PayPal charges UK charities a reduced charity rate per donation, but fees add up fast, Gift Aid is not handled automatically, and there is a completely free alternative.
- PayPal's UK charity rate is lower than its standard business rate, but the flat fee per transaction punishes small donations hardest.
- To access the charity rate you need to be both registered with the Charity Commission, OSCR or CCNI and separately HMRC-recognised.
- PayPal does not collect a Gift Aid declaration or submit claims to HMRC Charities Online, every £1 raised without a separate workflow leaves 25p on the table.
- Zeffy charges UK charities £0 in platform, transaction and credit card fees, and handles Gift Aid claims directly through HMRC Charities Online.
Every pound PayPal takes is a pound that does not reach your mission. PayPal's UK charity rate is lower than its standard business rate, but fees feel small until you run the numbers on a full year of fundraising. This guide shows you exactly what PayPal charges UK charities, what those fees cost in real programme pounds, and what your options are if you want to keep every penny you raise.
In this article:
How much does PayPal charge UK charities?
UK charities that qualify for PayPal's charity rate pay 1.4% + 20p per domestic transaction (verified from the Zeffy vs PayPal compare page; re-verify on PayPal's UK merchant fee page before publishing). That is the discounted rate for charities registered with HMRC. Without it, you pay the standard business rate, which is higher.
To qualify for PayPal's charity rate you must be registered with the Charity Commission for England and Wales, OSCR (Scotland) or CCNI (Northern Ireland), and separately HMRC-recognised for Gift Aid purposes. These are two distinct registrations: one with your charity regulator and one with HMRC. Your charity will have a registered charity number and a separate HMRC Charities Reference Number.
Here is how the charity rate breaks down on common donation amounts:
|
| £10 | 34p | £9.66 |
| £25 | 55p | £24.45 |
| £50 | 90p | £49.10 |
| £100 | £1.60 | £98.40 |
| £250 | £3.70 | £246.30 |
| £500 | £7.20 | £492.80 |
| £1,000 | £14.20 | £985.80 |
The flat 20p fee is what hurts small donations most. A £10 gift loses over 3% before it reaches your cause. International donations cost more: PayPal adds a cross-border percentage on top of the domestic rate, and fixed fees vary by currency.
PayPal fee calculator
Use the calculator below to see exactly what PayPal takes from your charity's fundraising and what you would keep with Zeffy at £0 in fees.
What PayPal fees really cost in programme pounds
Percentages feel abstract. Real programme losses do not.
|
| £10,000 | ~£160 | One term of after-school-club snacks |
| £25,000 | ~£400 | A foodbank collection round |
| £50,000 | ~£800 | A part-time volunteer coordinator for a month |
| £100,000 | ~£1,600 | A village-hall accessibility upgrade |
| £250,000 | ~£4,000 | Small-grant top-ups to five local causes |
On £50,000 in annual donations, PayPal takes roughly £800. That is money your donors intended for your mission, not for a payment processor.
Full PayPal charity fee chart (2026)
PayPal's fee structure has several layers. The charity rate is the starting point, not the whole picture. Re-verify all figures on PayPal's UK merchant fee page before publishing, as rates change.
|
| Charity rate (registered UK charity, domestic UK card) | 1.4% + 20p |
| Standard business rate (no charity status confirmed) | 2.9% + 30p |
| International / cross-border transaction (added on top of domestic rate) | +1.29% to +1.99% depending on card country |
| Zettle (card-present, UK) | Verify current rate at paypal.com/uk/zettle |
| Zettle manual card entry (UK) | Higher than card-present rate; verify live |
| PayPal Giving Fund (see section below) | 0% platform fee (conditions apply) |
Note that the standard Donate Button, the most common integration for charity websites, may charge the standard business rate rather than the charity rate unless you have completed PayPal's charity enrolment and are using the specific charity checkout flow. Confirm which rate your integration uses.
Is PayPal Giving Fund really free?
PayPal Giving Fund processes donations with 0% in platform fees, and it can look like an easy solution. But there are real costs that do not appear in the fee column.
What PayPal Giving Fund UK actually does
When a donor gives to your charity through PayPal Giving Fund UK (through eBay charity listings, Facebook fundraisers, or PayPal's own charity search), the donation goes to PayPal Giving Fund UK first, not to your organisation. PayPal Giving Fund UK is itself a separately registered UK charity (searchable on the Charity Commission register) that then regrants the money to you.
PayPal Giving Fund UK claims Gift Aid on the donor's behalf and passes the 25p-per-£1 uplift on to your charity. That means the Gift Aid still reaches you. However, the donor relationship is between the donor and PayPal Giving Fund UK, not your charity, and the consequences of that are significant.
The real catch
- You lose donor data. The donor's name and home address are not shared with your charity. You cannot steward that donor, send a thank-you, or issue your own Gift Aid declaration for any future direct gift.
- You cannot claim Gift Aid on repeat gifts made directly to you. Without the donor's address on file, your charity cannot process a Gift Aid declaration for subsequent donations outside the Giving Fund. That 25p per £1 uplift is gone on every future direct gift.
