Receiving Payments with PayPal in Malaysia: Fees, Benefits and How to Set up an Account

PayPal is one of the world’s first online payment solutions. Founded in 1998, PayPal has grown to become the leader for safe online transactions over the last 20 years.

Today, PayPal dominates with a market share of 61.44%, with competitors trailing far behind.

Despite its global popularity, however, PayPal hasn’t grown in popularity over the years as a preferred payment solution in Malaysia. One of the main reasons for this is Malaysians’ preference for FPX (online bank transfer) payments online, a channel which PayPal doesn’t support.

Lately, PayPal has even ceased its physical office in Malaysia, causing some concerns if PayPal will continue to support Malaysian accounts (note: it will).

Regardless, there is still a huge advantage of knowing how to use PayPal to grow your online income.

If you’ve heard about PayPal, but aren’t sure how it works, how you can use it for your e-commerce business, I’ve prepared this quick guide to help you understand how PayPal works and how you can get started with one.

What is PayPal and How does it Work?

PayPal is an easy and secure way to send and receive payments online. As a buyer, you connect your credit card or debit card to PayPal and then make payments through PayPal.

As a seller, you can accept payments using PayPal by integrating it with the e-commerce store of your choice.

Buyers with a PayPal account can make payments to seller PayPal accounts through their PayPal balance or their linked credit or debit cards.

Benefits of using PayPal for E-commerce

Internationally recognised payment solution

With one of the largest market shares in the world, PayPal is one of the most widely recognised payment solutions in countries like the US. 

If you’re planning to sell to countries like the US, PayPal would be a more trusted solution compared to our local payment gateways like MOLPay and iPay88.

Seller protection

PayPal provides seller protection to sellers who use PayPal to accept payments. This can help prevent fraudulent payment activities to your account.

Integration with most E-commerce Platforms

You can easily integrate PayPal with popular e-commerce platforms like Shopify, WooCommerce, EasyStore and BigCommerce. Usually, only a one-click install and login is required.

Disadvantages of using PayPal for E-commerce

Not widely used in Malaysia

PayPal is not a widely acceptable payment method in Malaysia. If your customers are mainly based in Malaysia, you’ll probably lose a lot of sales if you only enable PayPal as your payment option.

FPX and Bank Transfer Not Available

With PayPal, you can only accept payments using PayPal, credit cards and debit cards. You won’t be able to accept FPX payments, which can be a big problem if most of your customers are from Malaysia.

Transferring money with PayPal

Transferring money to other people

Transferring money to other people is pretty straightforward if they have a PayPal account. You only need their e-mail address and make the transfer instantaneously. 

Withdrawing money to yourself

If you have money in your PayPal account that you want to withdraw, you can do so by linking your account to a local bank account, debit card or credit card you want to withdraw to. PayPal can link to most popular banks in Malaysia such as Maybank, Public Bank and CIMB Bank.

When transferring money to your local bank account or credit card, expect to wait anywhere between 2 – 5 working days for the transfer to be completed. Transfers to VISA cards can sometimes happen instantly.

PayPal Fees

Transaction Fees

When you receive payments with PayPal, PayPal will charge you a transaction fee. For most sellers, this starts at a 3.4% + RM2. Buyers won’t get charged any transaction fees.

Setup & Annual Fees

It’s free to setup an account with PayPal and there are no annual fees. 

PayPal Fees vs iPay88 Fees

Here’s how PayPal’s fees compare to our popular local payment gateway fees in Malaysia:

Fees	PayPal	iPay88*
Transaction Fees (credit card)	3.4% + RM2	2.0 – 2.8%
Setup Fees	None	RM2,000 – RM6,500
Annual Fees	None	RM500 – RM1,500

*Fees reflected are based on information obtained in early 2019. For latest iPay88 fees, please refer to iPay88 directly.

PayPal Alternatives in Malaysia

If you do wan’t to use PayPal but for some reason can’t sign up for an account, what can you do?

For now, the best alternative to PayPal in Malaysia is Stripe. It has very similar features and is widely used in the US. So if you want to sell to US customers but for some reason can’t get a PayPal account, consider getting a Stripe account.

The registration process is similar and you’ll need similar documents to get started. The big difference is that you won’t be able to send money to other people with a PayPal account.

Creating a PayPal Account

Who can create a PayPal Account?

Anyone with a valid government ID in Malaysia can create a PayPal account. 

How to create a PayPal Account

There are two types of PayPal account: PayPal personal and PayPal business.

For most people, a personal PayPal account will be enough. But for e-commerce entrepreneurs, you might want to go with a PayPal business account.

Setting up a personal PayPal account is pretty straightforward. All you need to do is sign up with a valid e-mail address and government ID.

If you want to get a PayPal business account though, you’ll need both the above plus your business registration documents for verification. Be sure to only register for a business where you are listed as a director.

Even if you are selling outside Malaysia, use your verifiable local information, not a fake US address, for example.

Either way, you just have to go to PayPal, and click on “sign up” to get started!

Conclusion

PayPal provides an easy way to send and receive money online. Though, it remains a less popular payment option compared to iPay88, and MOLPay because of its inability to provide an FPX option.

For e-commerce entrepreneurs interested to sell to markets like the US, Australia, Canada and other countries where PayPal is widely used, having a PayPal account can be a huge advantage.

Most Malaysians can create a personal or business PayPal account as long as you have a valid government ID and business registration. For people who can’t create a PayPal account, Stripe can be a decent alternative.