PayPal Invoice Fees: How Much Businesses Pay for Domestic and International Invoices

PayPal invoicing is a popular choicefor UK small businesses and freelancers. It's free to set up, straightforward to use, and widely accepted by clients around the world. But the fees that apply when a payment is received, particularly from international clients, are often higher than they first appear.

This article breaks down what PayPal invoice fees actually cost in 2026, how domestic and international rates differ, and where hidden FX costs can quietly eat into what you receive.

For businesses invoicing internationally at scale,Wise Business** offers a transparent PayPal alternative for receiving cross-border payments**.

Learn about Wise Business 🔍

What are PayPal invoice fees?

PayPal invoicing is a free tool built into every PayPal business account. There are no setup costs, no monthly fees, and no charge for sending an invoice. The fee only applies when a customer pays, and it comes out of the amount received rather than being charged separately.¹

Understanding how those fees are structured matters, particularly for UK businesses invoicing international clients, where the total cost is rarely just the headline percentage.

How PayPal charges invoice payments

When a customer pays a PayPal invoice, PayPal deducts a percentage-based fee plus a small fixed fee from the amount received. The exact rate depends on where the customer is based¹

For UK businesses, the standard fee structure breaks down like this:

The fixed fee is charged in the currency received. For GBP invoices, that's £0.30 per transaction. For invoices paid in other currencies, a different fixed fee applies for example, €0.35 for EUR payments.¹

Any currency conversion adds a further cost on top. PayPal applies a conversion spread above the base exchange rate, which varies by currency pair and is shown in PayPal's currency converter tool at the point of transaction rather than published as a fixed figure.¹

Why older PayPal fee guides are often inaccurate

PayPal has updated its fee structure several times. Guides published before 2021 are particularly likely to quote rates that no longer apply, but even articles from 2023 or 2024 may understate your actual costs by 0.5-1% or more.¹

That's because PayPal now determines rates based on your Merchant Category and Transaction Type. How a payment is received, whether through a QR code, a Checkout link, or an invoice, affects the fee applied. A guide written before these distinctions were clearly separated will likely give you the wrong number for invoice-specific payments.

The current UK merchant fee schedule was last updated on 9 February 2026. ¹ If you're using an older guide to estimate costs or set your pricing, check PayPal's fees page directly before relying on those figures.

Domestic vs international PayPal invoice fees

The fee PayPal charges on an invoice payment depends largely on where your customer is based. For UK businesses, the difference between a domestic and an international payment can add up quickly, especially at higher invoice values.

Domestic UK invoice payments

A domestic transaction is one where both sender and receiver are based in the UK, including payments from Guernsey, Jersey, and the Isle of Man.¹ The fee is 2.9% plus £0.30 per transaction, with no additional cross-border charges or currency conversion involved.

To illustrate what this looks like in practice, here is an example:

For businesses invoicing only UK clients, this is a predictable cost; the challenge comes when clients are based overseas.

International invoice payments

When a customer pays from outside the UK, PayPal adds an international transaction fee on top of the standard domestic rate. For EEA senders, that's an additional 1.29%, bringing the total to 4.19% plus £0.30. For non-EEA senders, it's 1.99% extra, bringing the total to 4.89% plus £0.30.¹

Here's how that plays out on a £1,000 invoice:

A UK freelancer invoicing a US client £5,000 per month would pay around £246 in PayPal transaction fees alone, before any currency conversion costs.

Hidden costs businesses often miss

The transaction fee is the most visible cost. But for UK businesses receiving money from international clients, two additional costs often go unnoticed: the exchange rate markup applied when PayPal converts foreign currency into GBP, and the difficulty of knowing exactly what will land in the account before the payment is processed.

Exchange rate markups

When a client pays an invoice in a foreign currency, PayPal automatically converts it into GBP before depositing it. This conversion doesn't happen at the mid-market exchange rate. PayPal applies its own transaction exchange rate, which includes a conversion spread of 3% above the base exchange rate.²

This cost doesn't appear as a separate line item. It's built into the exchange rate at the moment of conversion, which makes it easy to miss. A PayPal invoice fees calculator can help estimate transaction costs, but it won't show the exact conversion spread in advance; that's only visible through PayPal's currency converter tool at the point of processing.¹

This means businesses receiving regular FX payments from international clients often can't accurately forecast their GBP income until after the money has already been converted.

Here's what you're actually paying on a £1,000 invoice from a non-EEA client paying in USD:

That means on a £1,000 invoice, you could receive as little as £911 before any withdrawal fees. The more international invoices you send, the more these costs compound. If you use a third-party integration to process PayPal payments between UK users, an additional PayPal Business Payments fee of £2.00 per GBP transaction applies on top of the standard rate.¹

Wise Business works differently. Instead of converting your payment automatically at a rate you can't see in advance, it lets you hold balances in 40+ currencies and receive payments with local account details in 8+ currencies. Your US client pays into your USD account details. Your EUR client pays into your EUR account details. The money sits in the currency it arrived in, and you convert only when you choose to, at the mid-market exchange rate with a low transparent fee* shown before you confirm. What you see is what you get.

Currency conversion and settlement timing

PayPal converts foreign currency payments at the rate applicable at the moment the transaction is processed, not when you sent the invoice. This means the GBP amount received can differ from what you expected when the invoice was raised.¹

This creates two practical problems:

• Reconciliation becomes harder. The amount landing in your account rarely matches the invoice value exactly, which creates extra work whether you're a sole trader or managing a finance team.
• Cash flow planning becomes less predictable. There's no control over when the conversion happens or at what rate, and the uncertainty compounds the more international clients you have.

