Sooner or later someone will say it to you: "Can you just send it as Friends and Family? It saves the fee." If you're the buyer, it sounds like a nice way to save a few dollars. If you're the seller, it sounds like you'll keep a bit more. In both cases it's worth stopping for a second.
The fee on a Goods and Services payment isn't just a charge for moving money. It pays for protection. Once you know what you'd be giving up, the choice gets much easier.
The short version
- Goods and Services costs the seller 2.99% for a domestic US payment and comes with buyer and seller protection.
- Friends and Family is free inside the US when paid from a PayPal balance or bank account, but it has no purchase protection.
- PayPal's terms say Friends and Family is not for buying or selling things.
- If you're selling, use Goods and Services, or a proper checkout or invoice.
What each option is for
Friends and Family is meant for sending money to people you know: paying back a friend for dinner, chipping in for a gift, or sending money to family. Nothing is being bought, so PayPal doesn't step in if there's a disagreement.
Goods and Services is meant for paying for something: an item from a seller, a commission from an artist, a design job from a freelancer. Because money is changing hands for a product or service, PayPal offers protection to both sides, and charges the person receiving the money a fee.
The fees side by side
| Goods and Services | Friends and Family | |
|---|---|---|
| Who pays | The person receiving the money | The person sending, only if they pay by card |
| Domestic US fee | 2.99% of the payment | Free from PayPal balance or linked bank |
| International | +1.5% on top | A fee applies for sending abroad |
| Purchase protection | Yes, for eligible purchases | No |
| Seller protection | Yes, for eligible sales | No |
| Allowed for selling? | Yes | No, per PayPal's terms |
Rates are from PayPal's US merchant fees page, last updated October 1, 2026. If your account is in another country, PayPal's fee page for your country will show your own rates.
What 2.99% looks like in real money
On a domestic Goods and Services payment of $100, the fee is $2.99 and you receive $97.01. On $250 it's $7.48. On $40 it's $1.20. There's no fixed fee on this payment type, so small payments aren't hit as hard as they are with PayPal Checkout.
If the buyer is in another country, add 1.5%. That makes it 4.49%, or $4.49 on $100.
You can check any amount in the PayPal fee calculator by choosing "Goods & services" as the payment type.
What the fee actually buys you
For buyers, Goods and Services means you can open a dispute if the item never arrives or is very different from what was described. PayPal looks into it and can refund you. With Friends and Family, there's nobody to complain to. If the seller disappears, so does your money.
For sellers, Goods and Services gives you a paper trail and, for eligible sales, seller protection against claims like "I never got it" when you can show proof of shipping to the right address. It also makes your income look like what it is: business income, recorded properly.
Why sellers should be careful with Friends and Family too
It's easy to think Friends and Family only puts the buyer at risk. It doesn't. A few things can go wrong for sellers too:
- Breaking PayPal's rules. Using Friends and Family to get paid for sales goes against PayPal's terms. Accounts that do it regularly can be limited.
- Card chargebacks. If the buyer funded a Friends and Family payment with a credit card, they may still be able to dispute it with their card company. You'd have no PayPal protection to fall back on.
- Looking less trustworthy. Experienced buyers know the risks. A seller who insists on Friends and Family makes some of them walk away.
Common scams to watch for
Most PayPal scams involve someone pushing the other person towards Friends and Family. A few classics:
- The "discount" seller. An item is listed well below market price, but only if you pay as Friends and Family. Once the money is sent, the seller vanishes.
- The fake payment email. As a seller, you get an email that looks like it's from PayPal saying you've been paid. Always log into PayPal directly to check. Never trust the email alone.
- The overpayment. A buyer "accidentally" sends too much and asks you to refund the difference. The original payment later turns out to be fraudulent, and you've lost the refund too.
A simple rule covers most of these: if someone you don't know insists on Friends and Family, say no.
So which one should you use?
- Splitting a bill or sending money to family? Friends and Family. That's exactly what it's for.
- Buying something from someone you don't know well? Goods and Services, every time.
- Selling things, even casually? Goods and Services, or a PayPal invoice or checkout. Build the fee into your price.
- Getting paid as a freelancer? Goods and Services or an invoice. See our guide on how to cover PayPal fees on invoices.
How to cover the fee without losing out
If you're a seller and the 2.99% bothers you, don't solve it by asking for Friends and Family. Solve it with your price. On a $100 item, the fee is $2.99. Raising your price to $103.08 means you'll receive almost exactly $100 after the fee. The PayPal fee calculator works this out for you in the "ask for this" box.
Most buyers would rather pay a few dollars more and be protected than save a little and have no way to get their money back.
Bottom line
Friends and Family is for friends and family. The moment you're buying or selling something, Goods and Services is the safer choice for both sides, and 2.99% is a small price for that safety. Build the fee into your prices, and treat anyone who pushes hard for Friends and Family as a warning sign.
Frequently asked questions
How much does PayPal charge for Goods and Services?
For a US PayPal account receiving a domestic Goods and Services payment, the fee is 2.99% of the amount with no fixed fee, based on PayPal's fee page updated October 1, 2026. On a $100 payment that's $2.99, so you receive $97.01. Payments from another country add 1.5%.
Can I use PayPal Friends and Family to sell things?
PayPal's terms say Friends and Family is for sending money to people you know, not for paying for goods or services. It also comes with no purchase protection. If you sell something and accept Friends and Family, neither you nor the buyer has PayPal's protection if something goes wrong.