UK charities comparing Square and PayPal in 2026 need a different frame from the US comparison: Square Payments closed to new UK sellers in 2023, PayPal has a reduced rate for HMRC-recognised charities, and neither handles Gift Aid automatically.
- Square Payments is no longer available to new UK sellers, so the real comparison is PayPal vs. UK in-person tools like SumUp, Zettle and GoodBox.
- PayPal offers a reduced rate for registered UK charities, but you must be HMRC-recognised and charity-registered to qualify.
- Neither PayPal nor Square automates Gift Aid declarations or files claims to HMRC Charities Online, a material gap worth £7.50 on every £30 donation.
- GoCardless, SumUp, Zettle and CAF Donate are the UK-realistic alternatives for charities already paying for a tool stack.
- Zeffy is 100% free for UK charities, handles Gift Aid, and replaces the whole tool stack at £0.
In this article:
UK reality check: Square, PayPal and the 2026 landscape
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| Online transaction fee | 2.9% + £0.30 (Plus/Premium); 3.3% + £0.30 (Free tier) | 1.99% + £0.49 (registered 501(c)(3)); 2.89% + £0.49 standard | £0 |
| In-person transaction fee | 2.6% + £0.10 | Via PayPal's in-person card readers; standard processing rates apply | £0 with Tap to Pay on iPhone |
| Nonprofit discount | No standard nonprofit discount | Yes, for verified 501(c)(3) organizations | No discount needed; always free |
| Chargeback fee | £0 | £20 | £0 |
| HMRC-compliant tax receipts | No | No (transaction confirmation only) | Yes, automatic |
| Built-in donor CRM | No | No | Yes |
| Platform fee | £0 on Free tier; £29+/mo on Plus/Premium | £0 | £0 |
Choosing between Square and PayPal is a question many US nonprofits face. For UK charities, the honest answer in 2026 is that the comparison has changed significantly. Square wound down its Payments product for new UK sellers in April 2023. If you visit squareup.com/gb today, you will find that Square Payments is not open to new UK sign-ups. Existing UK sellers were given a wind-down window; most have moved on.
That changes the frame entirely. The practical question for a UK small charity is: PayPal vs. dedicated UK payment tools (SumUp, Zettle, GoodBox) vs. a free all-in-one platform like Zeffy.
This guide walks through the 2026 fee maths in £, what the UK alternatives actually look like, and the one gap the whole comparison hides: Gift Aid. Neither Square nor PayPal automates a Gift Aid declaration or files a claim to HMRC Charities Online. On a £30 donation from a UK taxpayer, that gap is worth £7.50 to your charity (HMRC Gift Aid guidance).
The real cost: how much do charities lose to fees?
Fee maths gets abstract quickly. Here is what it looks like in pounds, using a £30 average gift and the current UK PayPal charity rate. For the canonical current rate, see the Zeffy vs. PayPal UK compare page (fees verified 2026-06-19).
On £10,000 raised
- PayPal (verified UK charity rate): On roughly 333 gifts of £30, the percentage and flat fees reduce what your charity keeps. See Zeffy vs. PayPal for the current rate and worked maths.
- Stripe UK (1.5% + 20p per transaction): On 333 gifts of £30, that is £150 in percentage fees plus approximately £67 in flat fees. Your charity keeps around £9,783.
- Zeffy: £0 in fees. Your charity keeps £10,000.
On £50,000 raised
- PayPal (verified UK charity rate): Fees apply on every transaction. Pull the current rate from the compare page to model your own scenario.
- Stripe UK (1.5% + 20p per transaction): On 1,667 gifts of £30, roughly £750 in percentage fees plus approximately £333 in flat fees. Your charity keeps around £48,917.
- Zeffy: £0. Your charity keeps £50,000.
Now layer in Gift Aid. For a £30 donation from a UK taxpayer, Gift Aid adds £7.50 to your charity at no cost to the donor. On £50,000 raised from Gift Aid-eligible donors using Zeffy (with Gift Aid automated), the Gift Aid top-up could add tens of thousands of pounds more over the year. Neither PayPal nor Square captures that for you automatically.
