Payment Service Providers

PayPal Business Account vs Personal Account: Which Is Best for You?

Read Time: 6 min

As PayPal continues its dominance in the payment industry, understanding the differences between PayPal Personal and Business accounts is important for merchants. Business accounts and Personal accounts offer different benefits to business owners. Wondering which account is right for you? We’re here to help! In this article, we explore how these account types differ while identifying the advantages and disadvantages of each.

PayPal Personal vs Business: How Do They Compare?

graphic of a person using a paypal personal account on their mobile device to pay for goods

Generally speaking, PayPal Personal and Business accounts have different target demographics. A PayPal Personal account allows a user to send or receive money, functioning mostly as a peer-to-peer payment platform. On the other hand, a PayPal Business account offers merchants a unique way to manage their business and facilitate their operations, functioning as a payment service provider. While that explains the cursory difference between a Business and a Personal account, below takes an in-depth look at each of these account’s offerings.

PayPal Personal Account

As a relatively simple type of account, PayPal Personal is best suited for users looking to send money to individuals within their network, make online purchases, or split payments. However, as a merchant, you can utilize the Personal account within your operations, but its features won’t be enough to fully support your business. That being said, if you’re a self-employed freelancer, you may find the Personal account to be a better option as there are no additional fees.

If you decide to go with a Personal account, please note that your personal name will be displayed on bank transactions, as you cannot use your business name for this type of account. Additionally, a Personal account doesn’t offer in-person payment options; it only supports electronic transactions.

To create a PayPal Personal account, you must provide your full name, email address, mailing address, phone number, credit or debit card information, and bank account number.

PayPal Business Account

Essentially, a PayPal Business account is an upgraded version of the PayPal Personal account. Its additional features are designed to help you meet your customer’s needs on a daily basis. One such additional feature is invoicing capabilities that seamlessly integrate with your accounting software. If you don’t have accounting software, you can still send invoices directly through PayPal’s platform.

One of the biggest advantages of PayPal Business over PayPal Personal is that you can accept online and in-store payments, as well as set up monthly subscription services for your business. Some smaller, but equally important features include transaction management, label printing, tracking options, 24/7 customer support, and PayPal Credit eligibility. Additionally, a PayPal Business account allows you to access the PayPal Seller Protection Program, which helps merchants mitigate fraud and avoid frustrating PayPal chargebacks.

To open a PayPal Business account, you must provide the same information that you would for a Personal account, as well as your business’s name, address, phone number, and bank account routing number.


Differences Between PayPal Personal and Business

PayPal PersonalPayPal Business
Domestic In-Person Payments FeeNo fee2.59% + $0.49 per transaction
Domestic Online FeeNo fee 2.59% + $0.49 per transaction
Usage PayPal Personal is great for shopping online, splitting bills, and for freelancers who sell their work or service infrequently.PayPal Business is built to support small- or medium-sized businesses. Its suite of features helps to streamline business operations.
FeaturesSend and receive electronic payments with no fees, purchase goods and services, and sell products.Personalized account features include inventory and profit tracking, label printing, payment tracking, subscription services, 24/7 customer support, invoicing, and more.

PayPal Business Account vs Personal Account: Pros and Cons

Business Pros

  • Accept online, in-store, and recurring payments
  • A suite of business features, such as inventory tracking, invoicing, etc.
  • Use your business’s name trading name
  • 24/7 customer support

Business Cons

  • Fees incurred on each transaction
  • Downgrading from a Business to a Personal account is only available with customer support
  • Expensive chargeback fees for merchants
  • Does not support high-risk merchants*

Personal Pros

  • No subsidiary fees such as setup, monthly, and termination costs
  • No charges for transfers from a linked bank account, PayPal Cash, or PayPal Cash Plus
  • No merchant fees for selling goods and services
  • Straightforward and easy to use

Personal Cons

  • Accepting credit and debit cards online may be subject to fees
  • Instantly accessing funds incurs a 1% fee
  • The occurrence of frozen accounts and withheld funds has been reported
  • Limited features do not adequately support business operations

*High-risk business face an increased likelihood of violating PayPal’s terms of service, which can result in PayPal account termination. Such businesses should secure a high-risk merchant account to access the necessary payment processing support.


