PayPal is a common way for many businesses large and small to pay influencers. Why? Everyone has a PayPal account and PayPal deals with tax compliance and reporting. Influencer Marketing Hub’s 2024 influencer marketing benchmark report found that  27.2% of brands and agencies cited PayPal as their preferred method to pay influencers. Lumanu gives influencers and other creators the option of receiving payments via same day ACH or INTL bank transfer (for free) or PayPal (covering the PayPal fee) and we see ~10% of influencers elect to receive funds from us via PayPal.

Given the ubiquity of PayPal and the ease of making a payment it makes sense that it is such a common payment method. But is PayPal a good idea as a brand scales their influencer program? In short, no. At some point the ease of making a single payment isn’t worth it. This blog post explores challenges with relying on PayPal as a platform for paying influencers and talent managers.

Operational Challenges of using PayPal for Influencer Payments

Each payment through PayPal requires manual setup, which can be labor-intensive, especially when dealing with a large number of influencers or complex campaign structures. This manual process increases the risk of errors and reduces the overall efficiency of Marketing teams.

Paypal is not designed to handle specific needs of Marketing and Finance teams, such as:

• Control over funding - PayPal requires using a credit card or connecting a bank account ad does not support invoicing to fund

• Granular permissions - defining users who can create, approve, make payouts

• Ability to manage payments by campaign

• Ability to easily reconcile payments with a clear audit trail

Control over funding and ability to easily track expenses in Finance's systems - from Quickbooks to Netsuite to SAP eventually causes major headaches.

For businesses with multiple people managing influencers, affiliates, UCG creators and other freelancers, the reconciliation of payments can become a logistical nightmare. PayPal does not offer a robust solution for payment tracking or reconciliation, making it difficult for marketing teams to match payments with campaign deliverables, track payment statuses, and ensure accurate financial reporting.

Funding a PayPal account also leads to challenges between Finance and Marketing, especially with scale. PayPal accounts need to either be funded via a bank account connection (high risk/ non starter for many companies) or credit card (along with fees fees).

Consider a campaign with 50 global influencers. Using PayPal, your team might spend hours on individual payment setups, currency conversions (PayPal charges very high native FX rates), fee calculations, and manual tracking in spreadsheets. This isn't bottleneck slows down campaign execution and takes time and focus away from strategic marketing initiatives. As your influencer or affiliate program expands from a handful to dozens or hundreds of partners, PayPal’s per-transaction approach and manual oversight requirements become a significant blocker to growth. What’s manageable for five payments becomes an administrative nightmare for fifty.

“Using PayPal is one of the biggest headaches for us with our influencer program. Reconciliation every month across the several accounts my team uses takes hours of time. We need another solution to scale” Dustin E. - Vice President Marketing & Label Operations at Atlantic Records

Lumanu automates mass payments to global influencers, affiliates and other 1099 freelancers from a single dashboard. Lumanu handles vendor onboarding an d compliance (W-9/W-8BEN collection), supports multiple forms of payment scheduling (in app, csv upload, Zapier workflows, API), and provides clear approval workflows. Learn how Lumanu frees up your team's time to focus on strategy, not spreadsheets.

Accounting and Finance Frustrations with PayPal

Reconciling a PayPal account isn’t as simple as reconciling payments made directly from a bank account (or from a Lumanu account). There is no clear and concise statement for a given time period to help quickly reconcile your account. PayPal's transaction data often requires manual manipulation to align with internal accounting codes, campaign budgets, or project IDs. The mix of fees, currency conversions, and potential holds directly within transaction lines complicates reconciliation.

A few common points of frustration for Finance and Accounting when using PayPal:

Multiple entries per payout: A single transaction can show up multiple times in PayPal, with things like authorizations, fees, and reversals all creating separate entries. This can make it confusing to match transactions with your records.

Holds and reserves: Sometimes PayPal holds onto funds before releasing them to a seller and reviews take days or weeks. When PayPal freezes funds or limits an account used for business payouts it can halt campaigns, delay critical payments to your valued influencer partners (damaging relationships), and create significant cash flow issues that impact your marketing budget.

Currency conversion: If you deal in multiple currencies, PayPal might show transactions in different formats than your accounting software, creating extra work. The foreign exchange fees are hidden and much higher than banking rails.

Limited download options and customization: PayPal doesn’t always categorize transactions in a way that’s easy to work with in your accounting software as it lacks ability to add fields to payouts which causes manual spreadsheet work.

Lumanu acts as your single vendor of record for all freelancer payments (a virtual staffing agency if you will), simplifying reconciliation and accounting entries. Lumanu supports funding via invoices, provides finance-grade reporting, supports accounting and ERP integrations including adherence to "No PO, No Pay" policies. Connect with our team to learn how.

Limitations with Talent Management Accepting PayPal

PayPal is widely accepted among individual influencers for its convenience. However, when it comes to talent managers and agencies, the acceptance of PayPal as a payment method is far from universal. Many talent management agencies can’t accept PayPal as a payment method as they do not have a company account and require a bank transfer formal payment channels that align with their accounting systems. Considering roughly 33% of all influencer payments are made via talent managers, most influencer teams will have to find an alternative answer to PayPal. Many have set up PayPal for receiving payments but find it as a necessary evil to support their brand partners.

