Accepting PayPal as a merchant

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.

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.

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.

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