How To Avoid Paypal Fees And Send Money For Free

by Anil Polat · 37 comments

Sending money electronically is a source of convenience and frustration for travelers who want to move funds but not incur the roughly 3% fee Paypal tacks onto transactions. While not always effective, there are a few ways to move money to friends and make online payments without paying a cent in fees using several Paypal functions.

spare change

First, Know When Fees Are Applicable

Paypal doesn’t add fees to all transactions and most notably doesn’t charge you extra for making purchases online. When requesting money through Paypal however the rate is 1.9-2.9% and about that amount when sending money to others for personal purposes.

  • Extra fees are also added if the funds are coming from another country or if Paypal has to do any currency conversion.

You should check all of Paypal’s fee information from time to time, as it changes periodically. Ryan Olbe also has an excellent Paypal fee calculator.

paypal personal paymentsUsing eChecks

Paypal is best known for it’s nearly instant transfers but you can save quite a bit on fees by sending eChecks. Funds are taken directly from a linked bank account and once the money is drafted, (in 3-5 business days), your payment becomes available to the receiving party. What you sacrifice in speed, you make up for in fees, which are capped at $5, up to transactions worth $162. After that, all fees on eCheck are waived, eliminating them altogether.

Combining Personal And “Other” Payments

Perhaps the most straightforward way to send money without facing a Paypal fee is to send money as a “Personal” payment, making sure to select “Other” as the reason for payment. Paypal won’t add a fee to these types of transactions and if you can convince someone sending you money to do the same, you’ll end up will more money in your pocket as a result.

[photo by: justmakeit (spare change)]

{ 37 comments… read them below or add one }

1 Barbara @ Hole In The Donut Travels October 17, 2010 at 23:14

Anil: These are invaluable tips for me, as I conduct my entire business online using PayPal and the fees are a frustration, but a very necessary evil. Any way to reduce them is welcome. I currently have a client who paid me via eCheck. I assume your reference to saving fees above is for the sender in the case of eChecks, but I’m very curious to know if it has any impact on the recipient, so I’m going to monitor this one when the funds are released. Thanks!


2 Anil P. October 18, 2010 at 05:38

You’re welcome Barbara, I took me a while to get back around to this topic! As for eChecks the recipient shouldn’t face any fees but look forward to hearing your observations as well.


3 Barbara @ Hole In The Donut Travels October 19, 2010 at 03:28

First of all, LOVE, LOVE, LOVE the new logo. Second, just got my latest eCheck through PayPal and though they did deduct a charge, it was 2% instead of the normal 3% (or more, since this was sent from Germany), soit did save me some money. Think I’m going to request that my clients send me funds in the form of eChecks whenever possible. Worth waiting a few extra days to save the dollars.


4 Anil P. October 19, 2010 at 05:12

Thank you Barbara, it felt good to spruce up Tech Guide a bit 🙂 and glad to hear the eChecks saved you on the Paypal fees. They make me shudder a bit any time I see them!


5 metiko2010 November 11, 2010 at 11:49

Thank you for sharing this great article. I have some problem to ask.
The seller on the ebay said he want me to send the money by personal paypal like in this article. By doing this I couldn’t use ebay protecting for sure . So I would like to know. If this seller cheat me I could refund my money back? By using paypal policy.

Thank you very much!!


6 Anil P. November 12, 2010 at 05:26

If it’s a personal payment than unless something has changed you wouldn’t be able to initiate a refund. Well, you could but it would be up to the other party to approve it. In the case of eBay it’s probably best to pay the fee and have the protection.


7 David N June 28, 2011 at 10:05

Or, use bitcoin to pay. costs like a penny in fees.


8 Anil P. July 1, 2011 at 13:30

Hopefully a good alternative in the very near future.


9 Jevaughn Brown August 24, 2011 at 01:09

I have some money I want to send and I’ve been rereading PayPal’s fee structure and googling around looking for how to make sure I send it without incurring a fee. The “send money as a “Personal” payment, making sure to select “Other” as the reason for payment” tip is gold for me man. I had come to suspect as much, and now I have confirmation. 🙂
Thanks a lot Anil.


