Venmo isn't the only digital payment platform that wants a bigger slice of the pie. Its owner PayPal is getting in on the action, with a widespread change of its rates set to go into effect on August 2nd. Barring a few small adjustments to currency exchange and charity rates, almost all of these are increases in processing fees. Most notably, the standard PayPal checkout merchant fee will increase from 30 cents plus 2.9% to 49 cents plus 3.49%.
That's going to mean a pretty noticeable dip in profits for sellers, who will invariably pass the charges along to consumers in general. Since the flat rate charge is jumping by almost 40%, the change will disproportionately affect cheaper items and services. A bit of napkin math: a $10 phone case purchased with PayPal will go from a $.59 processing fee to an $.84 processing fee, jumping from 5.9% to 8.4% of the sale price. A $500 phone purchase will go from a $14.80 fee to $17.94, a shift from 2.96% to 3.58%.
As a result, you may see more merchants drop PayPal as a payment option, especially if they get the bulk of sales from cheaper items. In-person payments made with a QR code jump to 1.9% plus ten cents for more than $10 (with an even costlier 2.4% rate at beneath $10), credit card payments processed by PayPal online ad 2.59% + 40 cents, and credit card payments in person (including Google Pay) go to 2.29% + 9 cents.