PayPal is one of the leading payments solutions worldwide, trusted by millions of people across the globe. Wondering how to use PayPal in South Africa? Or how does PayPal work in South Africa? In this article, we’ll see how to create a PayPal account and use it to receive payments online in South Africa.
PayPal is a world-leading payment solution, trusted by millions of customers and businesses. It is a great way to receive payments online for your online store or your business. But how does PayPal work in South Africa? There are several specificity such as the currencies you can receive, or how to withdraw your funds. Using PayPal in South Africa is not as easy as in other countries, but it remains a great way to receive payment from your international clients.
No time to read through? Here is a quick summary. To use PayPal in South Africa, you just need to open a PayPal account, verify it, and link it to your South African bank account. In terms of costs, the PayPal transaction fees in South Africa add up to around 5% to 8% per transaction. This makes PayPal an expensive solution. But PayPal allows receiving foreign currencies such as USD or Euros, which is not the case with most local South African payment solutions.
In this article we’ll cover the following:
- Is PayPal available in South Africa?
- How does PayPal work in South Africa?
- Step-by-step process to setup your PayPal account
- PayPal fees in South Africa
Ready to read on? Let’s dive into it!
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Is PayPal Available In South Africa?
The good news is that yes, PayPal is available in South Africa. You can use PayPal to pay and to receive payments online for goods or services. However, due to South African regulations, using PayPal in South Africa does come with a few constraints.
First, it is not possible to receive payments in South African Rand. But you will be able to accept international payments in the 25 different currencies offered by PayPal, including USD and Euros. This makes PayPal a great way to receive payments from international customers who do not want to pay in Rand. However, this is not convenient for local customers in South Africa.
The second main constraint is that you cannot keep funds in your PayPal account. You also cannot use the funds of your PayPal account to make online purchases directly. Instead, your PayPal balance has to be withdrawn within 30 days to your South African bank account.
While this may seem inconvenient, the use of PayPal in South Africa should not be dismissed. Indeed, PayPal offers many benefits.
Benefits of PayPal
First, PayPal is used by hundreds of thousands of websites around the world. It is well-known and trusted by customers. PayPal is also popular in North America and Europe, and allows you to receive payments in 25 currencies. This means that if you plan to sell to international customers in their local currency, PayPal is a great option.
Then, PayPal also offers buyer and seller protection against fraudulent transactions. This protects your customers and yourself from fraud and payment issues.
Another benefit is that PayPal handles all the payment details and data when clients make payments. They keep this information secure, and you can operate your business knowing that both your and your customers’ information is safe.
Finally, a well-known payment option like PayPal adds trust when clients buy from you. This can be a great differentiator when they are deciding to buy from your business.
How does PayPal work in South Africa?
Now, let’s see in practice what you will need to do to set up PayPal to receive payments in South Africa. In order to use PayPal in South Africa, you need to:
- Create and verify a PayPal account
- Link your South African bank account to your PayPal account
- Don’t forget to withdraw your funds within 30 days of receipt
Let’s review these different steps in detail and see how PayPal works in South Africa.
Step-By-Step Process to Setup your PayPal Account
1. Create a PayPal account
To receive payments through PayPal, you first need to create a South African PayPal account. To do so, visit http://www.paypal.com/za and create your account.
You can choose between an individual or a business account. This choice depends on how you intend to use your account, and if you are working as an individual or through a business entity.
Once you have created your account, you need to verify it. To do that, you have to send some verification documents to PayPal. These typically include:
- A copy of your National Identity card (or of your Passport for foreign citizens)
- Proof of address, such as a utility bill or bank statement
- A copy of your bank statement to confirm your personal banking details
To verify your account, you also need to link a credit/debit card to your PayPal account. This is done in the “Add/Edit credit card” screen of your PayPal account. Fill in the required details such as your name, card details, and billing address. After you have confirmed these details, PayPal will charge a small amount on your card to verify it. They will refund it automatically a few days later.
Once your documents have been approved, your account will appear as “Verified” by PayPal.
2. Link your PayPal account to your bank account
Once your PayPal account has been verified, the last step to receive payments is to link your PayPal account to your South African bank account. After this is done, you will be able to withdraw money from PayPal in South Africa.
