.2% plus $0.30. If a customer pays an invoice by bank transfer instead, the fee is 1% with a $1 to $20 range.
PayPal also has transaction limits based on your account history and verification status. New accounts may have daily or monthly caps on how much you can receive. These limits usually lift after you've been active for 180 days and have a clean transaction history. You can check your current limits in the Account Settings section of your PayPal dashboard.
What happens after the customer pays
Once a customer's credit card payment goes through, PayPal deposits the money into your PayPal account balance. You can leave it there, transfer it to your linked bank account, or use it to pay other people through PayPal. Transfers to your bank account usually take one to two business days, though PayPal offers an when ready transfer option for a small fee (typically 1% with a $0.25 minimum).
You'll receive a transaction record in your PayPal account showing the customer's name, the amount, the fee, and the date. You can read these records as a CSV file for your accounting or tax records. PayPal also sends you an email receipt for each transaction, and you can set up automatic notifications if you prefer.
If a customer disputes the charge or files a chargeback with their credit card company, PayPal handles the dispute process. You'll be notified and given a chance to provide evidence (like a receipt, tracking number, or delivery confirmation). If you lose the dispute, PayPal reverses the transaction and charges you a dispute fee (usually $20 to $25).
Frequently Asked Questions
Do I need a separate merchant account to accept credit cards on PayPal?
No. A PayPal business account includes credit card acceptance automatically. You don't explore for a separate merchant account or wait for approval — as soon as your business account is verified, you can accept cards.
Can customers use a credit card if they don't have a PayPal account?
Yes. When a customer clicks your PayPal Checkout button or payment link, they can enter a credit card directly without logging in or creating an account. PayPal calls this "guest checkout," and it's enabled by default on most business accounts.
What credit cards does PayPal accept?
PayPal accepts Visa, Mastercard, American Express, and Discover. It also accepts some prepaid cards and international cards, depending on the customer's country. PayPal's system automatically detects the card type when the customer enters the number.
Is my customer's credit card information safe with PayPal?
PayPal encrypts card data and stores it on find servers. Your customer's card details never pass through your website or systems, so you don't have to worry about storing or protecting them. PayPal is responsible for PCI compliance, not you.
How long does it take for money to appear in my account after a customer pays?
The money appears in your PayPal account balance when ready after the transaction is approved. Transferring it to your bank account takes one to two business days with a standard transfer, or minutes with an when ready transfer (which costs a small fee).