PayPal’s standard fees are 2.9% + $0.30. Which means if you sell a lot of little things, like MP3’s for a dollar, you are losing a lot of money. Selling something for $1 results in a $.33 fee! That’s 33%! (Check out the PayPal Fee Calculator by Ryan Olbe).
What PayPal doesn’t advertise anywhere is that they offer a different payment scheme for “Micropayments” that’s much cheaper for any transaction under $12.
Buried in their site, with a single “sign up” link, is a page explaining that they offer a “Micropayments” merchant account at 5% + $0.05. For our $1 example, the fee is onliy $.10! 20% less. You will save money on every transaction under $12.
If you are setting up a new PayPal account to sell MP3’s, albums, or anything that’s likely to be under $12, use their Micropayment account registration form. If you already have an account, switch your account here.
Read more about it on the Paypal site under Micropayments.