Lumanu provides dedicated support for both your team and ALL your payees, ensuring smooth transactions. All top tier talent management agencies e.g. Gersh, DBA, WME, Trend Management, Parker, Select Management and more already have Lumanu accounts. We pay directly to bank accounts, preferred by talent agencies and many creators, increasing your access to pay top talent through one unified platform.

PayPal per Payment Transaction Fees

An immediate concern for creators when receiving PayPal is fees. Each goods and services transaction incurs a fee, which brands typically cover by topping up the payout. Aside from the small annoyance of managing this process, 3% adds up quickly when managing multiple influencers and affiliates. These costs diminish the overall budget available for campaigns. Specialized platforms like Lumanu can support variable fees for lower volume payors with the ability to lock in lower fixed fee rates with scale.

“Paypal does naturally charge fees in terms of what the creators are receiving. So we have to  compensate extra to offset it. You know, that adds up over time and I think just in general we wanted to move away from PayPal to have a centralized solution with better visibility and control” Wyatt L. - Sr. Director Performance marketing at Mary Ruth’s organics

Lumanu offers transparent pricing and streamlines global payouts in local currencies, eliminating hidden fees and unfavorable exchange rates often encountered with PayPal. This ensures your budget is maximized and your international partners are paid efficiently.

Thinking about using PayPal Friends and Family? Think again

A common temptation might be to circumvent standard business transaction fees by using PayPal’s "Friends and Family" payment option. This method, while fee-free, is designed strictly for personal transfers between family and friends and not intended for business transactions, including payments to influencers or affiliates.

Legal and Compliance Risks: Using the "Friends and Family" feature for business transactions violates PayPal’s terms of service and can lead to account limitations or closures. This can disrupt ongoing campaigns and create significant operational setbacks for your marketing efforts. Your account may even be flagged if you pay a creator who typically follows the rules and receives mostly goods and services payments.

Update: PayPal' User Agreement Update (Effective July 16, 2025):

PayPal has announced updates to their User Agreement, effective July 16, 2025.

The key takeaway from the updated terms is that if a user's personal account activity looks like a business, PayPal has the right to force a switch to a business account or close the personal account which can result in frozen funds.

The new user agreement states:

"If the activity associated with your personal account primarily involves business or commercial activity, PayPal may close your account unless you agree to cease the business or commercial activity or convert your personal account to a business account.”

This means payments to influencers, affiliates or other contractors via PayPal 'Friends & Family' is becoming even riskier. These payments are intended for personal gifts and reimbursements, not for business income.

Lack of Support in Case of Issues or Errors

Mistakes happen, but the repercussions of errors like paying the wrong person or double payment are exacerbated with PayPal due to its limited customer support in such scenarios. Resolving these errors can be time-consuming and costly, with no guarantee of connecting with anyone at PayPal or recovery of funds.

Account holds and limitations

PayPal has a reputation for freezing or limiting accounts without much warning. These holds can last from a few days to several months. PayPal may place holds or reserves on funds received, especially for new or high-risk accounts. This can tie up funds that businesses need to make on time influencer payments, which may cause cash flow challenges.

With Lumanu, all transactions are compliant business payments, eliminating the risks associated with PayPal's account holds. Lumanu is a scalable, secure platform built for professional B2B payouts.

Challenges with International Payments

When dealing with influencers and affiliates across borders, businesses must consider the complexities and costs associated with international payments. PayPal, although a global platform, poses specific challenges in this area that can affect the overall success of international marketing campaigns.

Unfavorable Exchange Rates: PayPal exchange rates are significantly worse compared to standard bank rates. This means that when influencers and affiliates receive payments in a currency different from their own, they often incur substantial fees due to unfavorable exchange rates.

Additional Fees: On top of high exchange rates, PayPal may also impose additional cross-border and currency conversion fees. These fees can significantly increase the cost of transactions, impacting the budget allocated for influencer marketing campaigns and reducing the actual payout received by the influencers.

Payment Delays: International transactions via PayPal can also face delays due to the need for security checks and compliance with international financial regulations. Such delays can frustrate influencers and affect timelines critical to the synchronized launch of global marketing campaigns.

Ready to Modernize Your Influencer & Affiliate Payments?

While PayPal serves as a basic tool for transactions, its use in the context of influencer and affiliate marketing presents several significant challenges that can hinder the efficiency and effectiveness of campaigns. Brands looking for a more streamlined, reliable, and feature-rich payment solution might consider specialized platforms like Lumanu, which are tailored to meet the specific needs of influencer marketing workflows.

Stop letting outdated payment processes hinder your growth. Lumanu offers a comprehensive platform designed to simplify onboarding, automate global payouts, ensure tax compliance, and provide robust financial controls for your business. Empower your team, delight your creators, and scale with confidence.

Request your personalized Lumanu demo