PayPal lets you take credit card payments directly from customers without a separate merchant account
PayPal processes credit card payments through its standard payment system. You create a PayPal account, set up payment collection (either through invoices, a payment button on your website, or in-person with a card reader), and customers pay you with their credit card. PayPal handles the transaction, deposits the money into your account, and charges you a fee per transaction.
You do not need a traditional merchant account or a separate payment processor. PayPal acts as the middleman between you and the customer's card issuer. The money lands in your PayPal balance, and you can transfer it to your bank account whenever you want.
Key Takeaways
- PayPal charges a per-transaction fee (currently 2.99% plus $0.30 for online payments in the US, though rates vary by country and account type) each time a customer pays with a credit card.
- You can collect payments through PayPal invoices, a payment button embedded on your website, QR codes, or a physical card reader if you take payments in person.
- Money from credit card payments goes into your PayPal balance first; you then transfer it to your linked bank account, which usually takes one to two business days.
- PayPal holds funds for 21 days on new accounts or if you sell high-risk items, but most established sellers see money available when ready after the transaction clears.
Set up a PayPal account and choose your payment method
Start by creating a PayPal account at paypal.com. You will need an email address, a password, and basic personal information. If you are taking payments for a business, use a Business account rather than a Personal account — it gives you access to invoicing, payment buttons, and reporting tools you will need.
Once your account is created, link a bank account and confirm your identity. PayPal will deposit two small test amounts into your bank account; you then log in and confirm those amounts to prove you own the account. This step usually takes three to five business days.
After your bank account is confirmed, you can start taking payments. Choose which method fits your situation: invoices (for one-off or recurring payments to specific customers), a payment button (for a website or email), a QR code (for in-person or social media), or a card reader (for face-to-face transactions).
Send invoices for one-time or recurring payments
If you are billing specific customers — a client for freelance work, a customer for a product order, or a tenant for rent — use PayPal invoices. Log into your PayPal account, go to the Invoicing section, and click Create Invoice.
Fill in the customer's email address, the amount owed, a description of what they are paying for, and the due date. You can also add your business name, logo, and payment terms. When you send the invoice, the customer receives an email with a link to pay. They can pay with a credit card, debit card, or their own PayPal balance.
For recurring payments — a subscription, monthly retainer, or regular billing cycle — you can set up automatic invoicing. PayPal will send the invoice on the schedule you choose, and the customer can set up automatic payment so they do not have to act each time.
Create a payment button for your website or email
If you have a website or send payment links via email, use a PayPal payment button. Log into your account, go to Tools, and select PayPal Buttons. Choose the button type: Buy Now (for a one-time purchase), Subscribe (for recurring payments), or Donate (for nonprofits).
Enter the item name, price, and currency. PayPal generates a code snippet that you paste into your website, or a link you can email directly to customers. When they click the button or link, they land on a PayPal checkout page where they enter their card details and complete the payment.
You can also use PayPal's hosted payment page if you do not have a website. Generate a unique payment link and share it with customers via email, text, or social media. The link takes them straight to a checkout page branded with your business name.
Use a card reader for in-person payments
If you take payments face-to-face — at a market, a service appointment, or a retail location — PayPal offers a physical card reader. The reader plugs into your phone or tablet via the headphone jack or USB-C port, and you use the PayPal Here app (now called PayPal Zettle in some regions) to process the transaction.
The customer inserts, taps, or swipes their card, and the payment goes through when ready. The fee is the same as online payments (2.99% plus $0.30 in the US), and the money lands in your PayPal balance right away. You can also manually enter card details if the customer does not have their card with them, though this carries a slightly higher fee.
Card readers are usually free or low-cost to purchase, depending on your region and account type. Check PayPal's current pricing when you set up in-person payments.
Understand PayPal's fees and when money reaches your account
PayPal charges 2.99% of the transaction amount plus $0.30 for each credit card payment in the United States. If a customer pays $100, you receive $96.71 after fees. Rates vary by country, so check your local PayPal site for your exact fee structure.
Some PayPal account types — such as PayPal Commerce Platform for high-volume sellers — have different rates. If you process a large number of payments or high dollar amounts, contact PayPal sales to discuss volume pricing.
Money from credit card payments usually appears in your PayPal balance when ready after the transaction clears. On new accounts or if you sell items PayPal considers higher-risk, funds may be held for up to 21 days. Once the money is in your PayPal balance, you can transfer it to your linked bank account. Transfers typically take one to two business days, though some accounts offer next-business-day transfers for a small fee.
Manage disputes and refunds
If a customer disputes a charge or requests a refund, PayPal handles the dispute process. You can issue a refund directly from your account — the money goes back to the customer's card, and the fee you paid is not refunded to you.
If a customer files a dispute (claiming the charge was unauthorized or the product did not arrive), PayPal will contact you for evidence. Keep records of the transaction, any communication with the customer, and proof of delivery or service. PayPal's Resolution Center shows you the dispute details and lets you upload documents to support your case.
Disputes usually resolve within 10 business days. If PayPal rules against you, the full transaction amount is refunded to the customer, and the fee still comes out of your account.
Frequently Asked Questions
Can customers pay with any credit card through PayPal?
Yes. PayPal accepts Visa, Mastercard, American Express, and Discover. Customers can also pay with debit cards or their PayPal balance if they have one. You do not need to set up separate processing for each card type — PayPal handles all of it.
What happens if a payment fails?
If a customer's card is declined, PayPal notifies them when ready. For invoices, the customer can try again with a different card. For payment buttons, they see an error message and can update their card details. You will not be charged a fee for a failed transaction.
Can I see a record of all credit card payments I have received?
Yes. Log into your PayPal account and go to the Activity or Transactions section. You can filter by date, payment method, or status. You can also read a CSV file of all transactions for your records or accounting software.
Is there a monthly fee to accept credit card payments through PayPal?
No. You only pay per transaction. There is no monthly subscription or account fee for standard PayPal accounts. Some premium account types have monthly fees, but they are optional and designed for high-volume sellers.
How long does it take to get paid after a customer swipes their card?
The money appears in your PayPal balance when ready on most accounts. Transferring from PayPal to your bank account takes one to two business days. On brand-new accounts or high-risk transactions, PayPal may hold the funds for up to 21 days before releasing them.