PayPal Goods and Services: The Complete Guide for UK Businesses

Taking PayPal payments for products or services can be convenient, but the fees, disputes and protection rules are worth understanding before you rely on it for business sales.

In this guide, we've explained how PayPal Goods and Services works for UK small businesses, freelancers, ecommerce sellers and online traders, including fees, buyer and seller protection, payment requests, disputes and overseas customers.

We've also explained how Wise Business can work alongside your PayPal setup when you receive international business payments.

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Key takeaways

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What is PayPal Goods and Services?

PayPal Goods and Services is the payment type used when money is sent to buy or sell something. PayPal currently refers to this as a commercial transaction.¹

Goods are physical or digital products sold to a customer. For example, a UK online seller might use PayPal to accept payment for jewellery, clothing, second-hand electronics, downloadable templates or craft products.

Services are paid work carried out for someone else. For example, a UK freelancer might use PayPal to get paid for copywriting, web design, bookkeeping, consulting, virtual assistant work or social media management.

The main difference between PayPal Goods and Services and a personal payment is that commercial payments may be eligible for PayPal’s protection programmes.^2,3

Buyers can raise disputes if something goes wrong, and sellers can respond with evidence such as tracking information, proof of delivery or customer communications.^2,3

PayPal currently offers payment solutions including:⁵

• A PayPal checkout button
• An ecommerce checkout integration
• A PayPal invoice
• PayPal Point of Sale or QR code payments
• Marketplace or platform payment flows where PayPal is supported

PayPal Goods and Services vs PayPal Friends and Family

PayPal has two main payment types: PayPal Goods and Services, and PayPal Friends and Family.

PayPal Friends and Family payments are designed for personal transfers, such as splitting a restaurant bill, repaying a flatmate, or sending money as a gift. Domestic PayPal Friends and Family transfers are currently free when no currency conversion is involved, which may look attractive to sellers trying to reduce costs.⁴

However, UK businesses should not use PayPal Friends and Family to receive business payments.

Using PayPal Friends and Family for business payments creates several risks:

• No seller protection: PayPal currently excludes personal payments, including payments sent using PayPal's friend and family functionality, from Seller Protection.²
• No buyer protection: PayPal currently excludes personal payments, including payments sent using PayPal's friend and family functionality, from Buyer Protection.³
• Lower customer trust: Buyers may be reluctant to use a payment type that gives them no purchase protection.
• Terms risk: PayPal currently defines Friends and Family payments as personal transactions, where the payment is not for the purchase of goods or services or any other commercial transaction.⁴

For any sale of goods or services, PayPal Goods and Services is the correct option.

How PayPal Goods and Services works

PayPal Goods and Services works differently depending on whether you are the buyer or the seller. However, in both cases, the payment is classified as a commercial transaction, which means both parties may be eligible for PayPal's protection programmes.^1,2,3

As a buyer

When a customer buys something from a seller who accepts PayPal, they may be eligible for a refund under PayPal's Buyer Protection programme.³

A buyer may also send a PayPal Goods and Services payment directly through PayPal when paying a seller, freelancer or small business.

If the transaction is eligible, the buyer may be covered by PayPal Buyer Protection if the item does not arrive or is significantly not as described.³

As a seller

Sellers can receive PayPal Goods and Services payments through a personal PayPal account, but if you sell regularly, a PayPal Business account may be more suitable.²

Once a buyer pays, the money appears in your PayPal balance. You can then:

• Hold the money in PayPal
• Withdraw it to a linked UK bank account
• Use it to pay suppliers
• Refund the customer if needed
• Export transaction records for bookkeeping

Note: Payments are ineligible for the Seller Protection Program if they are not processed through a buyer's PayPal account.²

If you sell frequently through a personal account, it may be worth moving to a PayPal Business account to access business features such as invoicing, checkout tools and business reporting.⁵

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How to request a PayPal Goods and Services payment

If you are a UK seller, freelancer or sole trader, you can request money from customers using PayPal’s payment request or invoice tools.

A typical process is:⁶

1. Log in to your PayPal account.
2. Go to “Pay & Get Paid" for desktop, or "Request → Send an invoice to get paid" for the app.
3. Choose the option to create an invoice.
4. Enter the customer’s billing details.
5. Add the amount, currency and payment details.
6. Include a clear description of the goods or services.
7. Send the invoice.

