Pinching Pennies With Paypal Micropayments

Fees suck. Fees suck several dollars per month from our hobby budgets. It’s also the cost of doing business and without the services we pay these fees for, we would be unable to reach an audience of millions (eBay) or make monetary transactions with just a few clicks (Paypal).

The latter is a platform that you can actually shave some pennies from your Paypal fees. It is called micro payments. The standard fee structure for transactions using goods and services on Paypal is 2.9% of the gross payment plus a per transaction fee of $0.30.

Dime sales are rampant on Twitter. Dollar cards sit alone in closets because nobody wants to pay shipping in a bubble mailer (about $3.00 to $3.50) for a dollar card. A seller doesn’t want to give dollar cards away for free.


One way to make dollar sales more palatable on eBay is offering them up for $1.50 or $2.00 with free shipping in a plain white envelope (PWE). Here is the breakdown for that transaction with fees applied.

Standard Paypal Fees On $2 Sale

Paypal offers something called micro payments, and it’s possibly something you have already heard of, but unsure how to apply. It’s not easy. First, you need to have a Paypal business account, and that’s the easy part. You can switch your existing account to a business account online. There are no fees associated with a business account.


Next, you will need to sign up for micro payments, and Paypal makes this a bit more difficult. It cannot be done online. To sign up for micro payments you need to call Paypal (1-888-221-1161) and request the change. Once you are connected and make the request with a Paypal operator, it takes just seconds. When I switched my account to micro payments, it was active in less than 15 minutes.

The fees for micro payments are a per transaction rate of $0.05 plus 5% on gross payment. Let’s take a look at that same $2.00 sale with micro payments.

Micro Payment Fees on $2 Sale

It may look like a small difference ($1.05 vs. $0.84), but that is $0.21 and if you are doing 100 transactions of small amounts per month, that can really add up.


One other piece of information: you can only have one form of fee per email address. So, you can set up one account for your larger transactions (the break even point between standard and micro payments is right around $12.50), and a micro payments account for less than $12.50 sales. This will require a little more attention on your listings, and I have opted to keep one Paypal account across all of my transactions.

I’ll share a snapshot of a monthly look at my savings. During the month of March, I sold 116 items and paid $43.05 in micro payment Paypal fees. Under the standard Paypal fee structure, I would have paid $55.81 in fees. For just one month I saved $12.76. Over the course of a year that adds up to more than $150 and I can buy a lot of Cubs cards with that!

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