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What Is PayPal Micropayments?

Stephen Hart

Stephen Hart

Founder - Cardswitcher

Former - Chief Financial Officer @ Worldpay

When selling items online, it can be difficult to escape the expensive world of fees.

No matter what you’re selling, or which payment gateway you use, you’ll have to pay card processing fees on each transaction. But when your regular transactions are of small value, it can begin to feel like you’re losing out on a huge chunk of your sales.

Fortunately, this is where PayPal Micropayments come in. Micropayments offer a lower rate for small transactions, depending on your average transaction amount. In this article we’ll cover how PayPal Micropayments work, and whether you could benefit.

paying on laptop

How do PayPal Micropayments work?

When you’re processing a high amount of small value transactions, the regular fee rate can start to seem like it’s eating heavily into what goes into your account.

Micropayments offer a cheaper way to process your transactions, as you get a lower rate on small value transactions. However, it’s important to note that you’ll only get approved for Micropayments if:

  • You have an average transaction value of £5 or less.
  • You have a PayPal Business account.

This means that even if you have a number of small value transactions, you won’t be able to get PayPal Micropayments unless your average is below £5. Provided PayPal approves your Micropayment rate application, this rate will apply to all of the transactions that come into your PayPal account.

What are the fees for micropayments?

For PayPal Micropayments, the standard rate fee per transaction varies from normal. Rather than the regular rate, you get a lower charge (correct as of November 2021). To compare:

  • PayPal Standard Rate 2.9% + £0.30
  • PayPal Micropayment Rate 5% + £0.05

If we look at this using the table below, you can see how this works with both lower and higher transactions.

Sale ValueRegular FeeMicropayment fee


We can see below £12, where the regular and micropayment fee are the same, the micropayment fee is the cheaper option. Beyond £12, the Micropayments rate works out more expensive.

But, when upgrading to the Micropayment rate, this fee applies to all transactions. Though you can only get approved with a low average, it’s important to consider how this rate will affect your higher cost transactions.

You should also note that if your buyer is overseas, slightly different rates will apply. For overseas Micropayments, the rate will be 6% + a fixed fee depending on the currency.

For example, if your buyer was located in Sweden, the rate would be 6% + 0.54 SEK. You can see the full list of rates for different currencies here, but if you are regularly dealing with overseas buyers, it’s also worth checking out how currency conversion and foreign transaction fees work.

Setting up PayPal Micropayment Cut Offs

Though you aren’t currently able to set up cut-offs through PayPal, it is possible to do so elsewhere. This would mean that depending on the site you’re using, you could always pay the cheaper fee rate.

Major retailers that currently offer the ability to do this include eBay, however you could also create a custom code if you’re selling through your own website.

woman filling out a form

How to apply

Applying for PayPal Micropayments is fairly simple. All you need to do is:

  1. Have a PayPal Business Account.
  2. Login to your account, and go to the PayPal Contact page.
  3. Click on ‘Message Us’.
  4. Type ‘Set up PayPal Micropayments’ into the chat, or select ‘Talk to Human’ to speak with someone directly.
  5. Once your application is processed, you should get approval within a few days.


If costly fees are starting to impact your sales or business, CardSwitcher is here to help.

We could save up to 40% on your current credit card processing costs. Just provide us with a few quick facts about your business, and you start to compare prices with us with ease.

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Written by:
Stephen Hart

Stephen Hart

Founder - Cardswitcher

Former - Chief Financial Officer @ Worldpay

Stephen brings a wealth of experience honed through years in the financial sector, particularly in the card processing payments industry. His illustrious career spans key roles at PwC, Natwest, and the role of CFO at WorldPay, before going on to found card processing comparison site, CardSwitcher. He is passionate about helping growing businesses to understand the card processing landscape so they can make savvy financial decisions.