- Disbursements are delayed. PayPal Giving Fund UK batches and releases funds on its own schedule (monthly to UK bank accounts). You do not control when the money arrives.
- PayPal controls eligibility. If your charity status lapses or PayPal decides your organisation does not meet its criteria, donations can be redirected to other causes.
For one-off matched-giving campaigns where donor data is not critical, the 0% fee is useful. But if you are using the Giving Fund as your primary donation channel, you are trading fees for something arguably more valuable: your donor relationships and your Gift Aid pipeline.
How much does PayPal take from donations?
The short answer: at the charity rate, PayPal takes 1.4% plus 20p on every domestic donation. On a £50 gift, that is 90p. On a £25 gift, it is 55p.
That seems small. Here is what it adds up to:
- At £10,000 a year raised, you lose roughly £160 to fees.
- At £50,000 a year, you lose roughly £800.
- At £100,000 a year, you lose roughly £1,600.
And that is only the charity rate. If a board member manually enters a card through Zettle, the rate is higher (verify the current Zettle UK manual-entry rate at paypal.com/uk/zettle). If your Donate Button is not configured to use the charity checkout flow, you are paying the full standard business rate.
There is also a Gift Aid angle that no percentage chart captures. On a £50 gift with Gift Aid, HMRC adds £12.50 through Gift Aid, but you only capture that uplift if you (not PayPal Giving Fund) hold the donor's declaration. If the donation came through a standard PayPal button with no Gift Aid declaration collected, that £12.50 simply does not happen.
The hidden costs most UK charities do not expect
The fee chart tells you the rates. It does not tell you about the situations that catch charity finance teams off guard.
Account holds on large gifts
PayPal's fraud systems flag unusual activity, including major gifts. Charities report having accounts frozen after receiving a large donation following a campaign spike. While PayPal reviews the activity, your funds are inaccessible, a cash flow problem at the worst possible moment.
Chargebacks
PayPal's Seller Protection does not cover donations. If a donor disputes a charge, you absorb the chargeback fee on top of losing the donation amount. Charities that receive donations from unfamiliar donors, through viral campaigns, for example, are especially exposed.
No donor segmentation
PayPal was not built for charities. You cannot segment donors by programme interest, giving capacity, or engagement history. That limits your ability to send targeted appeals and costs you in retention over time.
Manual card entry costs more
If a board member takes a phone donation and manually enters the card through Zettle, that transaction hits a higher rate than card-present processing (verify the current Zettle UK manual-entry rate on paypal.com/uk/zettle). Manual card-entry payments are also not covered by Seller Protection.
Gift Aid is not handled
PayPal does not collect a Gift Aid declaration, does not store one against the donor record, and does not submit a claim to HMRC through Charities Online. Every £1 raised through a standard PayPal button without a separate Gift Aid workflow is 25p left with HMRC. On a £100 gift, that is £25 your charity never sees. Over a year of fundraising, the Gift Aid gap can dwarf the platform fee gap.
UK GDPR gaps
PayPal's donor data flow is opaque for UK charities. If you use PayPal Giving Fund as an intermediary, you must document your lawful basis under UK GDPR (governed by the ICO) for any downstream marketing communications. Without the donor's address on file, legitimate-interest or consent bases are difficult to establish for future contact.
How can UK charities avoid PayPal fees?
You have a few options, depending on how much you are willing to change your setup.
Option 1: Confirm your charity rate
If you are already using PayPal and have not enrolled in the charity rate, start there. You need a PayPal Business account and evidence of registration with the Charity Commission, OSCR or CCNI, plus confirmation of your HMRC charity recognition status. The review takes a few business days. This gets you from the standard business rate down to 1.4% + 20p, meaningful savings, but not zero, and Gift Aid still requires a separate workflow.
Option 2: Use PayPal Giving Fund for specific campaigns
For campaigns where donor data is not critical, a one-time giving day or an eBay charity listing, Giving Fund's 0% fee is useful. Understand that you will not own the donor relationship and your charity's own Gift Aid claims on those donors will be limited for future direct gifts. Do not use it as your primary donation channel.
Option 3: Switch to a zero-fee platform
This is the only option that eliminates fees entirely. Zeffy charges £0 in platform, transaction or credit card fees. Zeffy is 100% free for UK charities. More than 100,000 charities worldwide have raised over £2 billion through Zeffy with £0 going to fees.
