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  • Can I use Paypal for micropayments?

Can I use Paypal for micropayments?

December 5, 2005 / Dave Taylor / Computer & Internet Basics, PayPal Help / 8 Comments

Dave, I’m interested in selling lots of very small information products from my Web site, but I haven’t found a really good solution for transaction that are less than five dollars. I heard that Paypal is introducing micropayments, though, and am wondering if you know anything about it?

Great timing! My friend and colleague Kevin Savetz was just telling me how he uses a PayPal micropayments account on his Printable Certificates site, where he sells printable award certificates for $4. The micropayments rate saves him 17 cents per transaction compared to a regular PayPal account.
Here’s what he shared with me about Paypal micropayments:
Merchants who wish to use PayPal’s micropayments pricing need to open a new PayPal account through the account registration link below.
Merchants who receive both “macro” and “micro” payments should maintain two separate accounts: 1: to apply their standard rate to “macro” payments and 2: to apply the “micro” payments rate to their micropayments.
(However, having set up a second account for micropayments, I found that I couldn’t link it to my checking account: PayPal only allows one PayPal account to be linked to any checking account. The company is aware of this issue but doesn’t have a solution yet.)
Each PayPal account is associated with only one merchant processing rate. That rate determines the fee that’s applied to funds received into that account. For example: a standard Premier/Business Account rate for receiving funds is 2.9% + $0.30. Using PayPal’s 5% + $0.05 micropayments rate would reduce the total transaction fee charged to payments received below the value of $12 (per payment). However, if you accept payments that are greater than $12, you would pay a lower processing charge by accepting the payment into the account set with the 2.9% + $0.30 rate.
If you want to set up a PayPal account for accepting micropayments, you must use this URL to do it:
    Sign up for Paypal micropayments @ 5% plus 5 cents
(During and after creating the new account, I saw no special indication that it has micropayment pricing, but the customer service guy assured me that using the above URL means you’ll get micropayment pricing.)
Finally, the part about not being able to link two PayPal accounts to a single checking out is a real issue. If you don’t have a second checking account, cashing out means paying for them to cut you a check. The sneaky way to get around it is to use the Mass Pay feature on the micropayments account to transfer money to the regular account. (It costs less – 2% or $1, whichever is less.)
Thanks, Kevin, for that inside scoop!

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Starbucks coffee cup I do have a lot to say, and questions of my own for that matter, but first I'd like to say thank you, Dave, for all your helpful information by buying you a cup of coffee!

8 comments on “Can I use Paypal for micropayments?”

  1. Max says:
    July 24, 2010 at 9:02 pm

    Is this a phishing scam? It looks suspicious. paypal-labs.com why can’t they just make it paypal.com

    Reply
  2. Alex says:
    August 21, 2008 at 8:31 pm

    I just signed up. Thanks!

    Reply
  3. Franck Silvestre says:
    August 6, 2007 at 9:59 am

    Paypal is driving me crazy Dve. since I am with them, they keep limiting my account…

    Reply
  4. Bubba says:
    April 3, 2006 at 3:34 pm

    I upgraded my Paypal account to Business status. I want to accept micropayments. In fact, I would expect all of my sales to be $5 or less.
    So, how do I tell Paypal I want to accept micropayments?
    The only information provided about transaction fees lists the same old “1.9% to 2.9% + $0.30 USD” information.
    Literally, what the heck do I do next?

    Reply
  5. Kirt says:
    April 2, 2006 at 11:10 pm

    Hi there Dave-
    Great tip, but I cant open a business account there? Would you mind terribly checking out that posted link again, to see if I’m a retard or if there’s something I’m missing?
    Thanks! Great site/article/tip

    Reply
  6. Mark says:
    December 12, 2005 at 12:36 am

    I am in Germany and I tried to sign up for Paypal Micropayments but it won’t let me. Is Micro Payments only restricted to the US? If so, why? That is extremely unfair!

    Reply
  7. Dave Taylor says:
    December 6, 2005 at 8:50 pm

    You’re absolutely right. Fixed. Thanks. 🙂

    Reply
  8. informednews.com says:
    December 6, 2005 at 7:40 pm

    See the link ‘Sign up for Paypal micropayments @ 5% plus 5 cents’, it’s not working.

    Reply

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