Use Friends and Family only for personal payments, like paying back a friend for dinner: PayPal defines it as money sent with no purchase of goods or services behind it, and it's free from your balance or bank in the US. Use Goods and Services whenever you're buying or selling something. The buyer pays nothing extra, the seller pays PayPal's 2.99% receiving fee, and the payment counts as a commercial transaction.
I read PayPal's US consumer fees page, its merchant and business fees page and its how PayPal works page, as of October 2026. The two buttons look almost the same in the app, but PayPal treats the payments behind them very differently, and that difference is what protects or exposes you.
Friends and Family and Goods and Services side by side
| Friends and Family | Goods and Services | |
|---|---|---|
| What PayPal calls it | A personal transaction | A commercial transaction |
| Meant for | Money to or from friends and family with no purchase behind it | Buying or selling goods or services |
| Fee to send (US, domestic) | None from balance or bank; cards 2.90% + fixed fee | Free for the buyer unless there's a currency conversion |
| Fee to receive (US) | None when there's no currency conversion | 2.99% for Send/Receive Money for Goods and Services |
| Sending abroad | 5.00%, minimum 0.99 US dollars, maximum 4.99 US dollars | Merchant international rates apply |
| Purchase Protection | Not described for personal transactions on the pages I read | PayPal says it covers eligible purchases |
| Free (as of October 2026) | Yes from balance or bank, domestic | Free for the buyer; the seller pays |
What PayPal means by Friends and Family
PayPal's consumer fees page is precise about this. When you send money from the Friends and Family tab of the Send Money flow, or receive it from friends and family on PayPal or Venmo, without an underlying donation or commercial transaction, PayPal calls it a personal transaction. In other words, the payment isn't for goods or services.
Within the US, sending a personal payment from your PayPal balance or a bank account costs nothing, while paying by card costs 2.90% plus a fixed fee. Receiving one is free when no currency conversion is involved. Send it to another country and there's a 5.00% fee, with a minimum of 0.99 US dollars and a maximum of 4.99 US dollars.
Keep going with the PayPal Business vs Personal Account guide.
What changes with Goods and Services
The moment money is for something you're buying or selling, PayPal calls it a commercial transaction. For the buyer, paying for a purchase is free unless there's a currency conversion. The seller pays to receive it: PayPal's US merchant fees page lists Send/Receive Money for Goods and Services at 2.99%, and PayPal Checkout at 3.49% plus a fixed fee.
That fee buys something. PayPal says its Purchase Protection covers eligible purchases, and a purchase is exactly what Goods and Services records. If a seller asks you to pay by Friends and Family to dodge the fee, they're asking you to label a purchase as a gift to a friend, and that's the moment to stop and think.
Comparing it with another app? Read PayPal vs Zelle.
Which button to press
- Paying a friend back for dinner, rent or a shared gift: Friends and Family.
- Buying from someone you don't know, online or from a listing: Goods and Services.
- Selling anything, even second-hand: ask buyers to use Goods and Services, and treat the 2.99% as part of selling.
- Sending money to family abroad: Friends and Family, but check the 5.00% international fee first.
- Not sure? If there's a product or a service involved, it's Goods and Services.
For more on how PayPal compares with other ways to pay and get paid, see this Stripe vs PayPal comparison, and this explainer on PayPal's conversion rate before you send money abroad.
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My advice on Friends and Family or Goods and Services
Keep it simple: Friends and Family is for people you'd lend money to anyway, and Goods and Services is for everything you buy or sell. As a buyer, Goods and Services costs you nothing extra in the US and records the payment as a purchase. As a seller, the fee is part of doing business, so build it into your prices rather than asking buyers to tick the wrong box.
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Frequently asked questions
Is PayPal Friends and Family free?
In the US it's free to send from your PayPal balance or bank account, and free to receive when there's no currency conversion. Paying by card costs 2.90% plus a fixed fee.
How much is the PayPal Goods and Services fee?
PayPal's US merchant fees page lists Send/Receive Money for Goods and Services at 2.99%, paid by the person receiving the money.
Who pays the Goods and Services fee?
The seller. PayPal says it's free for buyers to pay for a purchase unless a currency conversion is involved.
Can I use Friends and Family to buy something?
PayPal defines Friends and Family payments as ones with no purchase of goods or services behind them, so a purchase belongs under Goods and Services.
What does PayPal charge to send money abroad to family?
PayPal's US consumer fees page lists 5.00%, with a minimum of 0.99 US dollars and a maximum of 4.99 US dollars.
