The One Tool I Use to Save $200 a Month on PayPal Fees

Want to get your freelance invoices paid faster and stop paying high PayPal fees? I explain how I save over $200 on invoicing payment fees with this one simple tool.

As a self-employed freelancer, it’s vital you use your time wisely, find ways to be more productive, and spend money on things that matter.

So when it comes to accepting payments virtually, why do we let online payment systems rob us of our hard-earned income? I talk to lots of freelancers each week and the one topic they always asking me about the best way to get paid without losing a large chunk of it to fees.

Sites like PayPal, charge anywhere from 2% – 6% to accept payments from clients using their service. And since this is the most widely accepted form of online payment, most clients request it.

After realizing I was tired of giving up my money to pay fees, I started looking for other options. I found a simple hack that will save you hundreds — yes, hundreds — of dollars in invoicing fees as a freelancer.

How to pay $0.50 per transaction with PayPal Business Payments

Many popular online invoicing tools, like FreshBooks, (which I use personally and highly recommend) have the option to click the PayPal business payment button when creating invoices for clients.

How does it work? Essentially they’ve worked out a deal, when your client pays the invoice via PayPal with their account balance or echeck you’ll only have to pay a $0.50 flat fee, instead of the usual 3ish percent.

freshbooks PP biz option example 2016

Beware though, this does not include a credit payment option. So in order to receive the $0.50 per invoice paid option your clients have to be willing to pay via this method only. However, it can be worth the savings (in my opinion and experience) and most clients don’t mind using this payment process at all.

This is mostly only available for U.S. currency but if your clients pay you using this method, it could potentially save you hundreds of dollars each year. The only way you can take advantage of this simple hack though, is to use an online invoicing service (like the ones mentioned above).

If you create an invoice directly through PayPal, or through QuickBooks, you won’t have access to this money-saving option.

Where to find the $0.50 in invoicing fees option

As I mentioned, Freshbooks is the invoicing system I have been using for almost three years now, and there are multiple reasons I love it.

Among the many features, are time tracking, creating estimates and sending professional invoices to clients. But I also use it for the simple feature of PayPal Business Payments, which is specifically helpful for us freelancers who run our own businesses.

Start by creating a new invoice

Click the “New Invoice” button to create a new invoice for a client, or you can replicate your template from a past invoice.

On the right-hand side of your new invoice, look under the Online Payment Options section and you’ll see the different payment options you currently offer your clients.

Choose the PayPal Business Payment option

Be sure to check the “business” PayPal Business Payment box under the PayPal tab when creating an invoice, and you’ll only be charged $0.50 per transaction — no matter how large your invoice.

Here’s how it works for me

So the process looks like this –> New Invoice –> Accept Payments Online –> check boxes for different payment options, the PayPal Business Payments option is under the PayPal tab.

You can’t use it with credit cards, only a direct transfer from a bank account. But most of my clients use this option and I’ve never had an issue. I also pay my small team of freelancers, and have a bookkeeper who helps me keep everything running smoothly.

We all use FreshBooks to clock our time with client projects, bill for expenses and services, and then receive payments each month. For the most part I bill out about $7,000 a month for client work. If you’re doing the calculating, I was originally wasting over $210 A MONTH in Paypal fees. ($7,000 x PayPal’s standard 3% = $210)

Yes, FreshBooks charges a small monthly fee to use their services (about $19-30 a month), although they do have a free service with less features. But that’s small change compared to the fees PayPal charges, and how much money you could save using this invoicing hack.

And if you’re still keeping track, I was losing out on nearly $2,500 a year paying invoicing payment fees. Talk about highway robbery! I also know another small business owner who use this service, and it helps saves her over $1,500 a year in fees.

With this simple feature — using a program that’s totally free no less — you can instantly give yourself a raise! Now you’ll be spending less time working and more time doing other more important things on your list of priorities.

If you’re still losing your hard-earned money to PayPal fees, consider signing up for FreshBooks and use this simple back to keep more of your hard-earned money!


Got any other invoicing payment hacks or tips? Leave a comment sharing your ideas so other freelancers can save money too!

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  1. This is my first time commenting, but I’ve been following your blog for a while and have found it HUGELY helpful!

    Just wanted to say thanks much for this explanation- I’ve heard about this method but wasn’t sure exactly how it worked. 2014 was my first year freelancing full time, so I wasn’t sure if something like Freshbooks would be worth the cost. But now that I’ve seen how much all those Paypal fees add up, it looks like Freshbooks would save me a ton of money!!

    May I ask why you recommend Freshbooks vs Harvest or Zoho?

    • Carrie says:

      Hi KeriLynn,

      Thanks for the first comment! I really appreciate your thoughts and kind words.

