Does Stripe or PayPal refund the processing fee if a client receives a refund?

Generally, neither Stripe nor PayPal returns the original transaction processing fee when you issue a full or partial refund to a customer. The merchant absorbs the loss of the original payment processing fee.

Merchant Fee & Net Payout Engine

PayPal & Stripe Fee Calculator

Q: What are the standard processing fees for PayPal and Stripe?

Standard domestic online credit card processing fees are generally 2.9% + $0.30 for Stripe and 2.99% to 3.49% + $0.49 for PayPal checkout. International transactions usually incur an additional 1% to 1.5% cross-border fee plus currency conversion margins.

Q: How do I calculate how much to invoice to receive an exact net amount?

To calculate the required invoice amount (gross charge) so that you receive an exact net amount after merchant fees, use the reverse fee formula: Invoice Amount = (Target Net Amount + Fixed Fee) ÷ (1 - (Percentage Fee ÷ 100)).

Q: What is the difference between domestic and international transaction fees?

Domestic transactions process cards issued in your registered business country. International transactions process foreign-issued credit cards, incurring additional cross-border assessment fees (typically +1% to +1.5%) and optional currency exchange spreads (up to 2% to 3%).

Q: Are payment processing fees tax deductible for businesses and freelancers?

Yes. Merchant gateway processing deductions from PayPal, Stripe, and credit card merchant acquirers are recognized business operating expenses in most tax jurisdictions and can be deducted against gross business receipts.

Calculate gateway fees, net in-hand earnings, or find the exact amount to invoice clients.

Payment Gateway

Calculation Goal

Currency

Standard Fee Rates Tap preset to load rate

Invoice / Sent Amount $

Transaction Size

Gateway % Rate %

Percentage Cut

Fixed Fee ($) per transaction

Fixed Charge

Net Amount You Receive in Bank

$485.20 -$14.80 Total Fee

Gross Invoiced $500.00 Client pays

Total Deducted Fee $14.80 Gateway cut

Net Payout $485.20 To your account

Effective Fee Rate 2.96% Total % taken

Revenue Retention Breakdown Net: $485.20 (97.0%) | Fee: $14.80 (3.0%)

You Keep (97.0%) Gateway Fee (3.0%)

Fee Breakdown for Common Transaction Sizes (2.9% + $0.30):

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E-Commerce & Freelance Billing Guide

About the PayPal & Stripe Fee Calculator

Online payment processors like PayPal and Stripe deduct transaction fees automatically before transferring funds to your linked bank account. For contractors, digital creators, and Shopify/WooCommerce sellers, failing to anticipate these merchant deductions results in smaller net payouts than expected.

1. Standard Payout Deduction Formula

Fee = (Gross Amount × Rate%) + Fixed Fee
Net Payout = Gross Amount - Fee

Calculates how much stays in your pocket when a customer pays an exact invoice amount.

2. Reverse Invoice Formula (To Receive Exact Net)

Invoice = (Target Net + Fixed Fee) ÷ [1 - (Rate% ÷ 100)]

Calculates the higher gross total to bill your client so you receive your full target amount after gateway deductions.

Why Does Effective Fee Rate Vary?

Because payment gateways charge a fixed per-transaction fee (such as $0.30 or $0.49) in addition to a percentage, micro-transactions experience a much higher effective percentage penalty:

On a $10 transaction with a 2.9% + $0.30 fee ($0.59 total fee), the effective cut is 5.9%.
On a $100 transaction with the same rate ($3.20 total fee), the effective cut drops to 3.2%.
On a $1,000 transaction with the same rate ($29.30 total fee), the effective cut converges toward 2.93%.

Frequently Asked Questions

What are the standard processing fees for PayPal and Stripe?

In the United States, standard domestic credit card processing rates are:
• Stripe: 2.9% + $0.30 per successful card charge (+1.5% for international cards, +1% if currency conversion is needed).
• PayPal: 2.99% to 3.49% + $0.49 for standard checkout transactions, and 4.4% + fixed fee for cross-border transactions.

How do I calculate how much to invoice to receive an exact net amount?

Simply adding 2.9% to your desired net does not work because the gateway takes 2.9% of the new, higher gross total. You must use the reverse formula:
Invoice Amount = (Target Net + Fixed Fee) ÷ [1 - (Rate% ÷ 100)]
For instance, to receive an exact $500 at 2.9% + $0.30: (500 + 0.30) ÷ (1 - 0.029) = 500.30 ÷ 0.971 = $515.24.

What is the difference between domestic and international transaction fees?

Domestic transactions occur when the customer's card was issued in the same country where your Stripe or PayPal merchant account is registered. If a client in Europe or Asia pays your US-based account, card networks charge an extra cross-border fee (typically +1% to +1.5%). If currency conversion is involved, an additional 1% to 2.5% spread is deducted.

Are payment processing fees tax deductible for businesses and freelancers?

Yes. In virtually all jurisdictions (including the US IRS, UK HMRC, Canada CRA, and India), merchant processing fees are recognized as ordinary and necessary business expenses. You report your gross revenue and deduct the cumulative processing fees as banking/merchant expenses.

Does Stripe or PayPal refund the fee when issuing a refund?

No. In accordance with current industry policies, neither Stripe nor PayPal returns the original transaction fee when a merchant issues a refund. You must repay the customer the full purchase price while absorbing the original gateway processing charge.