10 Anil P. August 27, 2011 at 13:31

You’re very welcome, enjoy!


11 Rachael August 29, 2011 at 12:50

Hi thanks for sharing the information! I have been sending and accepting money from people using paypal free of charge when I clicked the “GIFT” instead of “Other” option, but now I have a back up option if the other one fails!

I’m still fairly new to Paypal so can you tell me how to avoid fees when adding funds? I don’t want to pay 4.95 each time for the green=dot moneypak card, and I hear they also charge fees when linking it to a bank account; which method is the most money saving and convenient?


12 Anil P. August 30, 2011 at 20:25

Transferring to and from most bank accounts is without fees already but if you’re transferring from a card it depends on what method they’re using. I’m not sure a way around it in that case.


13 Elizabeth November 12, 2011 at 23:37

Do you have any experience with sending personal funds to countries in Africa. My boyfriend sends $ to his family in Nigeria via Western Union and they take a wopping $8 for $100 sent. Could Paypal work, and in that case how would they access the actual funds? Thank you so much.


14 Anil P. November 14, 2011 at 07:44

I don’t unfortunately but suspect if Paypal has a presence in Nigeria it would work much the same way. Create and account, link it to a banking number, and you’re good to go. The key is having the linked bank account to access the funds.


15 Sarah Northway January 21, 2012 at 14:36

Not sure if this only applies to international transfers but I’m trying to xfer from a Canadian Paypal account (paid for from a Canadian bank account) to a US Paypal account, and with “Personal” and “Other” selected Paypal still charges me a 1% fee. Plus their cad->usd exchange rate is 3% worse than the banks. :/


16 Anil P. January 21, 2012 at 21:06

You can also try the gift option, hopefully you’ll have better luck with that, sorry it didn’t work in your case :/


17 Irene November 21, 2012 at 14:04

if i send someone money in paypal under personal and other what if they don’t send me the merchandise? Can i file for dispute? I got the money taken and what i received was a piece of crap…


18 Anil P. November 26, 2012 at 06:25

You should file the dispute with the third-party company you used (if you did) as part of the transaction. They may be able to help you resolve the matter.


19 Diana January 22, 2013 at 06:07

Hello! I did not recieve an item I ordered 2 months ago on ebay so I opened a case and the seller gave me a refund. Yesterday the item arrived and I sent a message to the seller. He says to send him the payment back but I don’t know how. I want to use PayPal. Could you please tell me if I should use the Send Money option in PayPal and follow your suggestion in “Combining Personal And “Other” Payments” above? is it ok?

or I should select “Send Money” in PayPal > “This is a purchase of: Goods” > and pay ? (and in this case is it a fee for the transaction) ?

Thank you!
(ps: English is not my 1st language. Sorry for any writing mistake.:)


20 Anil P. January 22, 2013 at 14:31

I would go ahead and use the goods option and have the seller pay the fees since they didn’t deliver on time.

And your English is no problem and quite good!


21 Mtcoolj March 22, 2013 at 09:36

Hello there, after reading the above article and talking with the seller of the item I wish to purchase I’m sure I have a grip on this subject but I just want to make sure.

I’m purchasing an item from Malaysia from a seller I’ve dealt with before, the first item was of minimal value but this second item is of greater value. We’re looking around a four figure amount. He notified me when I pay to pay as “gift” to help him avoid some fees. Is this going to help him avoid all fees so he gets more bang for the buck or will there still be fees… The way I understand it is there’s no fees for using “gift” or “personal-other”?

Or is this different with International orders? Could I be fined by doing something wrong? Quite a few question lol, I just want to do the right thing. ANy answers would be aprreciated.

Thank you


22 Anil P. March 22, 2013 at 17:16

They’re likely trying to avoid fees though I would recommend going through the intermediary website for purchase protection.