You can link an account from any South African bank to withdraw your funds. However, in South Africa, the withdrawal process requires creating an FNB online profile, even if you do not bank with FNB. Indeed, since 2010, PayPal has a partnership with FNB to process the transactions.
The way it works is that the FNB Withdraw Service allows you to withdraw funds paid into your PayPal account to your FNB or any linked South African bank account. If you don’t bank with FNB you can create a free FNB Online Banking profile and link your PayPal account to your South African bank account.
Fort this, you just need to register with the FNB PayPal Service on the FNB website. Then, how to link PayPal to FNB is then only a matter of getting your FNB online profile set up and filling up a few forms.
This process allows withdrawing funds to any bank account in South Africa. If you bank with ABSA, Capitec Bank, Standard Bank, Nedbank, or any other bank you will still be able to withdraw your funds to your existing account. When you withdraw money from your PayPal account, it is processed by FNB and sent to your linked bank account. If you bank with FNB, the withdrawal is sent directly to your FNB account.
3. Withdraw your funds
As previously mentioned, due to South African regulations it is not possible to use your earnings directly from your PayPal account. It is not allowed to make online purchases using your PayPal funds or send money directly to other PayPal users.
Instead, you’ll have 30 days from when the funds hit your account to withdraw them to your South African bank account. Once in your bank account, you can use them as you like from there.
And that’s it! You’re now ready to use PayPal in South Africa.
PayPal Fees in South Africa
We’ve now covered the benefits of using PayPal, and have also run you through the setup process. The last thing to be aware of is the PayPal fees in South Africa.
The PayPal costs do not include any setup fees or monthly fees, so you won’t have to worry about that. However, you will have to be ready for:
- A fixed PayPal transaction fee of between 2.4% and 3.9%, plus $0.3USD per transaction.
- PayPal also charges a currency conversion fee of 2.5% above the going exchange rate. That exchange rate is fixed by FNB. It also typically includes a margin above the market rate, charged by FNB.
- Finally, FNB charges a withdrawal fee of between 0.81% and 1.51%. The percentage depends on the transaction amount and volume from your account’s history.
The PayPal fees in South Africa are summarized in the table below:
|PayPal fee||2.4% to 3.9% + $0.3 per transaction|
|Currency conversion fee||2.5%|
|Exchange rate||Decided by FNB|
|FNB withdrawal fee||0.81% to 1.51%|
|Total||5.71% to 7.91% + $0.3 per transaction|
With fees totaling between 5.7% and 8%, PayPal is expensive to use in South Africa.
Do the benefits of a globally trusted payment brand outweigh the fees that come with its use? Do the benefits of a system that can help to diversify your customer base and extend your reach internationally outweigh these costs? In the end, it will come down to your personal preference and what is required for your business.
The Bottom line
Setting up a successful online shop requires several steps, like finding the right product to sell, and creating an online brand. But, none of this does you any good without a reliable payment method for when you start making sales.
Using PayPal in South Africa isn’t the cheapest, but it comes with plenty of benefits. Using a world-leading payment platform helps make your online shop more trustworthy and credible. Plus, it allows selling to international customers in their own currency, which can be a big plus or even a must-have.
And if you still want to weigh up your options, have a read of our summaries of the best payment gateways in South Africa.
Frequently Asked Questions
Can I use PayPal in South Africa?
The short answer is yes, you can use PayPal in South Africa. You just need to open a PayPal account, verify it, and link it to your South African bank account. It does require going through a few hoops and the PayPal fee for receiving money is not cheap, but it works!
How to open a PayPal account in South Africa?
To open a PayPal account in South Africa, you just need to go to the PayPal website and create your account. Then, verify your PayPal account by uploading the required documents and linking a credit or debit card. Once it is done, you will be able to use your PayPal account to make and receive payments online.
How do I receive money from PayPal in South Africa?
Once somebody has sent you a payment using PayPal, you can withdraw it to any bank account in South Africa. Due to regulations and the partnership between PayPal and FNB, to withdraw your funds, you have to use the FNB ‘Withdraw Service with PayPal’. Your funds will then be deposited into a bank account of your choosing. Withdrawals from PayPal to your bank account take approximately 3 to 5 working days.
Which South African banks work with PayPal?
You can withdraw your PayPal funds to any South African banking account. This includes Standard Bank, Nedbank, ABSA, and all other South African banks. The withdrawal process only requires that you link your South African bank account to PayPal as described here.
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