How To Avoid Paypal Fees When Invoicing Clients As A Freelancer Or Small Business

Things are different between USA clients and international clients. I’ll show you methods for both - but your best chance to save money is if both you and your client are from the USA (sorry international freelancers!).

How To Avoid PayPal Fees On Payments From US Clients

Ok, this is the absolute best way I’ve found for how to avoid PayPal fees when requesting money from clients.

With this method, you only pay a flat $0.50 (fifty cents!) fee no matter how much money you’re receiving:

​It’s called PayPal Business Payments and it’s awesome.

But...it won’t work for everyone.

See, it only works for a very specific set of circumstances - basically, you need to be invoicing someone with a USA bank account, which usually means it only works with USA clients (I’ll show you my solution for international clients in a second). Additionally - your client needs to pay via their bank account or PayPal balance - no credit cards accepted.

And here’s the other tricky thing about the PayPal Business Payments flat fee:

You can’t invoice with the flat fee PayPal Business Payments straight from your PayPal account. Instead, the only way to invoice clients with PayPal business payments is to use one of the approved invoicing tools (which isn’t every invoicing tool, unfortunately).

You have a few different options. But to get access to PayPal Business Payments, I recommend Freshbooks.

Freshbooks is an accounting and invoicing tool that a lot of freelancers and small businesses use.

Unfortunately, Freshbooks isn’t free - you’ll probably end up paying ~$25 month for Freshbooks if you’re a freelancer (there’s a cheaper plan, but it only lets you invoice 5 clients). But you’re still probably going to come out way ahead.

That is, if you’re currently receiving $1,000+ per month from US clients, you’re still going to save a bundle even after the $25 monthly payment to Freshbooks. Plus, Freshbooks will just generally save you a ton of time on invoicing and accounting, which is a nice secondary benefit.

So, here’s the deal:

If you’re from the USA and you’re receiving payments from clients in the USA, take advantage of flat-rate $0.50 PayPal Business Payments to decrease PayPal fees when you receive money from your clients.

How To Decrease PayPal Fees For International Payments

If you want to decrease the PayPal fees that you pay on international payments (or if you're an international freelancer), I’m going to suggest a radical solution:

Don’t use PayPal.

Seriously, I’ve been unable to find a surefire way to avoid international fees with PayPal. Plus, PayPal always gives you a crappy conversion rate, so the fees are even worse than they seem at first glance. It’s not uncommon to end up paying over 4% to receive international payments when all’s said and done.

Here’s what to do instead:

Sign up for a TransferWise Borderless Checking Account.

Basically, this lets you accept payment in different currencies without needing to convert the money right away.

That means you don’t need to pay any fee to receive money via a bank transfer. The only time you pay is when you convert or withdraw the money, which is going to be much lower than PayPal because TransferWise’s fees are pretty low.

I’ve been using TransferWise to accept payments from a European client for a while and the differences are pretty dramatic.

With TransferWise, I pay ~$7 to receive $1,500, while that same fee with PayPal would be more like ~$60.

TransferWise is a billion dollar company that’s regulated by the UK Financial Services Authority, so you’re not dealing with some shady money transfer organization, either.

Stop Giving PayPal Your Hard-Earned Money

I don’t know about you - but I’d rather spend my own money than give it to PayPal.

While you’ll probably never be able to completely eliminate PayPal and other money transfer fees, by employing these two tactics for both your USA and international clients, you’ll be able to decrease your PayPal fees by a big chunk.

And that means more money in your pocket to do fun stuff. Happy freelancing!

If you know a great way how to avoid PayPal fees that I didn't cover, I'd love if you shared it in the comments. Like I said, I'm always looking for ways to give PayPal less money - so you'd make my day if you know a way to do it better.

Disclosure: This post contains affiliate links, which means I get paid if you sign up for a new Freshbooks account. It doesn't affect the price that you pay and it did not affect my recommendation.