      Congrats on freelancing full time in 2014, it was also my first full year being my own boss. In my experience, FreshBooks has definitely been worth the cost as it’s saved me a lot of money in fees. I tried Harvest, but didn’t like the software as much as FreshBooks, and I haven’t personally tried Zoho. But I was thinking of doing some research to compare the them all and see how they stack up. Maybe I’ll post a comparison on the blog soon. Great idea! Thanks. 🙂

  2. QuickBooks has a similar service. Intuit PaymentNetwork charges me $.50/transaction when someone pays through their service. Within Quickbooks I create the invoice and get a unique URL for that invoice. I email the URL to the client and they pay online. I don’t accept credit card payments because Intuit will charge me the typical 3% fee, so my clients must pay via checking account, but most of my client’s don’t mind typing in their bank information.

    • Carrie says:

      Oh what a good tip, Carol. Thank you! I didn’t realize that QuickBooks offered this same type of thing, so I’ll be sure to include that in an upcoming article I’m writing about other types of payment systems. Mind if I quote you?

  3. Maggie says:

    When you use Freshbooks and a client pays with a credit card, aren’t you still charged the transaction fee from the credit card company? I am trying to figure out what the my best invoicing option is and I am just wondering if that was taken into account. Thank you!

    • Carrie says:

      Hi Maggie! Yes you are correct about this, which is why I suggest using the PayPal business payment option as often as possible. But there will be some clients who prefer to use a credit card as payment, which means you have to pay a transaction fee. But at least it’s part of the cost of doing business and can be deducted on your tax return every year. Hope that helps!

  4. Naomi says:

    Hi Carrie,
    Thanks for this article. As I work in AUD it doesn’t work for me right now. Here’s hoping they extend it to other currencies soon. Until then, I just have to write the fee off as a business expense.

  5. Kayla says:

    I wrote about this a month or so ago – I finally switched to Freshbooks because I realized that I was losing money by not making the switch. I did the math and even with having to pay to use Freshbooks, I would still be ahead by having less fees each month.

  6. Kelly says:

    Hi Carrie! I just came across your website and am finding it really helpful. I do have a question regarding the option to check PayPal Business. WHERE do you find this?! On my current invoicing, it only gives me an option to check a box that says “accepts credit cards.” I don’t see a PayPal option at all, let alone the business option.

    • Carrie says:

      Hey Kelly, great question! When you’re creating a new invoice it’s under the payment options box on the right-hand side.

      FreshBooks business payment example

      So the process looks like this –> New Invoice –> Accept Payments Online –> check boxes for different payment options, the PayPal Business Payments option is under the PayPal tab. You can’t use it with credit cards, only a direct transfer from a bank account. But most of my clients use this option and I’ve never had an issue. I still use this feature every month for my own invoicing!

  7. Chris Baker says:

    I think it’s worth noting that if you use Harvest, they make you wait 5 days to get your money after the client pays your invoice. It gets paid by Echeck for some reason so 5 business days. Do you know if the other services process your payments via Echeck? I would be willing to switch to Freshbooks if they process payments instantly instead of Echeck. I’ve had my verified business account for 5 years now so there’s no reason for them to be doing Echecks.

  8. Joe says:

    Thanks for the advice, but has anyone got this to work outside of the US?

    I’m in the UK and don’t seem to have this option in Freshbooks, but do have a PayPal Business Account.


  9. Cassandra says:

    The service seems to no longer do this PayPal option so I suggest you take it down.
    this post is completely irrelevant And I’m disappointed that after I signed up and sent out a few invoices I realize that my customers would still have to pay the exact same way with the 2.9% interest rate fee as PayPal in QuickBooks and every other service has.

    • Carrie says:

      Oh really? Sorry you haven’t been able to find this option, Cassandra. You can see from the screenshot in the comments above that the PayPal Business Payment option for $0.50 per transaction is STILL AVAILABLE. If you need additional help, shoot me an email.

    • Ryan says:

      Cassandra, this didn’t work for me at first, either. But then I realized it was because I didn’t have my PayPal account associated with my FreshBooks account. Once I clicked the “activate PayPal” link (in FreshBooks Settings –> Accept Credit Cards tab, scroll to bottom), I was able to associate my PayPal Business account with FreshBooks. When I went back to the invoice creation, the PayPal Business Payments option showed up as Carrie’s screenshot shows above. Hope this helps!

  10. Nick Berry says:

    Thanks for the tip!
    Freshbooks IS stupid easy to use, the people there are super nice (picked-up the phone on the first ring!) AND they post bios of their office dogs (3 of ’em) under the “About Us” tab.
    One thing that initially scared me off the base version was the 5 client limit.
    Turns out that’s 5 “active” clients. It’s apparently pretty easy to deactivate and re-activate clients and you still can access any invoices you’ve already created.

  11. Andrea says:

    Is this option also available for recurring invoices for clients who are on a retainer, or is it only an option for individual invoices created and sent manually?

  12. Tom says:

    FYI I was told just this week by a Freshbooks employee that Paypal Business Payments are not part of the new Freshbooks.

    “One thing to keep in mind is that we do not have PayPal as one of our payment processors within the new platform. We had a lot of feedback regarding the user experience with PayPal and found that most people preferred FreshBooks Payments (WePay) and Stripe.”

    I personally never had a problem with it and am pretty bummed to hear this. I was told for now I can stay with the old platform but who knows how long that’s going to last.

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