Accepting PayPal as a merchant

PayPal is a wallet with its own account relationship, its own dispute process and its own pricing, sitting alongside rather than inside your card acceptance. That separateness is the whole commercial story: PayPal is usually the one line on a payment statement that was never part of a negotiation.

Why PayPal is priced outside your card contract

Most merchants hold a direct PayPal agreement or reach PayPal through their PSP as a pass-through method. Either way it is rarely bundled into the card rate negotiation, and rarely revisited when volume grows. A merchant who has renegotiated card acceptance twice may still be on the PayPal terms they accepted at launch, on volume that has multiplied since.

Disputes

Disputes work differently, and that has a cost

PayPal operates its own buyer protection and resolution process, separate from card chargeback rules and separate from your acquirer’s handling. Evidence requirements, timelines and outcomes differ. For merchants with meaningful PayPal volume that means a second dispute workflow, often owned by a different team, with its own loss rate. Comparing your PayPal dispute loss against your card chargeback loss is a comparison very few merchants have made and one that usually explains more than the fee does.

Currency

The mark-up has a standard unit, so use it

Where a currency conversion happens, European law sets how the charge has to be expressed. Articles 4 and 5 of Regulation (EU) 2021/1230 require currency conversion charges to be given as a percentage mark-up over the latest available euro foreign exchange reference rates issued by the European Central Bank, disclosed before the transaction is initiated.

Those articles protect the payer rather than the payee, so the obligation is not aimed at your invoice. What they hand you is a unit. A mark-up over the ECB reference rate is the only expression of foreign exchange cost that lets two providers be compared, and a quote that arrives as a rate rather than as a mark-up has hidden exactly the number you need.

On a wallet the point bites twice, because conversion can happen when the customer pays and again when you are paid out. Ask for both legs as a percentage mark-up over the ECB reference rate, on your own currency pairs. Half a percentage point on the payout leg compounds across every transaction that crosses a currency, and it never appears on the line marked payment costs.

Wallet share and the point-of-sale opening

PayPal launched tap to pay on iPhone in Germany in May 2025, following the European Commission’s binding commitments of 11 July 2024 requiring Apple to open NFC access on iOS to third-party wallets across the European Economic Area. The relevance for merchants is that wallet competition at the point of sale is now real, and the wallet layer is becoming a contested market rather than a settled one.

Cross-border

A euro payment from another member state may not cost you more

Regulation (EU) 2021/1230 carries a rule that reaches your own statement. Charges levied by a payment service provider on a payment service user in respect of cross-border payments in euro shall be the same as the charges levied by that provider for corresponding national payments. A merchant is a payment service user, so this is not only about what your customer pays.

The scope is euro, plus the national currencies of member states that have notified a decision to extend it. Currency conversion charges sit explicitly outside this particular rule, and that distinction is worth holding on to: a higher price because the money crossed a border is one thing, a higher price because it changed currency is another, and the two are governed separately.

The test is short. Take your own pricing for a euro transaction from your home market and for the same transaction from another euro member state, same method, same value. If the two differ, you are not opening a negotiation about preferences. You are opening one with a regulation behind it.

Steering

Placement is a lever, and it is yours

A wallet earns its share largely through where it sits in the checkout and whether it arrives preselected. That makes placement the most valuable variable on the page, and it is the one merchants most often assume they cannot touch.

Article 62(3) of PSD2 says otherwise. A payment service provider shall not prevent the payee from steering the payer towards the use of a given payment instrument, or from offering a reduction for using it. That is a floor under your freedom, and it holds whatever an agreement says about prominence.

So the honest exercise is to read your own agreement against that article and then measure. Move the wallet one position down, or take away the preselection, and watch conversion and blended cost together. If conversion holds and cost falls, the wallet was capturing volume that was never at risk. If conversion drops, you have just measured the incremental revenue you were buying, which is the number the fee should have been argued against in the first place.

Which payment provider supports PayPal?

Adyen, Checkout.com, Stripe, Braintree, Worldline, MultiSafepay and Redsys all document PayPal, among others, as does effectively every other provider, so the useful questions are what your effective PayPal rate is, whether it sits inside or outside your main contract, what your PayPal dispute loss rate is, and what proportion of PayPal volume would have converted on another method anyway. That last one determines whether you are buying incremental revenue or paying a premium on revenue you already had.

Reviewing what this costs you

What you pay is set in your PSP contract, not by the scheme. Start by establishing whether you are overpaying your PSP, or look at what payment performance optimisation does to authorisation rate and cardmix, which is where a wallet earns or costs you money.

Relevant markets: global