When PayPal makes sense for a UK charity, and when it does not
PayPal is a trusted checkout that many UK donors recognise. That familiarity reduces friction at the donate button, and that is a real advantage. For a small charity with a simple donate-page need, PayPal is straightforward to set up.
The honest limits are just as real, though. PayPal is a payment button, not a fundraising platform. It does not automate Gift Aid declarations. It does not offer ticketing, supporter management, auction tools, or a donor CRM. Most UK charities using PayPal end up paying separately for a supporter database (Beacon, Donorfy) and a ticketing tool (Ticket Tailor, TicketSource), and still processing Gift Aid claims manually.
To qualify for PayPal's reduced UK charity rate, your charity must be registered with the Charity Commission for England and Wales, OSCR (Scotland), or the Charity Commission for Northern Ireland, and must be HMRC-recognised. The application process is covered in the section below.
For the full UK fee breakdown, the Zeffy vs. PayPal compare page is the canonical source (verified 2026-06-19 from PayPal UK's official pricing).
In-person card payments for UK charities: what actually works
With Square Payments closed to new UK sellers, the real in-person toolkit for UK charities running fetes, quiz nights, and raffle stalls looks like this.
UK charities running community events consistently report that cash is dying. Supporters at summer fetes, church fairs, and village-hall quiz nights arrive without cash and expect to pay by card or phone. Per-ticket and per-transaction fees can price small charities out of affordable ticketing entirely.
Here are the UK options that actually work in 2026.
SumUp and Zettle
SumUp and Zettle (PayPal's in-person reader brand) are the dominant card readers at UK charity shops, fetes, and door collections. Both offer tap-to-pay card readers for under £30, no monthly fee, and sub-2% rates on most transactions. SumUp and Zettle both support tap-to-pay from a phone app, removing the need for separate hardware. For simple in-person payment needs at community events, either is a practical and affordable choice.
GoodBox
GoodBox makes purpose-built contactless donation devices (GBx) designed specifically for UK charities: churches, museums, visitor attractions, and street fundraising. The devices handle tap-to-donate directly on a physical unit, which can work well at unmanned giving points or high-footfall venues. See the Zeffy vs. GoodBox compare page for current UK fees (verified 2026-06-19).
Zeffy Tap to Pay on iPhone
Zeffy's Tap to Pay works on an iPhone with no card reader, no hardware purchase, and no per-tap fee. A volunteer with an iPhone can accept contactless cards and digital wallets at any event at £0 per transaction. For charities whose only reason to consider Square was the in-person micro-payment use case, Tap to Pay closes that gap at zero cost.
PayPal for charities: how to qualify for the reduced UK rate
PayPal publishes a reduced rate for verified UK registered charities. Without that discount, your charity pays the standard PayPal business rate on every donation. Here is how the verification process works.
Before you apply: confirm that the current rate and application path are live at paypal.com/uk. PayPal updates its charity programme documentation periodically, and the fee structure can change.
- 2. Obtain HMRC recognition. Your charity must be HMRC-recognised (a separate registration from the charity regulator) and hold an HMRC Charities Reference Number. This is the same recognition required to claim Gift Aid.
- 3. Apply through PayPal's charity programme. The application asks for your charity registration number, HMRC Charities Reference Number, and organisational details. Confirm the current application path on PayPal's UK charities page before starting.
- 4. Wait for verification. PayPal reviews charity applications manually. Approval typically takes a few business days but can run longer in busy periods.
- 5. Activate the reduced rate. Once approved, your account is flagged as a verified UK charity and the reduced rate applies to qualifying domestic transactions automatically.
Until that approval lands, every donation taken on PayPal is charged at the standard business rate. That is a real cost during the verification window, particularly if you launch a campaign before charity status is confirmed.
To compare Zeffy and PayPal side by side on UK fees, Gift Aid handling, and supporter management, visit the Zeffy vs. PayPal compare page. Zeffy's setup takes under 30 minutes for any registered UK charity, with no charity-programme application.
Feature comparison: what matters most for fundraising
Fees are the headline, but charity-specific features decide whether the platform actually fits the work. Here is how PayPal and SumUp/Zettle (the realistic UK in-person alternatives) stack up on the four things that matter most for UK fundraising teams.
