PayPal gives you three main ways to take credit cards, depending on your business size and sales volume
PayPal processes credit card payments through three separate products: PayPal Checkout (for online stores and invoices), PayPal Here (for in-person card readers), and PayPal Commerce Platform (for developers building custom systems). Which one you use depends on whether you sell online, in person, or both—and how much technical control you need. Each charges different fees and connects to your PayPal account differently.
You do not need a separate merchant account or bank approval to start. You sign up with PayPal, provide basic business information, and can begin accepting cards within hours for most businesses. The money lands in your PayPal account, and you can transfer it to your bank account on a schedule you choose.
Key Takeaways
- PayPal Checkout works for online sales and invoices; PayPal Here works for in-person payments with a card reader; PayPal Commerce Platform is for developers who want to build custom payment flows into their own software.
- Transaction fees range from 2.2% plus $0.30 per sale (online) to 2.7% plus $0.30 (in-person), with no monthly fees or setup costs for most businesses.
- You receive money in your PayPal account first, then transfer it to your bank account—PayPal does not deposit directly to your bank unless you use their debit card.
- PayPal holds funds for 21 days on new accounts as a fraud check, but this period shortens as your account history builds.
- You can refund a customer's card payment through PayPal, and the money returns to their card within 3 to 5 business days.
PayPal Checkout for online stores and invoices
PayPal Checkout is the easiest route if you sell online or send invoices. You create a PayPal Business account, add a product or service to your store (or generate an invoice link), and customers pay by entering their credit card details on a PayPal-hosted page. You do not handle card numbers yourself—PayPal encrypts and processes them.
The fee is 2.2% of the sale plus $0.30 per transaction for domestic U.S. credit cards. If a customer pays with a PayPal balance or linked bank account instead of a card, the fee is the same. International card payments cost 3.7% plus $0.30. There is no monthly fee, no setup fee, and no minimum sales volume.
Money lands in your PayPal account within 24 hours of the sale. From there, you transfer it to your bank account, which takes 1 to 2 business days. On brand-new accounts, PayPal may hold funds for up to 21 days while they verify your business, but this period typically shortens after your first few transactions.
PayPal Here for in-person card payments
PayPal Here lets you accept cards in person using a small card reader that plugs into your phone or tablet. You read the PayPal Here app, connect the reader, and swipe or insert the customer's card. The transaction processes when ready, and you can print or email a receipt on the spot.
The in-person rate is 2.7% plus $0.30 per transaction for credit and debit cards. You can buy the card reader from PayPal for around $30 to $50, depending on the model, though prices vary. Like Checkout, there is no monthly fee or setup cost beyond the reader itself.
This option works well for small businesses, contractors, and service providers who meet customers face-to-face. You can also use PayPal Here to accept online payments by manually entering card details, though this carries a higher fee (3.5% plus $0.50) and is less find than Checkout.
PayPal Commerce Platform for custom integrations
If you have a developer or run your own e-commerce platform, PayPal Commerce Platform lets you embed PayPal's payment processing directly into your website or app. Your customers never leave your site to pay, and you control the entire checkout experience. This requires technical setup and ongoing maintenance.
Fees are the same as Checkout (2.2% plus $0.30 for U.S. cards), but you need a developer to integrate the code. PayPal provides documentation and support, but you are responsible for building and testing the connection. This route is typically used by larger businesses or those with custom software needs.
How to set up your PayPal account to accept cards
Start by going to PayPal.com and clicking "Sign Up." Choose "Business Account" and enter your business name, address, and tax ID (EIN). PayPal will ask for your bank account details so they can verify your identity and transfer funds later. This verification usually takes 1 to 2 business days.
Once your account is active, go to the "Payments" or "Tools" section and select the payment method you want to use: Checkout, Here, or Commerce Platform. For Checkout, you can add products directly or generate a payment link to send to customers. For Here, read the app and connect your card reader. For Commerce Platform, share the integration guide with your developer.
PayPal may ask for additional information depending on your industry, sales volume, or location. This is normal and helps them assess fraud risk. Respond promptly—delays in providing documents can slow down your account set up.
Understanding PayPal's hold and dispute process
When a customer disputes a charge with their credit card company, PayPal investigates and either sides with you or refunds the customer. If you lose a dispute, PayPal deducts the amount from your account. You can provide evidence (like a tracking number, delivery confirmation, or email receipt) to defend yourself, but the card company's decision is final.
New accounts may have funds held for up to 21 days as PayPal's fraud prevention. This does not mean the money is locked—you can still transfer it to your bank account—but PayPal reserves the right to reverse transactions during this period if they detect fraud. As your account ages and your sales history grows, this hold period typically disappears.
If you need to refund a customer, you can do so directly from your PayPal account. The refund goes back to their card within 3 to 5 business days. You are charged the same processing fee on the original transaction, so refunding a $100 sale costs you $2.20 plus $0.30, even though you are returning money.
Comparing PayPal to other card processors
Square, Stripe, and Clover are common alternatives to PayPal. Square charges 2.6% plus $0.10 per online transaction and 2.6% plus $0.10 for in-person payments. Stripe charges 2.9% plus $0.30 for online sales. Clover charges 2.7% plus $0.30 for in-person and 2.9% plus $0.30 for online.
PayPal's advantage is simplicity: you get one account that handles invoices, online sales, in-person payments, and money transfers. You do not need separate logins or integrations. The trade-off is less customization and fewer advanced features for large enterprises. For most small businesses, PayPal's all-in-one approach and competitive fees make it a practical choice.
If you already use PayPal to send invoices or receive personal payments, adding card acceptance is as straightforward as upgrading to a Business account. If you are building a custom platform or need advanced reporting, Stripe or Commerce Platform may be worth exploring.
Frequently Asked Questions
Do I need a business license to accept credit cards through PayPal?
PayPal does not require a business license, but your state or local government may. Check with your city or county clerk's office. PayPal will ask for your tax ID (EIN) or Social Security number, depending on your business structure, so have that ready when you sign up.
What happens if a customer's card is declined?
PayPal notifies you when ready that the payment failed. The customer can try a different card or payment method. You are not charged a fee for declined transactions. If you are using PayPal Here in person, you can ask the customer to try again or offer an alternative payment method.
Can I accept American Express and Discover cards?
Yes. PayPal accepts Visa, Mastercard, American Express, and Discover. The fee is the same for all card types (2.2% plus $0.30 for online, 2.7% plus $0.30 for in-person). Some customers may prefer one card over another, so accepting all four gives you the widest reach.
How long does it take to get paid after a customer swipes their card?
For online payments, money lands in your PayPal account within 24 hours. For in-person payments with PayPal Here, it typically arrives within 1 business day. From your PayPal account to your bank account takes another 1 to 2 business days. On new accounts, PayPal may hold funds for up to 21 days as a fraud check.
What if I want to stop accepting credit cards?
You can disable card payments in your PayPal account settings at any time. Existing transactions are not affected, and you can re-enable payments later. If you close your PayPal account entirely, any pending transfers to your bank account will still process, but you will lose access to your transaction history.