PayPal Raises Prices; Will SMBs Look Elsewhere?

One of the most used Web-based payment services in the digital world, PayPal, dropped a virtual bombshell on the 'Net community this week with the announcement that sellers (retailers) will soon be seeing increased transaction costs.

For U.S. merchants, the payments company will be changing to a flat rate of 2.9 percent, plus 30 cents for domestic transactions (and 3.9 percent plus a fee that varies by country for international transactions) starting October 1, 2015.

The new structure eliminates discounts—which are frequently as low as 2.2 percent —for businesses with sufficient sales. Many of PayPal’s larger customers have existing contracts that won’t be affected by the change (at least in the immediate future).

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The digital payments business had 169 million users and processed 1.1 billion transactions in Q2 2015, with transaction volume up 27 percent from a year earlier.

There are, of course, plenty of alternatives to PayPal for those displeased with the rate change to consider. Website Magazine has written somewhat extensively on the topic of payment services, but some of the most popular alternatives today for developers looking for a reliable digital payment service include Stripe, 2Checkout, Amazon Payments, Authorize.net, PaySimple, Intuit's GoPayment and others.

Are you currently a PayPal merchant? What impact will the rise in transaction costs have on your business?