Gift Aid handling
Neither PayPal nor SumUp/Zettle issues a Gift Aid declaration automatically or files a claim to HMRC Charities Online. They send transaction confirmations, which are not the same thing. Your charity is responsible for capturing Gift Aid declarations separately, processing them, and submitting claims manually or through a third-party tool. This is the largest single feature gap in any payment-only tool for UK charities. See the dedicated Gift Aid section below.
Supporter management and CRM
PayPal shows transaction histories; SumUp/Zettle show sales reporting. Neither maintains supporter profiles, segments giving history, or tracks lifetime value the way a fundraising CRM does. Most UK charities using these tools end up paying separately for Beacon or Donorfy (the two leading UK-built fundraising CRMs) to fill this gap.
Direct Debit and regular giving
Regular giving via Direct Debit accounts for around 31% of all UK charity donations, making it the single largest payment method in the sector. Neither PayPal nor SumUp/Zettle offers native Direct Debit. The standard UK route is GoCardless (1% + 20p per transaction, capped at £2; 25% charity discount available), which integrates into Beacon, Donorfy, and most UK fundraising platforms.
Restricted-fund and Fundraising Regulator reporting
Both PayPal and SumUp export transaction data as CSV. Neither tags donations by campaign, fund, or grant restriction natively. If your funders require restricted-fund reporting or your charity needs to demonstrate compliance with the Code of Fundraising Practice (current version effective 1 November 2025), you will need to add that reporting layer yourself.
Gift Aid: the biggest gap neither Square nor PayPal fills
Gift Aid is the central UK charity-tax mechanism, and it has no equivalent in the US article this page is adapted from. Understanding it is the difference between a complete and an incomplete analysis of payment tools for UK charities.
Here is how it works. When a UK taxpayer donates and signs a Gift Aid declaration, HMRC returns 25p to your charity for every £1 donated, at no extra cost to the donor. A £30 donation becomes £37.50 to your charity. A £100 donation becomes £125. The donor pays nothing more; HMRC makes up the difference from the donor's paid income tax (HMRC Gift Aid guidance).
What neither PayPal nor SumUp/Zettle does:
- Capture a Gift Aid declaration (name, home address, confirmation that the donor pays UK income tax) at the point of donation.
- Store declarations in a format ready for HMRC Charities Online submission.
- File a Gift Aid claim on your behalf.
If you use PayPal or SumUp as your payment tool, you must capture Gift Aid declarations separately (paper, a separate online form, or a bolted-on tool), keep records for at least six years, and submit claims manually to HMRC Charities Online. That is a real administrative burden that the percentage fee comparison does not capture.
Gift Aid Small Donations Scheme (GASDS) adds another layer. Charities can claim a 25% top-up on small cash and contactless donations of £30 or less, without a written declaration, up to £8,000 in eligible small donations per tax year. For a charity running summer fetes and quiz nights with contactless card readers, GASDS is material. Neither PayPal nor SumUp/Zettle helps you track or claim it.
Zeffy handles Gift Aid as part of the platform. Declarations are captured at the point of donation; your charity keeps a record for every eligible gift. The combination of £0 fees and Gift Aid automation is what closes the gap entirely for a typical UK charity.
The hidden costs neither platform tells you about
The published fees are only part of the picture. A few things that do not appear in the standard comparison:
- PayPal account holds and freezes. PayPal's risk system can hold funds or freeze accounts during unusual activity reviews. For a charity running a one-time Christmas appeal with a sudden donation spike, that can mean an unexpected hold right when the funds are most needed. Keeping documentation ready and maintaining a relationship with PayPal support reduces the risk but does not eliminate it.
- Hardware refresh costs (SumUp/Zettle). Card-reader hardware eventually needs replacing as payment standards evolve. Upgrading a small fleet of readers every few years is a recurring cost that does not show up in the percentage rate.
- Chargeback fees. PayPal charges per chargeback; SumUp and Zettle have their own dispute processes. For a charity that occasionally takes a disputed payment from a confused supporter, these add up.
