Is PayPal Invoicing actually free?
Disclosure. PayPal pays us nothing. No affiliate arrangement, no link, no revenue from this page. The one thing worth declaring is personal rather than commercial: PayPal is the account this site would eventually be paid through, so we had reason to want it to come out well. On the largest invoices it does — and we have shown the arithmetic so you can check that the conclusion follows from the numbers rather than from the preference.
Yes. There is no monthly fee, no plan to buy and no limit on how many invoices you send. What it costs you is decided entirely by which of four buttons your client presses — and the one PayPal puts first is the second most expensive of them.
The answer
Yes, the software is free. But paying with PayPal costs you more than paying by card.
- 💳PayPal / Venmo / guest checkout: 3.49% + 49¢. A plain credit or debit card: 2.99% + 49¢. The PayPal button is half a point dearer.
- 🏦Bank transfer is 1%, capped at $10. On a $5,000 invoice that is $10 — the cheapest large-invoice route of any processor on this site.
- 🧾The fixed fee is 49¢, not 30¢. Below about $61 that makes PayPal dearer than Stripe or Square; above it, cheaper.
- 🌎+1.50% for an overseas client. The PayPal button from abroad is 4.99% + 49¢.
Jump to: The button problem All four routes Against Stripe and Square The $14.99 subscription Which one are you?
The button PayPal puts first is not the cheap one
PayPal’s fee schedule lists invoicing rates by payment type, and the ordering is worth reading twice.
| How the client pays | Rate | On a $5,000 invoice |
|---|---|---|
| Bank transfer (Pay by Bank) | 1%, capped at $10 | $10.00 |
| Credit or debit card, Apple Pay, other wallets | 2.99% + 49¢ | $149.99 |
| PayPal, Venmo or guest checkout | 3.49% + 49¢ | $174.99 |
| PayPal Pay Later | 4.99% + 49¢ | $249.99 |
The half point, in money.
$100 invoice — button $3.98, card $3.48. You lose 50¢.
$1,000 invoice — button $35.39, card $30.39. You lose $5.00.
$5,000 invoice — button $174.99, card $149.99. You lose $25.00.
This is not a trap so much as an inversion of what people assume. The received wisdom is that PayPal is the expensive way to take a card and the cheap way to take a PayPal payment. On invoicing transactions it is the other way round: the branded route carries the higher rate, and the plain card is the discount.
What you can do about it is limited but not nothing. You cannot stop a client choosing the PayPal button, and for many clients the PayPal balance is exactly why they are paying you this way. But if a client asks how they should pay, the honest answer is a card — or better, a bank transfer.
Bank transfer is where this becomes interesting
1%, capped at $10 per transaction. The cap is what matters: above $1,000 the fee stops growing entirely.
Where the cap starts working. 1% of $1,000 is $10, so the cap binds from $1,000 upward. Below that you pay the plain 1%.
$1,000 → $10.00 · $5,000 → $10.00 · $50,000 → $10.00
The same $10 on a $50,000 invoice is 0.02%. No card rate on this site comes within two orders of magnitude of that.
Against Stripe and Square
We have now costed all three on the same terms. On a card, the ranking is not the one the headline rates suggest.
| Invoice, paid by card | PayPal | Stripe | Square, free plan |
|---|---|---|---|
| $100 | $3.48 | $3.60 | $3.60 |
| $1,000 | $30.39 | $33.30 | $33.30 |
| $5,000 | $149.99 | $165.30 | $165.30 |
PayPal’s 2.99% beats the 3.3% that Stripe and Square both land on. The catch is the fixed fee: 49¢ against 30¢.
The crossover. PayPal’s lower percentage has to make up 19¢ of extra fixed fee.
0.31% × invoice = $0.19 → $61.29
Above $61.29 PayPal’s card rate is the cheapest of the three. Below it, Stripe and Square are.
And on bank transfers PayPal wins outright at scale: $10 against Stripe’s $25 and Square’s $50 on a $5,000 invoice. Square matches the $10 — but only on its $49-a-month plan, which is $588 a year for a cap PayPal gives you at no cost.
