Yes, you can accept credit card payments through PayPal, but the method depends on whether you have a business account and what type of payment setup you use

PayPal lets customers pay you with their credit cards in two main ways: through PayPal's standard payment buttons and invoices (which work with any PayPal account), or through PayPal's point-of-sale and virtual terminal tools (which require a business account). The customer doesn't need a PayPal account to complete the payment — they can enter their card details directly at checkout. You receive the money in your PayPal balance, minus PayPal's transaction fee.

The catch is that PayPal charges different rates depending on how the payment enters their system. A credit card payment made through a PayPal invoice or payment button costs you 2.99% plus $0.30 per transaction (as of this writing, though rates vary by country). If a customer pays in person using PayPal's card reader or virtual terminal, the rate is typically 2.7% plus $0.10. These fees come out before the money reaches your account.

Key Takeaways

  • PayPal accepts credit card payments through invoices, payment buttons, and point-of-sale tools without requiring the customer to have a PayPal account.
  • Standard online credit card payments through PayPal cost you 2.99% plus $0.30 per transaction, deducted before you receive the money.
  • You need a PayPal business account to access virtual terminals and card readers for in-person or phone payments.
  • The customer sees the payment as going to PayPal, not directly to you, so make sure your business name is clear in your PayPal profile.
  • PayPal holds some payments for up to 21 days if you are a new seller or if a transaction looks unusual, so plan your cash flow accordingly.

Setting up credit card payments with PayPal invoices

The simplest route for most small businesses is PayPal invoices. You create an invoice in your PayPal account, add the customer's email address and the amount owed, and send it to them. The customer receives a link, clicks it, and enters their credit card information directly — no PayPal account needed on their end. PayPal processes the card and deposits the money (minus fees) into your account.

To send an invoice, log into your PayPal account, go to the Tools section, and select Invoicing. Fill in the customer details, itemize what they are paying for, and choose your payment terms. You can set a due date, add a note, and customize the invoice with your logo. When you send it, PayPal emails the customer a link to pay. You can track whether they have opened it and whether payment has arrived.

This method works for one-off payments, recurring bills, and retainers. If you send invoices regularly, PayPal's invoicing dashboard shows you which ones are paid, pending, or overdue. You can also set up automatic reminders to send to customers before the due date.

Using PayPal payment buttons for online stores and websites

If you have a website or online store, you can embed a PayPal payment button that lets customers buy directly from your site. When they click the button, they are taken to a PayPal checkout page where they enter their credit card (or use an existing PayPal account). After payment, they return to your site with a confirmation.

PayPal offers two types of buttons: a simple "Buy Now" button for single items, and a shopping cart button for multiple items. You can create these buttons in your PayPal account under the Tools section without writing any code. PayPal generates the button code, which you paste into your website's HTML. If your website is built on a platform like Shopify, WooCommerce, or Squarespace, PayPal integration is usually built in — you just connect your PayPal account and turn it on.

Payment buttons charge the same 2.99% plus $0.30 fee as invoices. The customer's credit card information is entered on PayPal's secure page, not on your website, which reduces your responsibility for handling sensitive data.

Accepting credit cards in person or by phone with PayPal

If you need to take credit card payments over the phone or in person, you will need a PayPal business account and access to PayPal's virtual terminal or card reader. The virtual terminal is a web-based tool where you manually enter a customer's card details (or they enter it themselves on a secure form). The card reader is a small device that plugs into your phone or tablet and reads the physical card.

To use the virtual terminal, log into your PayPal business account, go to Tools, and select Virtual Terminal. Enter the card number, expiration date, CVV, and billing address. PayPal processes the payment and deposits the funds into your account. This method costs 2.7% plus $0.10 per transaction, which is lower than the online invoice rate.

The card reader (PayPal Here or PayPal Zettle, depending on your region) is a separate device you purchase or rent. You swipe or insert the card, and the reader sends the payment to PayPal. In-person card reader payments also cost 2.7% plus $0.10. Both tools require a business account because they involve you handling the customer's card information directly.

Understanding PayPal's holds and processing times

PayPal does not instantly deposit credit card payments into your bank account. The money first lands in your PayPal balance, where you can use it to pay other people or transfer it to your bank. A bank transfer from PayPal to your account typically takes one to two business days, though it can take up to five.

New sellers and businesses with little transaction history may see PayPal place a hold on incoming payments for up to 21 days. PayPal does this to reduce fraud risk. If a transaction looks unusual — a very large amount, a customer in a different country, or a payment from a new customer — PayPal may also hold that specific payment. You can see which payments are on hold in your Activity section. Once the hold period ends, the money moves to your available balance.

If you need the money faster, PayPal offers an instant transfer option to your debit card (not your bank account) for a small fee, typically $0.25 per transfer. This gets the money to your card in minutes rather than days.

Comparing PayPal credit card fees to other payment processors

PayPal's 2.99% plus $0.30 rate for online payments is standard for small businesses, but it is not the only option. Stripe charges 2.9% plus $0.30 for online card payments. Square charges 2.9% plus $0.30 for online payments and 2.6% plus $0.10 for in-person card reader payments. Authorize.net charges a monthly gateway fee (around $25) plus per-transaction fees that vary by card type, usually between 2.29% and 3.48%.

The choice between PayPal and competitors often comes down to what you are already using. If you have a Shopify store, Shopify Payments is built in. If you use Square for in-person payments, Square Online integrates seamlessly. PayPal's advantage is that it works across invoices, buttons, and in-person payments with one account, so you do not have to juggle multiple platforms.

For very high-volume sellers, some processors offer lower rates if you commit to a monthly minimum or accept a longer settlement period. For most small businesses and freelancers, the difference between PayPal and competitors is less than 0.2%, so the choice usually comes down to ease of use and what your customers expect.

What happens when a customer disputes a credit card payment

When a customer disputes a credit card charge through their bank or card issuer, PayPal notifies you and may temporarily reverse the payment from your account. You then have the chance to respond with evidence that the transaction was legitimate — an invoice, a delivery confirmation, a message from the customer, or any other proof that you provided what you promised.

If the customer's bank rules in their favor, you lose the money and PayPal charges you a dispute fee (typically $20 to $25). If you win the dispute, the money stays in your account and you do not pay a fee. PayPal's dispute process usually takes 10 business days, though it can extend longer if the bank needs more information from you.

To protect yourself, keep records of every transaction: invoices, delivery confirmations, emails with the customer, and any communication about what was purchased. If you ship physical goods, use tracked shipping so you can prove delivery. For services, get written confirmation from the customer that they received what they paid for.

Frequently Asked Questions

Do customers need a PayPal account to pay me with their credit card?

No. When you send a PayPal invoice or they click a payment button on your website, they can enter their credit card details directly without creating a PayPal account. PayPal processes the card and they never need to log in.

Can I accept American Express and Discover cards through PayPal?

Yes. PayPal accepts Visa, Mastercard, American Express, and Discover. The fee is the same regardless of card type for most small business accounts, though some high-volume sellers may see different rates for different card brands.

What if a customer's credit card is declined?

PayPal tells the customer their card was declined and suggests they try a different card or contact their bank. You are not charged a fee for a declined payment. The customer can retry immediately or contact you to arrange another payment method.

How do I know if PayPal is holding my money?

Log into your PayPal account and go to your Activity or Transactions page. Payments on hold show a status of "Pending" with a note about when they will be released. You can also see the hold date in your account overview.

Can I refund a credit card payment made through PayPal?

Yes. Go to your Activity page, find the transaction, and click Refund. PayPal returns the money to the customer's card and reverses the fee you paid. The refund usually appears on the customer's card statement within one to three business days.