- No UK-charity-specific support. Neither PayPal nor SumUp/Zettle staffs a dedicated UK charity support team. You are talking to general small-business support, who may not understand Gift Aid requirements, the Fundraising Regulator Code, small-society-lottery rules, or UK GDPR and PECR compliance for donor data.
- The bolt-on cost: Gift Aid tool, CRM, and reporting. Because none of these platforms handles Gift Aid declarations, supporter records, or restricted-fund reporting natively, most UK charities end up paying for a separate fundraising platform or CRM on top of their processor fees. That bolt-on stack quickly costs more than the percentage rate itself. A typical small charity might pay Ticket Tailor for ticketing, JustGiving or CAF Donate for donate pages, GoCardless for Direct Debit, and Beacon or Donorfy for supporter management. Zeffy replaces that entire stack at £0.
Better alternatives: payment tools built for UK charities
If the PayPal-vs-in-person-tools comparison leaves you with a tradeoff you do not want to make, here are the alternatives worth evaluating, ordered by fit for UK charity fundraising.
1. Zeffy
Zeffy is 100% free for UK charities, trusted by over 100,000 organisations that have collectively raised more than £2 billion through the platform. The only option in this comparison where your charity keeps 100% of every pound raised, at any donation size.
- Online donation forms, event ticketing, peer-to-peer fundraising, auctions, and Tap to Pay on iPhone: all at £0.
- Gift Aid declarations captured at the point of donation; records kept for every eligible gift.
- Built-in supporter CRM with retention dashboard.
- Setup under 30 minutes for any registered UK charity; no charity-programme application required.
2. Stripe UK
Stripe is the card-processing infrastructure that most UK fundraising platforms (including Zeffy) use under the hood. Its rate for UK cards is 1.5% + 20p per transaction, with a discounted rate available for verified charities processing a high proportion of donations. Like PayPal, Stripe is infrastructure, not a fundraising platform. UK charities using Stripe directly still need a donation form, Gift Aid tool, and supporter CRM on top.
- Competitive UK card rate for verified organisations.
- Strong developer API for custom donation flows; in-person via Stripe Terminal.
- No native Gift Aid handling, receipting, or supporter CRM.
3. GoCardless
GoCardless is the UK specialist for Direct Debit, the payment method behind approximately 31% of all UK charity donations. If regular giving is central to your fundraising strategy, GoCardless is the most important tool on this list.
- 1% + 20p per Direct Debit transaction, capped at £2. A 25% charity discount is available.
- Integrates natively with Beacon, Donorfy, ChurchSuite, and most major UK fundraising platforms.
- Not a full fundraising platform; pairs with a CRM and donation tool.
4. CAF Donate
CAF Donate is built by the Charities Aid Foundation, one of the UK's oldest charity infrastructure bodies. Used by over 8,000 UK charities for embedded donate buttons and Direct Debit giving.
- Low fees, no monthly subscription at entry level.
- Trust-first positioning; trustees will recognise the Charities Aid Foundation name.
- Reporting is more basic than commercial CRM alternatives.
5. Wonderful.org
Wonderful uses Open Banking (account-to-account transfer) to deliver genuinely 0% fees on donations. The donor authenticates via their banking app; the charity receives the full amount with no platform commission.
- 0% platform fee, 0% Gift Aid processing fee on Open Banking donations.
- Narrower reach than PayPal; conversion rates vary by donor age and banking app comfort.
- A strong option for digitally confident donor bases.
6. SumUp and Zettle
For in-person events, summer fetes, and raffle stalls, SumUp and Zettle are the dominant UK charity card readers. Both offer sub-2% rates, no monthly fee, and tap-to-pay from a phone app. Neither offers Gift Aid automation, donation forms, or a supporter CRM, but for simple in-person payment needs at community events, both are practical and affordable.
Why charities choose Zeffy over Square and PayPal
Zeffy is 100% free for UK charities, always. That is the line that closes the comparison. PayPal keeps a percentage of every online donation. SumUp and Zettle take a cut of every in-person tap. Zeffy keeps every pound in both columns.