The $14.99 subscription, which you almost certainly do not need
PayPal’s fee schedule lists an Invoicing Subscription at $14.99 a month — $179.88 a year. Nothing about basic invoicing requires it; the free invoicing is what everything above describes.
What we could not verify. The fee schedule states the subscription price but not what it adds, referring instead to separate Invoicing Terms and Conditions which we did not read. So we are not going to tell you whether it is worth $179.88 — only that it is optional, that it costs three times Setmore Pro and more than a year of most tools on this site, and that you should find out exactly what it buys before subscribing to it.
Which one are you?
Which one are you?
💰 I send large invoices to US clients
PayPal with bank transfer is the cheapest route on this site. $10 flat above $1,000, no subscription, no cap on how many. On a $5,000 invoice that is $165 less than a card. Put your bank details in the invoice and make the card the second option, not the first.
🧾 My invoices are under about $60
The 49¢ fixed fee works against you. Below $61.29 Stripe and Square are cheaper on a card. The real fix is fewer, larger invoices — the fixed fee is charged per invoice, not per dollar.
💬 Clients keep paying me with the PayPal button
That costs you half a percentage point — $25 on a $5,000 invoice. You cannot switch it off, but you can ask. “Bank transfer if that suits you, card otherwise” in the invoice note is worth more than any tool change on this site.
🌎 My clients are overseas
Add 1.50% to everything. The PayPal button from abroad is 4.99% + 49¢ — on $2,000 that is $100.29 against $70.29 domestic. Compare against Stripe’s 4.8–5.8% before assuming either is the cheap one; both are expensive.
📋 I want proper invoicing software, not just a payment link
PayPal’s invoicing is functional rather than rich. If you want recurring invoices, expense tracking or bookkeeping alongside, use Zoho Invoice or Invoice Ninja — both free — and connect PayPal as the processor. You keep the 1% bank rate and gain the software.
What we could not verify
Country. Every figure here is from PayPal’s United States merchant fee schedule. PayPal publishes a different schedule for every country and the fixed fee alone ranges from 0.39 EUR to 49.00 JPY. Read your own country’s page before using any of this.
What the $14.99 subscription includes. Listed as a rate, defined in a separate agreement we did not read.
Currency conversion. PayPal applies a conversion spread on top of the fees above when the payment currency differs from your balance currency. We did not establish that figure here, and it is the number most likely to make an overseas payment worse than the 4.99% suggests.
Questions people actually ask
Is there really no monthly fee?
Correct. Invoicing is included with a business account and the fees above are charged only when a client actually pays. If nobody pays you this month, PayPal charges you nothing. That is the same model as Stripe and unlike a subscription tool.
Can I pass the fee on to the client?
People do add a “processing fee” line to invoices, and whether that is permitted depends on your card network rules and your local law, not on PayPal’s pricing. We are not going to give you a ruling on it. What we will say is that the far simpler lever is the one this page keeps returning to: on a $5,000 invoice, asking for a bank transfer saves you $165 and asks nothing of the client but a different button.
Why does PayPal charge more when someone pays with PayPal?
The fee schedule does not explain it. The plausible reading is that the branded checkout carries buyer protection and dispute handling that a plain card payment through the same invoice does not. Whatever the reason, the number is published and it is 0.5 points.
The thing that actually decides it
Not whether PayPal Invoicing is free. It is, in the way that matters: no subscription, no limit, no charge unless you get paid.
What decides it is the same thing that decided every payment page on this site. On one $5,000 invoice, the spread between the cheapest and dearest route within PayPal alone is $10 against $249.99. No competitor, no plan upgrade and no software change on this site moves your costs by a fraction of that.
Ask how the client would like to pay. Then tell them how you would like to be paid. That one sentence in an invoice note is the highest-paid work on this page.
Related: Is Stripe Invoicing actually free? and Is Square Invoices actually free? — the same arithmetic, two other processors. And Best invoicing software for a business of one.