PayPal is the default payment tool for many freelancers — but its fees are high, and most people don't know exactly how much they're losing. This guide gives you the exact numbers and a way to calculate your own cost.
PayPal's Fee Schedule for UK Freelancers (2026)
Receiving Payments (Goods & Services)
| Payment source | Fee |
|---|---|
| UK client, GBP card/PayPal | 3.4% + £0.20 |
| EU client, EUR card | 3.4% + £0.20 + 3.5% FX conversion |
| US client, USD | 3.9% + $0.49 + 3.5% FX conversion |
| Australian client, AUD | 3.6% + A$0.30 + 3.5% FX conversion |
Currency Conversion
PayPal charges 3.5% above mid-market when converting foreign currency to GBP. This is on top of the processing fee — a double hit on international payments.
Other Fees
| Action | Fee |
|---|---|
| Sending via Friends & Family | 0% (domestic) — do not use for business |
| Receiving Friends & Family | 0% — do not use for business |
| Instant transfer to UK bank | 1% (min 25p, max £10) |
| Standard transfer to UK bank | Free (1–5 days) |
The PayPal Fee Calculator
For UK client paying by card (GBP):
Fee = (Amount × 0.034) + £0.20 You receive = Amount − Fee
For US client paying in USD (converted to GBP):
Processing fee = USD Amount × 0.039 + $0.49 FX fee = (USD Amount − Processing fee) × 0.035 Total fee = Processing fee + FX fee
Example — $1,000 from US client:
- Processing fee: $1,000 × 3.9% + $0.49 = $39.49
- Remaining: $960.51
- FX conversion at 3.5%: $960.51 × 0.035 = $33.62
- Total lost: ~$73.11 (~7.3%)
- You receive approximately: £739 (from $1,000)
Yearly Cost at Different Income Levels
All payments from UK clients via card:
| Monthly income | PayPal annual fees | Stripe annual fees | Annual saving |
|---|---|---|---|
| £1,000 | ~£410 | ~£192 | £218 |
| £2,000 | ~£818 | ~£365 | £453 |
| £3,000 | ~£1,224 | ~£546 | £678 |
| £5,000 | ~£2,040 | ~£910 | £1,130 |
All payments from US clients in USD:
| Monthly income ($) | PayPal annual fees | Stripe + Wise annual fees | Annual saving |
|---|---|---|---|
| $2,000 | ~£1,044 | ~£177 | ~£867 |
| $3,000 | ~£1,566 | ~£265 | ~£1,301 |
| $5,000 | ~£2,610 | ~£442 | ~£2,168 |
The difference is staggering for US dollar income. PayPal's combined card + FX fee (7%+) dwarfs Stripe+Wise (≈1.5% card + 0.41% FX ≈ 2%).
Why PayPal Fees Are So High
PayPal's fee structure layers multiple charges:
- Processing fee (3.4–3.9%) — higher than most processors
- FX conversion fee (3.5% above mid-market) — worse than Wise, Revolut, or any specialist
- Optional instant payout fee (1%) — for fast bank withdrawal
Each layer compounds. A US client paying you in USD means you lose ~7.3% by default.
Alternatives to PayPal for Freelancers
| Platform | UK card fee | International card fee | FX conversion | Best for |
|---|---|---|---|---|
| Stripe | 1.5% + 20p | 3.25% + 20p | 2% | Card invoices |
| Wise | Free (bank transfer) | Free (bank transfer) | 0.41% | International bank payments |
| Payoneer | N/A | Free (Upwork/Fiverr) | 2% | Platform withdrawals |
| PayPal | 3.4% + 20p | 3.9%+ | 3.5% | Clients who insist on it |
How to Move Away from PayPal
Step 1: Open a Stripe account (5 minutes, free). Step 2: Create a Stripe payment link or invoice for your next client. Step 3: Add Wise account details as alternative "bank transfer" option on invoices. Step 4: Offer PayPal as a fallback for clients who insist, but note the processing fee.
Many freelancers find that 80%+ of clients are happy to switch to Stripe or bank transfer once given the option. The remaining 20% (who insist on PayPal) you can either absorb the fee or add a surcharge.
Create a free Stripe account →Frequently Asked Questions
How much does PayPal charge per invoice for a UK freelancer? 3.4% + £0.20 for UK clients paying by card. On a £500 invoice: £17.20 fee, you receive £482.80. On the same invoice via Stripe: £7.70 fee, you receive £492.30.
Does PayPal charge to transfer money to my bank? Standard transfer (1–5 days): free. Instant transfer: 1% fee (min 25p, max £10).
Can I pass PayPal fees to clients in the UK? Yes — in the UK it is legal to add a payment processing surcharge. State it clearly on the invoice. Many clients switch to bank transfer to avoid the surcharge.
Is there a free alternative to PayPal? Wise is free to receive bank transfers and charges 0.41% to convert currencies. Stripe has no monthly fee (per-transaction fees only). Neither has PayPal's high per-transaction rates.
See also: Stripe vs PayPal for freelancers · How to stop losing money to PayPal fees · Best payment setup for UK freelancers
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