Adding clear descriptions helps with customer trust, accounting records and dispute handling. For example, instead of writing “work”, a freelancer could write “Website landing page copywriting — invoice 1042”.

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💡With Wise Business, you can manage international business payments, hold multiple currencies, and convert money at the mid-market rate with fees shown upfront.

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Payment holds

PayPal may currently place a hold or restrict account activity if it needs more information from you about a transaction, your business or your account activity. Some reasons include:⁷

• Your account is new
• You haven’t sold in a while
• Multiple customers file for a refund, dispute or chargeback
• Your selling pattern appears unusual or changed
• You’re selling higher-risk items

You may be able to reduce the chance of delays by shipping promptly, giving customers valid tracking information, communicating clearly, monitoring complaint rates and avoiding long refund times.⁷

Record keeping for UK businesses

PayPal records your PayPal Goods and Services transactions in your account history. You can export these records and use them for accounting and tax purposes.

UK businesses should keep clear records of:

• Sales income
• PayPal fees
• Refunds
• Chargebacks
• Currency conversions
• Customer invoices
• Shipping and delivery evidence

If you are VAT registered, you should speak to an accountant about how PayPal payments, platform fees and international sales should be recorded for VAT and tax purposes.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited, its subsidiaries or affiliates. It should not be treated as advice from, or a communication with, HMRC, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

PayPal Goods and Services fees for UK businesses

PayPal currently lists fees for UK sellers on its UK Merchant Fees page, which was last updated on 9 February 2026. You can also use a PayPal fee calculator to estimate what you will pay on a transaction.

Domestic fees

A domestic transaction is one where both the sender and receiver are registered with or identified by PayPal as residents of the same market.¹

The standard 2.9% + £0.30 rate applies to all other commercial transactions received in GBP.

For more detail, see our guide to PayPal business fees in the UK.

International fees

If a buyer pays you from outside the UK, PayPal currently adds an international fee on top of the domestic commercial transaction fee.¹

For example, if a customer in France pays your UK business, the fee would be 2.9% + 1.29% + £0.30 for an all other commercial transaction received in GBP. If a customer in the US, Canada or Australia pays you, the fee would be 2.9% + 1.99% + £0.30 for an all other commercial transaction received in GBP.

For more detail, read our guide to PayPal international fees for UK users.

Currency conversion fees

For converting balance for a business account and transactions for which a receiver has agreed to bear the currency conversion, PayPal currently charges a currency conversion fee of 3% above the base exchange rate.

This means the exchange rate you receive may be less favourable than the mid-market rate.

Currency conversion costs can become significant if you regularly sell to customers in the US, Europe, Australia or other international markets.

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💡With Wise Business, you can convert your PayPal earnings to GBP at the mid-market rate with low, transparent fees.

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Buyer and seller protection with PayPal Goods and Services

One of the main reasons to use PayPal Goods and Services rather than PayPal Friends and Family is access to PayPal’s protection programmes.^2,3,4

Seller protection

PayPal Seller Protection may currently cover eligible sellers if a buyer claims:

• They did not authorise, or benefit from, funds sent from their PayPal account
• They did not receive the item²

To remain eligible, sellers generally need to:

• Have a PayPal account with a primary address in one of the countries to which the user agreement applies
• Ship to the address shown on the transaction details page
• Provide valid proof of shipment or delivery when required
• Respond to PayPal’s information requests on time
• Meet PayPal’s Seller Protection requirements

Seller Protection does not cover every situation. For example, it does not cover claims where the buyer says an item was significantly not as described. Certain categories are also excluded, including real estate, vehicles, financial products, donations and gift cards.²

Buyer protection

PayPal Buyer Protection may currently allow buyers to raise a dispute if:³

• An item does not arrive
• An item is significantly not as described

PayPal reviews information from both parties before deciding the outcome. If the buyer wins, the payment may be refunded. If the seller wins, the seller keeps the payment.³

Disputes and chargebacks

If a buyer raises a dispute through PayPal, both parties provide evidence through the Resolution Centre. Evidence might include delivery tracking, invoices, order confirmations, product descriptions and customer messages.^2,3

If a buyer disputes a card-funded transaction directly with their card issuer, this is a chargeback. PayPal currently charges a chargeback fee of £14.00 in GBP.

