PayPal to Adjust its Merchant Rates from August

PayPal (PYPL) has announced new rates for its merchant customers in the U.S. The adjustments show the company will charge 3.49% and a $0.49 fixed fee for online transactions using its branded services. This rate will apply to services like PayPal Checkout, PayPal Credit, and Pay with Venmo. Also included in this category are Checkout with crypto and Pay in 4 installment plans.

Online payments with debit and credit cards will cost 2.59% plus $0.49 for transactions without chargeback protection. Transactions with chargeback protection will cost 2.99% plus $0.49.

In-person payments using PayPal and Venmo QR codes will cost merchants 1.90% plus a $0.10 fixed fee for transactions above $10. The rates will be higher for transactions under $10 at 2.40% plus a $0.05 fixed fee.

Charity transactions will cost 1.99% plus $0.49. A charity will need to apply and obtain approval to enjoy this rate.

“We will continue to invest, innovate, and provide businesses with the tools and experiences they need to grow, convert, and retain customers,” said Dan Leberman, PayPal’s Senior Vice President of SMB and Partners.

PayPal’s revised merchant rates will come into effect starting August 2. It says the new rates align pricing with the value it provides. For example, when PayPal is available as a checkout option, shoppers are about three times more likely to complete a purchase. (See PayPal stock chart on TipRanks)

Credit Suisse analyst Timothy Chiodo recently reiterated a Buy rating with a price target of $315 on PayPal. The analyst’s price target implies 11.16% upside potential. Chiodo sees PayPal making more gains if travel continues to improve.

“From our analysis, we determine that, assuming travel (heavier within Braintree) continues to improve throughout the quarter, our TPV growth forecast for Q2 may prove conservative,” noted Chiodo.

Consensus among analysts is a Strong Buy based on 19 Buys and 3 Holds. The average PayPal analyst price target of $314.81 implies 11.09% upside potential to current levels.

PYPL scores a 6 out of 10 on TipRanks’ Smart Score rating system, suggesting that the stock is likely to perform in line with market averages.

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