Zeffy vs. in-person tools: the zero-fee alternative
SumUp and Zettle's strength is the card reader at the fete stall or charity shop door. Zeffy's answer is Tap to Pay on iPhone: no card reader, no hardware purchase. A volunteer with an iPhone can accept contactless cards and digital wallets at any event, and Zeffy charges £0 per tap. For charities whose only reason to use a card reader was the in-person event use case, Tap to Pay closes the gap without the percentage fee.
Zeffy vs. PayPal: the zero-fee online alternative
PayPal's strength is the trusted checkout that donors recognise. Zeffy's donation forms accept credit and debit cards, digital wallets, and direct bank transfer, with Gift Aid declarations captured automatically and a built-in supporter CRM. There is no charity-programme verification wait. Setup takes under 30 minutes.
The stacked-tool savings for a typical UK charity
Consider a village hall or community charity running a summer fete, an autumn appeal, a Christmas raffle, and a sponsored 5K. With conventional tools that means Ticket Tailor for ticketing, JustGiving or CAF Donate for the donate page, a separate tool for Gift Aid declarations, and Beacon or Donorfy for supporter management. Each tool has its own fee, subscription, or percentage. Zeffy consolidates all of that into one free platform, with Gift Aid handled, at £0.
That is the practical answer to the Square vs. PayPal question for a small UK charity in 2026.
Note: UK case studies for Zeffy are being gathered through our case-study programme. If your charity would like to share your story, get in touch.
Frequently asked questions
Is Square Payments available to UK charities in 2026?
Square wound down its Payments product for new UK sellers in April 2023. If you visit squareup.com/gb today, Square Payments is not open to new UK sign-ups. Existing UK sellers were given a wind-down window. For most UK charities looking at Square in 2026, the practical alternatives for in-person card payments are SumUp, Zettle, GoodBox, or Zeffy Tap to Pay on iPhone at £0 per transaction.
What is PayPal's charity rate for UK registered charities?
PayPal offers a reduced rate for verified UK registered charities. To qualify, your charity must be registered with the Charity Commission for England and Wales, OSCR (Scotland), or the Charity Commission for Northern Ireland, and must be HMRC-recognised for Gift Aid purposes. For the current verified UK charity rate, see the Zeffy vs. PayPal compare page (fees verified 2026-06-19 from PayPal UK's official pricing). Always confirm the live rate at paypal.com/uk before quoting it in donor communications, as PayPal updates its charity programme periodically.
Do PayPal or SumUp handle Gift Aid automatically?
No. Neither PayPal nor SumUp/Zettle captures a Gift Aid declaration at the point of donation or files a claim to HMRC Charities Online. If you use either as your payment tool, you must capture Gift Aid declarations separately, keep records for at least six years, and submit claims manually. On a £30 donation from a UK taxpayer, Gift Aid adds £7.50 to your charity. Zeffy captures Gift Aid declarations automatically as part of the donation form, so you never lose that uplift through an administrative gap. See HMRC's Gift Aid guidance for the full declaration requirements.
What is the Gift Aid Small Donations Scheme (GASDS)?
GASDS allows UK charities to claim a 25% top-up on small cash and contactless donations of £30 or less, without a written Gift Aid declaration, up to £8,000 in eligible small donations per tax year. For a charity running fetes, quiz nights, or church collections, GASDS is material. Your charity must be HMRC-recognised for at least two complete tax years to claim GASDS. See HMRC's Gift Aid guidance for full eligibility rules.
Can a community group, CIC or unincorporated association use Zeffy?
Yes. Zeffy is open to charitable organisations at all stages, including unincorporated associations, Community Interest Companies (CICs), and PTAs. Some features, such as automated Gift Aid, require HMRC recognition as a charity. If your group is not yet a registered charity, you can still use Zeffy's donation forms, ticketing, and in-person tools at £0. For guidance on the distinction between a registered charity and a community group or CIC, the Charity Commission and OSCR both publish clear guidance on their websites.
How does Zeffy make money if it charges charities nothing?
Zeffy is 100% free for charities: no platform fee, no transaction fee, no credit card fee. Zeffy is funded by optional voluntary contributions from donors at the point of giving. Donors are asked if they would like to support Zeffy; the contribution is completely optional. The charity always keeps 100% of every donation, regardless of whether the donor chooses to contribute to Zeffy.
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