PayPal is one of the most popular payment methods with customers and one of the pricier ones for merchants. The real question isn't what PayPal costs. It's how much revenue it helps generate.
Two views of the same payment method
Ask online shoppers about their preferred payment method, and PayPal will almost always be near the top of the list. Ask e-commerce merchants which payment method often comes with higher processing costs, and you'll likely hear the same answer. How does one platform become both a customer favorite and one of the pricier payment options for businesses? And more importantly, is the extra cost worth it?
What customers value about PayPal
From a customer's perspective, PayPal offers a payment experience that's hard to match. There's no need to re-enter card details each time, one account works across thousands of online stores, and payment takes only a few seconds. Buyer protection adds another layer of confidence: if an item never arrives or differs significantly from its description, customers can open a dispute and request a refund. Most users never need that feature, but simply knowing it exists increases confidence when buying. For customers, PayPal is generally free to use, since merchants pay the processing fee. Today, PayPal serves 439 million active accounts worldwide and processed 25.4 billion payment transactions in 2025, representing roughly $1.79 trillion in total payment volume. In Germany in particular, PayPal remains one of the most widely used online payment methods.
What it costs merchants
Processing fees vary by country, sales volume and commercial agreement. For many European merchants, standard online transaction fees typically range between 2.49% and 3.49%, plus a fixed fee per transaction often around €0.35. Cross-border payments can cost even more. At first glance, the difference may look small, but for an online store processing €1 million in monthly sales, an additional 1% in fees represents around €10,000 a month, or €120,000 a year. That's why many businesses regularly review their payment strategy instead of relying on a single provider.
Why businesses don't simply remove PayPal
Transaction fees only tell part of the story. Imagine an online store with a checkout conversion rate of 72%. After adding PayPal, conversion rises to 76%. Those additional completed purchases can generate significantly more revenue than the extra processing fees cost. The real business question, then, isn't how much PayPal costs. It's how much revenue PayPal helps generate. The most successful e-commerce businesses evaluate payment methods exactly this way, by looking at overall business impact rather than transaction cost alone.
Are there cheaper alternatives?
There are certainly lower-cost payment options available today. Open Banking, Apple Pay, Google Pay, local bank transfers and modern payment providers often come with lower processing fees. But no single payment method suits every customer, market or business model equally well. Preferences differ across countries, industries and customer segments. That's why mature businesses rarely rely on just one payment option. Instead, they build a balanced payment strategy that combines several methods, maximizing customer choice while keeping costs under control.
The bigger lesson
This isn't really about PayPal. It's about the relationship between customer trust, conversion and payment cost. Too often, the checkout page gets treated as a purely technical step in the buying journey, when in reality it's one of the most critical moments in the customer experience. Companies can invest heavily in marketing, product development and website optimization, but if customers hesitate at the final payment step, much of that investment is lost. A payment method is more than a way to move money. It's a trust signal, and in many cases, it decides whether a visitor becomes a customer.
Practical recommendation
Customers rarely remember a payment when it works smoothly. They almost always remember when it doesn't. An effective payment strategy isn't about picking the provider with the lowest fees. It's about balancing customer trust, checkout conversion and processing costs. For many businesses, PayPal stays an important part of that mix, not because it's the cheapest option, but because, in the right context, it delivers value that extends well beyond the transaction itself.