Zeffy submits Gift Aid claims directly to HMRC through Charities Online, so the 25p per £1 uplift lands in your account without a separate workflow. With Zeffy, UK charities get:
- Customisable donation forms
- Automatic donation acknowledgements with your registered charity number
- Tap to Pay for in-person donations
- Accepts all major credit cards, Apple Pay, Google Pay, bank transfer and cheques
PayPal vs Stripe fees for UK charities
This comparison comes up regularly in charity communities. Here is a clear side-by-side, including GoCardless, the UK's dominant Direct Debit provider, used in roughly 31% of all UK charity donations.
|
| PayPal (charity rate) | 1.4% + 20p | Requires Charity Commission/OSCR/CCNI registration and HMRC recognition. No Gift Aid handling. |
| Stripe (standard UK rate) | 1.5% + 20p | No published standard UK charity discount; some charities negotiate custom rates. No Gift Aid handling. |
| GoCardless (Direct Debit, charity rate) | 1% + 20p, capped at £2 | 25% charity discount available. Charity must apply. Best for regular giving by Direct Debit. |
| Zeffy | £0 | No platform fee, no transaction fee, no credit card fee. Gift Aid claims submitted via HMRC Charities Online. |
PayPal's charity rate is slightly lower than Stripe's standard UK rate on the percentage, and the flat fees are the same. On a £15 donation, PayPal takes 41p (2.7%) and Stripe takes 42.5p (2.8%), neither is £0. GoCardless is the strongest option for regular giving by Direct Debit, but it is a payment processor, not a fundraising platform.
The real difference is not between PayPal and Stripe, it is between either and Zeffy. On £50,000 a year in donations, the saving is roughly £800 in fees, plus the Gift Aid you capture that PayPal never helped you claim.
A payment processor is not a fundraising platform. Zeffy is.
Zeffy is used by UK charities from PTAs to village halls, with Gift Aid built in.
Frequently asked questions
Is PayPal free for UK charities?
No. PayPal charges UK registered charities a reduced rate of 1.4% + 20p per domestic transaction (verify the current rate at the Zeffy vs PayPal compare page or PayPal's UK merchant fee page). Without charity enrolment, you pay the standard business rate, which is higher. PayPal Giving Fund processes donations at 0% platform fee, but comes with significant trade-offs around donor data and Gift Aid (see the section above).
How do I apply for PayPal's UK charity rate?
You need a PayPal Business account, evidence of registration with the Charity Commission for England and Wales, OSCR (Scotland) or CCNI (Northern Ireland), and confirmation of your HMRC charity recognition status. These are two separate registrations: your charity regulator issues your registered charity number, and HMRC issues your Charities Reference Number separately. Submit both to PayPal when applying. The review typically takes a few business days.
Does the PayPal Donate button use the charity rate?
Not automatically. The standard PayPal Donate button may apply the full business rate unless your account has completed PayPal's charity enrolment and is configured to use the specific charity checkout flow. Check which rate your integration is using in your PayPal account settings. If you are unsure, contact PayPal support and confirm the rate applied to your last ten transactions.
What happens if PayPal puts my charity's account on hold?
PayPal's fraud systems can freeze accounts flagged for unusual activity, including donation spikes after a campaign goes viral or a large single gift. When an account is on hold, your funds are inaccessible while PayPal reviews the activity. This can create a serious cash flow problem for small charities. You will need to contact PayPal support directly with documentation confirming the legitimate source of the donations. To reduce the risk, keep your account information up to date, maintain consistent donation patterns where possible, and have a contingency payment route ready.
Is there a completely free alternative to PayPal for UK charities?
Yes. Zeffy charges UK charities £0 in platform fees, transaction fees and credit card fees. Unlike PayPal, Zeffy handles Gift Aid claims directly through HMRC Charities Online, so you capture the 25p per £1 uplift without a separate workflow. Zeffy covers fundraising, ticketing, memberships, raffles, auctions and donor management in one free platform. You can compare the two in detail on the Zeffy vs PayPal page.
How does PayPal compare to Stripe for UK charities?
Both charge similar rates for UK card transactions: PayPal at 1.4% + 20p (charity rate) and Stripe at 1.5% + 20p (standard UK rate; Stripe does not publish a standard charity discount in the UK). Neither handles Gift Aid automatically. For regular giving by Direct Debit, GoCardless at 1% + 20p (capped at £2, with a 25% charity discount) is more cost-effective. For charities wanting to eliminate fees entirely and gain Gift Aid handling in one platform, Zeffy is the only option at £0.
Does PayPal handle Gift Aid?
No, not through a standard PayPal integration. PayPal does not collect a Gift Aid declaration from donors, does not store declarations against donor records, and does not submit claims to HMRC through Charities Online. Every £1 raised through a standard PayPal button without a separate Gift Aid workflow means 25p that never reaches your charity. On £10,000 raised, that is £2,500 left unclaimed. PayPal Giving Fund UK claims Gift Aid on the donor's behalf and passes the uplift on, but the donor's address is not shared with your charity, limiting your ability to claim Gift Aid on any future direct gifts from that donor.
Does PayPal Giving Fund pass Gift Aid to my charity?
Yes, but with important caveats. PayPal Giving Fund UK is a separately registered UK charity that claims Gift Aid on donors' behalf and passes the 25p-per-£1 uplift on to your charity. The Gift Aid uplift does reach you. However, because PayPal Giving Fund UK does not share the donor's home address with your charity, you cannot set up your own Gift Aid declaration for that donor's future direct gifts. If they later donate to you directly, through your website or at an event, you have no declaration on file, so you cannot claim Gift Aid on those donations. Over time, this donor-data gap compounds your Gift Aid losses.
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