Scott Wainner on Entrepreneurship & Startups

Founded ResellerRatings in '97, sold in '99 ($4M), rebought in '02 ($32k), built to $6M/year (no funding), sold to Answers in '12 for $34M.

There is a very well-hidden setting in Paypal that can save you a lot of money in Paypal fees depending upon the volume of Paypal payments that you receive. This is particularly important for merchants selling goods, or big sites that accept subscriptions, but it’s important for ebay sellers and anyone selling more than $3k/mo via Paypal. It’s called Merchant Rate pricing, and it’s something you have to opt-in to, on this page at Paypal (must be logged into Paypal, then visit that link – yes it’s a real Paypal link and no I’m not a phisher).

When I decided to write this post, it took me half an hour to find that page so don’t bother to look for it, they’ve hidden it well. No doubt, their requirement to opt-in to qualify for the discounted tiered pricing is probably buried in some legal agreement, too.

If you earn more than $3,000/mo in Paypal payments, the Merchant Rate switches your transaction fees from 2.9% to 2.5%, and again to 2.2% (>$10k/mo) and 1.9% ($100k/mo) saving you potentially hundreds or even thousands per month. I just assumed that Paypal’s tiered fees adjusted automatically to take my order volume into account but not so, you have to manually choose the lower tier if your sales volume qualifies.



Categories: Web Business

89 Responses so far.

  1. Austin says:

    Dude, you rock. We process tens of thousands of dollars each month in subscription fees via PayPal and never knew this. Thanks!

    • Scott says:

      Awesome, you’re welcome – glad to help out. I think it’s slimy for them to publish the tiered rate charts and not make it clear that the lower priced tiers are opt-in (like who wouldn’t opt in anyway?)

      • the only reason i wouldn’t opt in is if there was a stiff penalty coming down a level and I was hovering around $3,000 a month (which there shouldn’t be, but with sleazy companies who knows).

  2. Steven says:

    Is this something that goes away if you don’t maintain the $3k/month of incoming payments or is it a lifetime once it’s applied?

    • Scott says:

      I think it goes away but I don’t know what the timeline is like i.e. how long it lasts from the time sales drop below $3k.

  3. Frederic says:

    thank you so much for that tip! Damn paypal are so sneaky….you’d think they would offer it to anyone that meets the criteria….more people need to know about this

  4. Carl says:

    That’s a very nice tip Scott. I don’t earn enough each month through PayPal but I’m sure a lot of people will save a lot of money.

    Best Wishes

  5. BlogTalks says:

    Thanks for the tip. Playing devils advocate for a minute why would PayPal want to advertise the fact and lose revenue.

  6. [...] to Scott Wainer for his excellent post on PayPal’s secret merchant rate for this [...]

  7. Its methods like this why i dont like paypal. They are big, they are sneaky, they are ugly.

    • Wanda says:

      I agree and am looking into changing my CC processor. They don’t seem to know how to answer questions, either, except their canned responses which rarely apply.

  8. Everything in paypal is hidden. Even a simple process of canceling a subscription takes me a minimum of 4 clicks to get to the page. Talk about designing the site to be user friendly.

  9. Paypal sure makes you run round hoops to change, cancel or edit anything. And this in a day when every designer takes about user experience.

  10. Good tip. Ill put this to use once i make more money :)

  11. Useful Paypal info, thanks! I hope i can get such $ale numbers one day ;)

  12. [...] use paypal, and a few may be making quite a bit of dough, this is something they may like to know. What Paypal Won’t Tell You | W Revenue dot Com Basically it says how you can get lower fees due to the tier system, but instead of upgrading [...]

  13. Vampire Bats says:

    this is very useful info indeed i would have never known :O

  14. If only I was making a lot from paypal I could put this to good use

  15. Rich Tubbs says:

    Great tip. But when I went to Paypal to opt-in I found that I was already receiving the Merchant Rate without any sign-up on my part. So, apparently Paypal has some sort of automatic process here.