One way to work around this is to invoice in GBP rather than your client's local currency. This shifts the conversion to their side,** removing PayPal international fees from your end entirely**. If you're a freelancer working with international clients, this is often the simplest way to keep your GBP income predictable without changing how you use PayPal.

When businesses outgrow PayPal invoicing

PayPal invoicing works well when you're starting out. But as international invoices become a regular part of how you get paid, the cost structure that feels manageable at low volumes starts to work against you.

Higher invoice volumes and margin pressure

Think about what a 4.89% transaction fee plus a 3-4% conversion spread actually costs you at scale. On £5,000 worth of invoices from non-EEA clients every month, you could be losing £400 or more before accounting for anything else. Over a year, that's close to £5,000 quietly leaving your business through fees alone.¹

The bigger issue isn't just the total. Because PayPal's conversion spread varies by currency pair at the moment each payment is processed, your actual GBP income fluctuates even when your invoice values stay the same, making cash flow forecasting genuinely difficult as volume grows.

PayPal can also place a hold on your funds if your selling pattern appears unusual, including an unexpected surge in sales or a shift in your average invoice value. In some cases, holds can last up to 21 days.³ For a growing business, having income held while PayPal reviews your account causes real cash flow disruption.

International contractor and supplier payments

If you're also using PayPal to pay international contractors or suppliers, the visibility problem cuts both ways. When you pay someone in their local currency, PayPal applies its conversion spread to the outgoing payment too. You end up paying more in GBP than the invoice suggests, and the exact cost isn't clear until after the payment has already left your account.¹

For businesses managing payments across multiple currencies and multiple contractors, that lack of upfront clarity creates reconciliation headaches and makes it difficult to plan payment runs with any confidence. You can get a rough sense of costs using a PayPal business fees calculator, but the actual amount depends on live conversion rates that shift throughout the day.

That's the core tension with PayPal at this stage of growth: the tool that got you started starts to limit how clearly you can see and manage your money. If you're paying contractors in multiple currencies while also receiving international invoices, you need a platform that gives you visibility on both sides.

WithWise Business, you canreceive money in local currencies with dedicated account details, hold balances across 40+ currencies, and use cash management tools to convert and move funds when it works for your business, not just when a payment happens to land.

These features are available on the Advanced plan, which requires a one-time fee of £50 (Advanced plan) or for free (Essential plan).

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information.

Using Wise Business for international invoice payments

For UK businesses invoicing internationally, the gap between what you send and what you receive through PayPal can add up to a significant cost over time. Wise Business is built to close that gap, giving you transparent fees, local account details to receive payments, and multi-currency tools to manage what comes in without unnecessary conversion.

Transparent fees for international payments

With Wise Business, the fee and exchange rate are shown before you confirm anything. Wise uses the mid-market exchange rate with a low, transparent fee* on top no conversion spread added in the background, no rate you only see after the money has landed. What you're quoted is what arrives.

For businesses that have found PayPal invoice fees hard to predict, that upfront clarity makes a direct difference to how you price your services and manage cash flow month to month.

Multi-currency accounts for business payments

Rather than converting every international payment into GBP automatically, Wise Business lets you hold balances in 40+ currencies and receive payments with local account details in 8+ currencies. Your US clients pay into your USD details. Your eurozone clients pay into your EUR details. You convert only when you choose to, at the mid-market rate.

Payments sync automatically with Xero and QuickBooks, removing the manual reconciliation that comes with managing multi-currency income across different platforms.

These features are available on the Advanced plan, which requires a one-time fee of £50 (Advanced plan) or for free (Essential plan).

The claim regarding the speed of transactions depends on fund availability, approval by Wise's proprietary verification system, and systems availability of our partners' banking system. It may not be the same for all transactions.

Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information.

*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, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

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.

Register for Wise Business ✍️

FAQs

Does PayPal charge a fee if the customer pays by bank transfer?

Yes. PayPal invoice fees apply regardless of how the customer funds their payment. Whether they pay by bank transfer, card, or PayPal balance, the standard 2.9% plus £0.30 is deducted from what you receive. The funding method affects the customer's experience, not your fee.¹

Can PayPal invoice fees be passed to customers?

PayPal doesn't offer a built-in fee pass-through for UK business accounts. Most businesses factor fees into their pricing instead. Check PayPal's terms and applicable UK consumer regulations before adding surcharges to invoices directly.

Are PayPal invoice fees tax deductible for businesses?

Yes. PayPal transaction fees are a legitimate business expense for UK sole traders and limited companies and can be deducted from taxable income. Confirm the specifics with your accountant.

How do PayPal invoice fees compare to Stripe?

For UK domestic payments, Stripe charges 1.5% plus £0.20 per transaction, compared to PayPal's 2.9% plus £0.30. For EU card payments, Stripe charges 2.5% plus £0.20,⁴ compared to PayPal's 4.19% plus £0.30 for EEA senders. Stripe also adds 1% for currency conversion,⁴ while PayPal applies a 3-4% conversion spread. For most UK businesses invoicing internationally, Stripe works out cheaper per transaction, though both platforms charge fees that compound at higher volumes.

Can businesses avoid PayPal currency conversion fees?

Yes. Invoicing in GBP shifts the conversion to your client's side, removing PayPal's FX spread from your end. You can also explore alternatives to PayPal that offer local account details, letting you receive payments in the client's currency without automatic conversion.

Sources used:

1. paypal.com - PayPal UK merchant fees
2. paypal.com - PayPal currency conversion explanation
3. paypal.com - PayPal UK: why payments are put on hold
4. stripe.com - Stripe UK standard pricing

Sources last checked on date: 7-May-2026