[PayPal Payment Collection] One-Stop Tutorial + Revelation of Handling Fee | Reap

[PayPal Payment Collection] One-Stop Tutorial + Revelation of Handling Fee


4 min read

I'm sure you've heard of PayPal when looking up how to run an online store. This platform allows customers to pay by credit card, but do you know the other features of PayPal? Apart from the familiar benefits, what are the potential advantages and disadvantages of PayPal? Reap has put together a guide for you to use PayPal, so you can get a more comprehensive understanding of PayPal.

What is PayPal?

PayPal is an international trade payment service provider based in California, the United States. Users can simply register by email to pay online, replacing the slow and time-consuming remittance methods in the past. PayPal is now available in more than 200 countries. For online stores, PayPal serves as their Payment Gateway, allowing buyers to pay with their credit cards or PayPal account balance.

How does PayPal ensure the security of payments?

PayPal adopts the Payment Card Industry Data Security Standard (PCI DSS), which is a complete set of specifications for securing transactions. All businesses processing credit and debit card payments are required to comply with PCI DSS, regardless of the number or amount of transactions. The compliance with this standard reduces the risk of financial information misappropriation, identity theft, fraudulent payment and unauthorised transaction. As a matter of fact, PCI DSS is so prevalent that other existing payment platforms, like Reap, are also required to follow PCI's strict data protection guidelines and are continuously certified as PCI compliant.

PayPal Collections

PayPal offers a total of 5 ways for personal and business users to receive payments:

  • Share an email address linked with a PayPal account
  • Share a personal PayPal.Me link
  • Send a payment request directly to a friend/relative via email/text message
  • Add PayPal Checkout feature to your personal website
  • Send email invoices directly to customers

How do I start receiving payments via PayPal?

First, you must confirm your email address before you can start receiving payments. If someone pays you, you will receive an email notification. The first payment must be received manually by you, after which the system will automatically accept all payments received and deposit them to your linked PayPal account. PayPal has also launched a remittance tool called "PayPal.Me", where payees simply need to log in to their PayPal account and create a customised link for PayPal.Me. Customers can then click on the link and enter the amount to confirm payment. This feature is indeed more convenient and efficient than normal payment collection, nevertheless, it is not PayPal-exclusive. Different existing payment collection platforms, such as Reap, also provide a dedicated payment link service, and the collection handling fee is only 2.9% + HKD 2.35. Let’s compare the various platforms to see which one is more suitable for your business.

PayPal Collection Handling Fee

Conducting other types of business transactions, accepting donations from charitable organisations, or receiving payments through PayPal's "Request a Payment" function are all considered "business transactions" and PayPal will calculate the handling fee based on the "Business Transaction Rate" as follows:

Transaction Type

Handling Fee

Business Transaction

  • Local: 3.9% + fixed fee HKD 2.35
  • Overseas: 4.4% + fixed fee HKD 2.35

Large-value Payment

(Multiple payees in one go)

  • 2% of the total transaction amount
  • Cap: HKD 7 (local) / HKD 400 (overseas)

Small-value Payment

(Below HKD 5)

  • Local: 5%
  •  Overseas: 6%
  • Local Digital Products: 5.5% + Fixed Fee HKD 0.39

Currency Exchange (Balance and payment received)


PayPal Collection Time

If you are a new seller or have not used PayPal for a long time, there is a chance that general payments will be temporarily held by PayPal and cannot be used or remitted to your bank account. If there are no problems with the transaction (such as a refund or dispute), the amount will usually be available in your PayPal account within 21 days, or it may be available as soon as that night. If you wish to transfer the balance to a bank account, you need to submit a request-after processing the system instructions, it usually takes 3 to 6 working days for the money to be deposited into a bank account in Hong Kong. This shows that the time required for the entire PayPal collection process can fluctuate significantly, ranging from a few working days to nearly a month. We understand that small businesses need constant cash flow in order to continue their operation, so PayPal may not be the best choice given the time constraints. In comparison, existing payment platforms such as Reap are more convenient, as the payee does not need to have a Reap account to receive payments, where overseas remittances only take 3-5 working days and are also automatically credited to your bank account in Hong Kong. Reap’s platform grants us more flexibility to manage our payments as compared to PayPal’s varying verification time and complicated bank transfer process.

PayPal Withdrawal Limit

There is a withdrawal limit in PayPal. Users can log in to their PayPal account to view their personal withdrawal limit, which can only be removed by completing a series of information verification procedures, including bank account authentication or card linking and details confirmation. On other platforms, however, the process is not as perplexing. Other options, such as Reap, do not have a default withdrawal limit in the first place and customers can collect payments regardless of the amount, as long as they have sufficient credit on their credit card.

PayPal Collection Exchange Rates

At PayPal, overseas buyers can choose which currency they want to pay in, and they are responsible for a 4% currency conversion fee. As a seller, you should receive the same amount of money as the currency in your PayPal account. However, if the withdrawal process to your bank account involves currency conversion, e.g. transferring USD from your PayPal account to your HKD bank account, you will need to pay a currency conversion fee of 3% in addition to the basic handling fee, so you will need to pay a total of 7.4% + HKD 2.35 (4.4% + HKD 2.35 + 3%) for payment collection in foreign currencies.

If most of your customers are overseas buyers and need to receive foreign currency remittances, you may wish to consider other collection service providers such as Reap, where you can receive payments across borders with a handling fee of merely 3.9% + HKD $2.35 per payment with zero collection fee. What’s more, the amount you receive will be automatically credited to your bank account within 3 to 5 working days.

It is worth noting that the PayPal exchange rates include not only the wholesale exchange rates, but also the processing fee charged by PayPal, thus we can see that the PayPal exchange rates are higher than market prices. If you don't wish to be charged unnecessary or out-of-scope fees, you can in fact consider other existing options that allow you to receive foreign exchange at a lower cost.


As there are now a multitude of online payment platforms to choose from, you may wish to compare the pros and cons of the different options before moving on. Read this article Complete Guide to 7 best payment platforms for your eCommerce business to reduce the cost of payment collection!