  16. Would be nice to take $3000/month!

  17. zaggededge says:

    hey thanks for the heads up on paypal! i’d like to model my blog after yours

  18. I guess this isn’t a problem for most paypal users

    • Scott says:

      $3k/mo isn’t actually that much for people who sell things on ebay for a living – $3k/mo is a very small 1 person kind of business.

  19. Chip says:

    Thank you for these tips, I will check out my Paypal settings and modify them accordingly.

  20. SondraW says:

    Thanks for the tip!!

  21. Gosh, thanks for telling!

  22. This is great advice, never knew this. Thanks for this useful tip.

  23. Mark says:

    That was a great news. I ve been paying them. I use to close my account for $5000 and more a month

  24. Ryan G says:

    Definately worth knowing about PayPal. I didn’t have a clue.

  25. Gaia layouts says:

    Wish I know that before…

  26. Jenn says:

    Thank you very much for posting this! This will drop my fees and nothing is better than that. It’s also good news that PayPal automatically accepts your application. I’m ‘ready to go’ now!

    You’re awesome for finding that hidden page :)

  27. Nate Moller says:

    Thanks for the great tip – I found your article via StumbleUpon and am glad I did.

    Here’s the quick way to find it:

    1. Login to your paypal account

    2. In the top right corner there is a search bar, type this in: fees-rate-about

    3. You’ll come to the page – apply and SAVE MONEY!

    Thanks for the great post and money saving tip!

  28. Me Debt Free says:

    Never knew this – great advice. Thanks for the useful tip.

  29. Tom_L says:

    Great information, thanks for these tips.I´m not yet at the $3k mark, but once I get there I sure will use this money saving tip.

  30. I am too follower of Tom but I suggested this to some of clients :) they are happy with the information :) wow wow wow

  31. Very good to know. I thought that it automatically changed based on your volume. Good to know you have to manually switch it over. Thanks for the info!

  32. GURUmicro says:

    I came across your site after stumbling across the “Merchant Rate” info in Virtual Terminal. After being approved, I still couldn’t find any info on what my new rate actually will be. It was 3.1%. If it goes down even .5% it will translate to a $25.00 per month savings to me. Just about covers the virtual terminal fee of $30.00 Though the card processing rate seems quite high to me at 3.1% for merchant services as it is!! PayPal is not impressing me with their (raised) $30.00 per month service charge, then charging 3.1% on transactions. You’d think they would offer a free USB card swipe device for your cash register at these rates!!! This is not much less than a banks rates with a card terminal included!

  33. SEO Tips says:

    That is excellent, can I ask how you came across that? That will save a lot of people so much money.

  34. Amar Damani says:

    Thanks! you made my day, we will save a lot of money & the credit doesn’t goes to PayPal , it goes to you & only you..

  35. Paypal does not work in my part of the planet, Pakistan. I cannot even register an account. Any ideas of any ways around it??

    I miss on a LOT of transactions because of this reason because most people ONLY accept paypal for online transactions.


  36. [...] holder and have a good standing with PayPal you can apply for merchant rates. Merchant rates attracts lower fee than normal premier/business accounts rates. To qualify for merchant rates you should have received [...]

  37. [...] holder and have a good standing with PayPal you can apply for merchant rates. Merchant rates attracts lower fee than normal premier/business accounts rates. To qualify for merchant rates you should have received [...]

  38. Even at the low fees PayPal is still ripping off the merchant. Its sooooo much cheaper to get a regular merchant account. Paypal is great for very low volume merchants, but when you really need payment processing you need to get a merchant account.

    • Scott says:

      Very true, but consumers love how easy paypal is, so unfortunately you’re throwing away money if you don’t accept it. Making it easy and quick to pay will make the difference between closing a sale and not — it all depends on how badly the consumer wants the product.. If they are indifferent, then the thought of getting up to get their wallet, putting in their address and all their info for several minutes, can deter the sale.

  39. [...] holder and have a good standing with PayPal you can apply for merchant rates. Merchant rates attracts lower fee than normal premier/business accounts rates. To qualify for merchant rates you should have received [...]

  40. Town Websites says:

    Another interesting item, if someone pays by E-CHECK, the maximum fee charged will be $5 for a transaction.