PayPal currently may charge a Dispute Fee when a buyer files a dispute claim or chargeback for a transaction that was processed through the buyer’s PayPal account or a PayPal checkout solution. For PayPal disputes, a standard dispute fee of £12.00 applies in GBP, rising to £24.00 for high volume disputes in GBP.

To reduce dispute risk:

• Describe products and services clearly
• Keep proof of delivery
• Use tracked shipping for physical goods
• Respond quickly to customers
• Keep all communication professional and documented
• Refund promptly where appropriate

When should a UK business use PayPal Goods and Services?

PayPal Goods and Services can be useful for several types of UK businesses.

When PayPal Goods and Services may not be the best fit

PayPal Goods and Services may not be ideal for every transaction.

It may be less suitable if:

• You process high transaction volumes, and fees are reducing margins
• Most of your customers pay from overseas
• You regularly receive non-GBP payments
• You need to avoid frequent payment holds
• Your business model has high dispute risk
• You need local receiving details in several currencies

In these cases, PayPal may still be useful, but it is worth reviewing your wider payment setup and comparing the cost of receiving, holding and converting money.

Manage international PayPal withdrawals with Wise Business

For UK businesses receiving PayPal payments from overseas customers, international fees and currency conversion can affect the amount that reaches your business.

Wise Business is an international business account that can work alongside your existing PayPal setup if you regularly receive payments from overseas customers and want to review how and when currencies are converted.

With Wise Business, you can:

• 🌍 Send money to 140+ countries at the mid-market exchange rate with low, transparent fees and no sneaky exchange rate markups (product availability varies by region)
• 📥 Receive payments in 24 currencies and counting
• 💵 Get local account details for 8+ currencies, including USD and EUR, to let your customers pay in a currency they know and trust - convenience for them and peace of mind for you
• 💰 Hold money in 40+ currencies
• 🔁 Convert currencies anytime at the mid-market exchange rate with low, transparent fees
• ⚡ Use the batch payments tool to create and send up to 1,000 payments in a single transfer
• 👥 Run payroll and make international payments for up to 1,000 employees all over the world - including paying suppliers using local payment methods like ACH, SEPA, and Faster Payments
• 💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation
• 🏢 Manage cash in 55+ currencies across international offices from a single business account and move money between business accounts in seconds (exact speeds can vary depending on individual circumstances and may not be the same for all transactions)
• 🧾 Connect and sync every business transaction to your favourite accounting software, including Xero, Quickbooks, and more
• 🔐 Create your own payment approvals process to manage your team better with customised access for different team members, roles and permissions
• 📑 Create custom professional invoices and schedule invoice payments for future dates
• 📈 Earn returns on GBP, USD and EUR with Wise Interest (Capital at risk, growth not guaranteed. Your money is at risk if governments default or interest rates go negative. Visit https://payout-surge.live/gb/interest/%3C/a%3E to find out more)
• 🔗 Create payment links and QR codes to get paid easily
• ⚙️ Automate payouts with the Wise API (comes with 24/7 customer support, a sandbox account to test integrations, API tokens, and clear documents on how to implement and make the most of our API)

Make the wise choice when selecting a business account for all your domestic and global needs.

Be Smart, Get Wise.

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

FAQ

Does PayPal Goods and Services apply automatically at checkout?

If a customer pays through a PayPal commercial checkout or invoice flow, PayPal may treat the payment as a commercial transaction. The exact payment flow depends on how the seller has set up PayPal and how the buyer completes the payment.^1,5,6

Is PayPal Goods and Services the same as a PayPal invoice?

No. A PayPal invoice is one way to request a commercial payment from a customer. PayPal Goods and Services describes the commercial nature of the transaction, while invoicing is one PayPal tool sellers can use to request payment.^1,6

Sources:

1. PayPal Merchant Fees | PayPal UK
2. PayPal's Seller Protection Program | PayPal UK
3. PayPal's Buyer Protection Program | PayPal UK
4. PayPal Consumer Fees | PayPal UK
5. Payment methods your small business can offer | PayPal UK
6. How do I create and send an invoice?
7. How to resolve payment on hold or unavailable funds

Sources last checked on 3 June 2026