23 Rob April 9, 2013 at 02:07

Hi Anil,
I have to pay for a Canadian sister-in-laws airfare from Canada to Istanbul. I am in Australia and have a PayPal a/c. I need to transfer the dollars to her so she can physically pay and pick up her tickets.
What would be the best way to get the dollars to her? Gift? Other?


24 Anil P. April 9, 2013 at 04:41

Hi Rob, the “Gift” option is the best way – and I’ve now noticed there is even a question as to whether you’re transferring funds to a family member, which also doesn’t carry any fees.


25 Rob April 10, 2013 at 03:35

Thanks Anil I will get back to you with my success or failure and any other tips I gather along the way.


26 Anil P. April 10, 2013 at 03:45

Thanks and good luck!


27 Brian April 23, 2013 at 13:14

The Personal and Purchase tabs (for Payment Type) seem to be gone. Now it asks two questions and you select either radio button:

What are you sending money for?

* I’m paying for goods or services
$0.00 USD fee. Free for you. The seller pays the fees.
Purchasing goods? Your eligible transactions covered with Buyer Protection

* I’m sending money to family or friends
$0.00 USD fee if you use your PayPal balance and/or a bank account.
$0.33 USD fee if you pay using your credit or debit card.


28 Anil P. April 29, 2013 at 05:47

Thanks for the update – it looks like the second option is a good choice for many who want to avoid paying fees.


29 Robbie O July 15, 2013 at 05:03


Me and my colleagues receive bi-weekly payment via paypal. We send [paypal] invoices to our client which he pay via Paypal. We are virtual agents/ web developers and all transactions are via Paypal.

Is there any way for Paypal to waive or at least reduce the fee when receiving “salary” via Paypal? Our client is from Australia, we are form the Philippines.



30 Anil Polat July 16, 2013 at 08:32

Unfortunately, I don’t believe so. Is another invoice/payment system an option?


31 John Smith November 14, 2013 at 00:58

I am sure a lot of people use the ‘family or friends’ tab for goods and services payments. Have you heard of anyone getting their account closed or such by Paypal for doing this?


32 Anil Polat November 18, 2013 at 11:25

I never have.


33 TuuS July 18, 2014 at 17:07

The personal (now called “friends and family”) option is the best way to send money if there is a level of trust between the buyer and seller. I sell hobby related items in an online forum and we have a much better method of handling disputes than paypal offers so there really is no need for their purchase or seller protection.

It’s also worthy to note if you use your paypal account for a business and you then sell your used home entertainment system for $5000 which is half what you paid for it, you’re going to get a 1099 form and the government is going to assume that $5000 was profit. If the money was sent using friends and family option that won’t happen, so in some cases your only option is to use that or not use paypal at all. The only other alternative would be to pay income tax on $5000 of income when its really a $5000 loss, or become a licensed reseller of electronics so you can deduct the cost of the equipment you sold and take an accounting course so you can get all the tax papers filed correctly lol Yeah… paypal just isn’t very friendly sometimes.

Also, the friends and family option isn’t available in some countries. I don’t have a complete list but I know it’s not available in Germany, Singapore, India and a few other locations.

ps. I used some random examples to effectively make a valid point here but if you seldom use your paypal account to receive money it shouldn’t be a problem for an occasional payment.


34 Val Frazier December 26, 2014 at 01:36

Thanks for the fee-saving insight!


35 Anil Polat December 29, 2014 at 06:06

You’re welcome!


36 Laxmipathy January 4, 2016 at 03:20


I provide monthly accounting services for my US client and he send money via paypal. But when I received a money every, the paypal team deduct a fee of $14.60 every month. Is there any to avoid fee of $14.60 every month. Please suggest me an answer.

Thank you,


37 Dele January 6, 2016 at 03:36

Anil; I just opened a paypal account in Nigeria. But its strange as I don’t get any option of either ‘purchase’ or ‘family and friends’ whenever I want to send money. Pls what is wrong with my account?


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