    E-checks behave like checks – the funds have to clear before they show up as completed on your merchant account – so not the best for goods you ship unless you hold the order till the PENDING status clears. But if you do something like take funds for a service that will be delivered later, bingo.

    You have to educate your customers about how to use E-Check – they have to opt in from a similarly difficult to find payment option just before they approve a payment.

    Savings in fees on a $1000 payment – about $24.30 out of $29.30, even if your account hasn’t been approved for merchant fee reductions.

  41. I’m so tired of big businesses ripping off the little guy because they don’t have law degrees. This mentality of gouging customers because of ignorance is a big part of why the economy is in such disarray. Seriously… what is ethical about making customers “opt in” … it’s called doing the right thing. It should be automatic. I hate paypal but I have to use it. Sad that one has to find out about these things from other people because Paypal won’t just do the right thing. Good post!

  42. Melody says:

    Great info, thanks.

  43. GT says:

    PayPal is evil

  44. Edward says:

    THIS IS A SCAM. He wont tell you how to find the Paypal link, but he wants you to login to his fake Paypal link.


    • Scott says:

      The link goes to genius. Go to, login, then go to the link if you want. I am not a scammer and if you knew anything about anything, or had been around web business for the past 15 years, or had read any of the articles about me in Forbes, the Wall Street Journal, Inc mag, PC World, PC Magazine, Smartmoney, etc etc you’d know that.

  45. Marcus says:

    Thanks for the tip. Approved with 2.2 rate instantly! Cool! Not a bogus link, Einstein.

  46. Buy PSP Go says:

    Thanks for this, I’m not up to that level yet but when I do I’ll make sure that I take advantage of it!

  47. danny monham says:

    great artcle

  48. Amiga says:

    Paypal won;t tell you that they can ban easily your account or even take back cash from your bank account. I prefer to use some other systems than PayPal.

  49. Airyn says:

    I love you Scott. You just saved me a TON of $.

    PayPal will pay for it’s deceitfulness… Trust me.

  50. I will definitely keept his in mind and spread the news! Quite a few of my customers use PayPal, and while few of them are really huge, there definitely are a couple who stand to save some money.

  51. You just saved some business owners a lot of cash. What a great resource you site is.

  52. naruto says:

    Its methods like this why i dont like paypal. They are big, they are sneaky, they are ugly.

  53. Sözlük says:

    thanks great artcle

  54. I prefer moneybookers. Because paypal is not yet available here. Thanks

  55. Paypal provides more user friendly features to users and mostly every website provide you paypal option

  56. MarkAW says:

    Hi I agree with one of the comments made
    But they make it so difficult for you to understand them, Until you have been using them for a while then you still feel frustrated having to go through everything to get to where you want to be,
    It`s a complete nightmare for newbee`s
    I think of the times, banging my head and feeling frustrated with them,
    Even for those that have been with them for some time,
    As you have said there is a lot of things they don`t want you to know, That they should be telling you if you have a merchant account with them,
    Hey thanks for the info this is one thing to look into.

  57. Timmy says:

    I don’t use paypal anymore. They are sneaky and underhanded. I believe it’s alot less expensive to process through your own merchant account..

  58. vainfotech says:

    It is really good.


  59. Geografixx says:

    thanks for the great advice now I can offer my ebay template design services inc ebay store design services using pay pal

  60. Blanshik says:

    I guess, every system has its loopholes)))
    Thanks for publishing this )

  61. Hey! I know this is somewhat off topic but I was wondering if you knew where I could get a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having difficulty finding one? Thanks a lot!

  62. matt says:

    great info. you’ve just saved me about $15,000 per year. thanks man!

  63. Akin says:

    I need help to get my web site going to make money, can anyone tell me what strategy that i use to really make money online. I want the one that I can implement that works for real. thxs guys.

  64. Greg says:

    I am so frustrated with PayPal. I’ve been on the fence as to whether to use another processor and this article completely tipped the scale for me. I’ll chalk that up to a $5,000 learning lesson. GRRRR.

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    Very rapidly this web page will be famous among all blog viewers, due to it’s good articles

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