PayPal Personal vs Business Fees

PayPal PersonalPayPal Business
Receiving domestic transactionsNo fees2.59% + $0.49 per transaction
Online domestic transactionsNo fees2.59% + $0.49 per transaction
Receiving international transactions4% currency conversion fee + 1.5% international transaction fee + fixed currency fee 4% currency conversion fee + 1.5% international transaction fee + fixed currency fee
Invoicing N/A3.49% + $0.49 per transaction
Standard Credit and Debit Card PaymentsNo fees2.99% + $0.49 per transaction
Donations2.89% + $0.49 per transaction2.89% + $0.49 per transaction
Withdrawal feesLocal Account: No fee; Instant Account and/or Cards: 1.75% of the amount transferredLocal Account: No fee; Instant Account and/or Cards: 1.75% of the amount transferred
Chargeback N/A$20 chargeback fee

Note: For a comprehensive breakdown of fees incurred by business owners utilizing PayPal’s platform, please refer to our post detailing PayPal’s fees for merchants.


Is PayPal Personal or PayPal Business Better?

graphic of a bag of money to represent payment for paypal business or personal accounts

Ultimately, choosing between a PayPal Personal or PayPal Business account depends on how you plan on using your account. A Personal account can satisfy your payment needs if you plan to use it for splitting expenses, sending or receiving funds within your network, or occasionally selling your products. However, if you’re a merchant seeking a platform to facilitate daily transactions, you would most likely benefit from a Business account. While Business accounts are subject to additional fees, it’s a small price to pay for additional features that will streamline your operations and help your business run more efficiently.

PayPal Business Account vs Personal Account: Final Thoughts

After learning about the two types of PayPal accounts, you’ve now gained some insight into the characteristics of each—hopefully helping you decide whether a PayPal Business or PayPal Personal account is best for your business practices.

As there are many different business models out there, each best supported by a payment solution meeting its specific needs, you should really weigh the advantages and disadvantages of all payment solution providers, not just PayPal. For many businesses, obtaining a customized merchant account through a merchant services provider can be the best way to go. With so many choices in today’s payments industry, don’t settle for the most well-known, but rather the most well-equipped for your business’s needs!

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FAQs About PayPal Personal vs Business Accounts

Can I use Personal PayPal for business?

You can use PayPal Personal for business, however, it’s not recommended.

Can I use PayPal Business for personal reasons?

Yes, you can. PayPal Business offers the same features as a Personal account, plus a lot more. However, you’ll have to use your PayPal Personal account if you don’t want to pay fees.

Can I use PayPal Business for in-person payments?

Yes, PayPal Business allows in-person payments with a fee of 2.59% + $0.49 per transaction. The same fee applies to online transactions.

Can I have a Personal and Business PayPal account?

You can have two different types of accounts registered under the same user, but these accounts need to be associated with separate email addresses.

Do I need a Business PayPal account to sell on eBay?

No, you don’t. You can use a Business or Personal account to sell your products on eBay.

How can I turn my PayPal into a Business account?

You can turn your PayPal Personal account into a Business account in three steps:

  1. Navigate to settings, then select “Upgrade to a business account.”
  2. Provide the necessary business information.
  3. Click “Agree” and continue.

How do I know what type of PayPal account I have?

If there isn’t an option to upgrade your account on the left-hand side near the bottom of your interface, you currently have a Business account. If there is an option to upgrade to PayPal Business, you have a Personal account.

Which PayPal account should I choose?

Choosing the best account for your needs depends on whether you’re a merchant or an individual who doesn’t need additional business features.

Should I use a Paypal Personal or Business account for freelancing?

Most freelancers opt for a PayPal Personal account as they don’t need special business features. Plus, it comes with no fees for selling goods and services!



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