Small Streamers may be doomed after this new PayPal donation fee change

Recently, online payments system/platform PayPal introduced a change in its’ merchant fees, bringing forth a range of reactions from concerned “smaller” streamers.

The online payment system has increased its merchant fees especially for smaller transactions. With most Twitch streamers generally receiving $1 or $2 donations on the platform, this has been said to be a problem for small streamers who depend on thes.

Earlier, PayPal allowed streamers to receive $.67 for every $1 donation. On August 9, the platform saw a change in fee, which means that streamers will now receive only $.48 for every $1 donation, which is less than half of the amount!

The new surcharge percentage decreases for transactions of higher value, with $20 donation now netting Twitch streamers $18.93 instead of $19.12 that they previously got.

Streamers, PayPal has recently increased its transaction fees. A $1 tip will now only net you $0.48. That's right, less than half of a $1 tip actually goes to you. Please be aware of this when setting tip goals and checking revenue reports! pic.twitter.com/nEgioA1hmY

— Lowco (@LowcoTV) August 9, 2021

Small streamers expected to see decrease in earnings after PayPal increases merchant fees on small transactions

The updated merchant fees for domestic and foreign transactions as well as donations can be seen on this link. Earlier, PayPal used to charge a $.30 fee for every transaction along with 2.9% of the overall value of the transaction. Now, the fee has been reduced to 2.89%, with the additional surcharge being increased to $.49. In such a scenario, streamers receiving larger donations have hardly seen a change. However, smaller donations are bound to be affected with a $2 donation now resulting in the streamer receiving only $1.45.

The following screenshot can be seen to get a detailed look at how the new system has brought forth a marked change in earnings for smaller streamers.

Image via Esports Talk, YouTube

As expected, a range of smaller streamers complained about the issue on Twitter. Quite a few creators might be forced to use other payment services to receive donations.

A recent change to Paypal's flat fee is causing problems for small streamers, as the donations many rely on have become worth less than ever.https://t.co/AzVY80f4r9#Twitch #Streamers #Gaming #SupportSmallStreamers pic.twitter.com/RC78IgLyIg

— The Esports Talk Team (@EsportsTalkNews) August 12, 2021

Streamers and artists beware! Paypal have changed their fee system and it's actually quite a problem! Be wary of low comm prices + small tips to your stream! Less than 50% of $1 tips goes to creators now! Consider raising the minimum dono amount! PayPal doesn't need more money! pic.twitter.com/hxfYXXRlnd

— Skunky Designs (@SkunkyDesigns) August 12, 2021

I just saw an informational post about how paypal has a higher fee per USD when you get a tip and how you should keep this in mind when you set goals, information obviously aimed for streamers.And then saw some replies saying "be thankful you get tips or go be homeless" smh

— Panda lets out a howl! Megiddo! (@MochaLattePanda) August 10, 2021

Hopefully this information proves useful for streamers. Given changes in paypal fee structures, setting up your accounts to make the most of it can help save you money. A shout out and thank you to Charlie for sharing this info. https://t.co/GXFqpH5yPc

— Kristopher (@5ilver42) August 9, 2021

With PayPal fee structures changing, this is important for those smaller tips streamers get https://t.co/qInDMERbHt

— Felix🧙‍♂️ (@MJayyyB) August 9, 2021

Correction to above statement. If someone donates 1 dollar to a streamer, PayPal takes over 50% of it due to their transaction fees. The ratio would be less with higher transaction amounts I'd assume. PayPal's transaction fee is 2.89% + $0.49.

— Kaz (@EternalKaz_) August 9, 2021

Checked the new merchant fees and invoicing fees have also changes. It's now 3.49% in the US... and an addition 1.5% for international transactions.... also an additional fixed fee. Paypal, what the fuck. https://t.co/huVDsbdvae

— Cole Gerig (DM me for Commissions) (@HyperCole64) August 9, 2021

Twitch allows affiliated streamers to directly send the money that they receive to their bank accounts. Streamers can also make use of snail mail to receive their earnings.

Finally, streamers can also get rid of PayPal as the middleman in these transactions by using other donation services such as Twitch Bits, PeachPay or DonorBox. As a matter of fact, there are a range of services that streamers can use to avoid paying PayPal’s increased fee.