In this guide · 8 sections
- 01Why PayPal never matches your bank deposits
- 02Connect the PayPal feed in Xero
- 03Recording sales, fees and withdrawals
- 04QuickBooks Online and PayPal in Singapore
- 05Refunds, disputes and currency conversions
- 06Month-end PayPal reconciliation checklist
- 07Do it yourself or get help?
- 08Frequently asked questions
Short answer
Add PayPal as a bank account in Xero (with the PayPal feed) or QuickBooks. Record each sale at the gross amount, code each PayPal fee to a fees expense account, and match every withdrawal as a transfer, not income. When your books show the same PayPal balance as PayPal does, you are reconciled.
Why PayPal never matches your bank deposits
A customer pays you S$100 through PayPal. PayPal keeps its fee, holds the rest in your PayPal balance and only sends money to your bank when you (or an automatic rule) withdraw it. One withdrawal can bundle dozens of sales, refunds and currency conversions. If you record the bank deposit as a sale, your revenue, fees and GST are all wrong.
| PayPal fee (Singapore account) | Standard rate | On a S$100 sale |
|---|---|---|
| Domestic sale (buyer in Singapore) | 3.9% + S$0.50 | S$4.40 fee, S$95.60 kept |
| International sale | 4.4% + fixed fee | S$4.90 fee if paid in SGD |
| Currency conversion | 3.0% above the base exchange rate | Built into the rate, no separate line |
| Withdrawal to a Singapore bank (no conversion) | Free above S$200; S$1 below S$200 | Usually free |
| Standard dispute fee | S$11 | Per dispute, as listed |
Check the current figures on PayPal's Singapore merchant fees page. Our Stripe vs PayPal comparison shows how these compare with card gateways.
Connect the PayPal feed in Xero
Xero has a direct PayPal feed. Xero Central's article on PayPal direct feeds says transactions import every 12 hours and you can refresh the feed any time. Xero only imports PayPal transactions with a completed, cleared or reversed status, so pending payments show up later.
Add PayPal as a bank account
In Xero, go to Accounting, Bank accounts, Add bank account, and pick PayPal. Name it clearly, for example 'PayPal SGD'.
Log in to PayPal and approve the feed
Xero sends you to PayPal to authorise the connection. You need to be the PayPal account holder or an admin.
Pick the start date
Choose the first day you want in Xero. Older transactions are imported by hand from a PayPal CSV, which Xero describes in its PayPal statement import article.
Add one account per currency
If you hold USD or other balances in PayPal, add that currency in Xero first, then create a PayPal bank account for each one.
Create a fees expense account
For example 'PayPal fees' under expenses, so you can see what PayPal costs you each month.
Recording sales, fees and withdrawals
Every line in the PayPal account should be one of four things. Code them the same way every time and the account stays in balance.
| PayPal line | Code it to | Watch out for |
|---|---|---|
| Payment received | The sale or invoice, at the gross amount | Match to the invoice if one exists, so you don't create a second sale |
| Fee | PayPal fees expense | Never net it off against sales |
| Withdrawal to bank | Transfer to your real bank account | Match the same transfer on the bank side, not as income |
| Currency conversion | Transfer between the two PayPal currency accounts | Any difference is a foreign exchange gain or loss |
Xero's own PayPal payment service can also do part of this: Xero Central's Connect PayPal to Xero article says that when a customer pays an invoice, Xero can create a spend money transaction for the PayPal fee automatically.
QuickBooks Online and PayPal in Singapore
QuickBooks Online handles PayPal the same way: a bank-type account for PayPal, sales gross, fees as an expense, withdrawals as transfers. The difference is the feed. Intuit's 'Connect to PayPal' app is documented for the US, and an Intuit reply on the QuickBooks Community says connecting PayPal Singapore as a bank feed is unavailable.
In practice, Singapore QuickBooks users either import PayPal's activity report as a statement each month, or use a connector app that posts PayPal summaries. Check what your QuickBooks region offers before you commit; our Xero vs QuickBooks guide covers the wider choice.
Refunds, disputes and currency conversions
These are the lines that usually knock the PayPal account out of balance.
- Refunds: PayPal says there is no fee to make a refund, but the fees you originally paid to receive the payment are not returned. Record a credit note or refund against the original sale and leave the original fee as an expense.
- Disputes: when a buyer opens a dispute, PayPal may hold the amount. Move it to a 'PayPal disputes' holding account until it is decided, then return it or write it off.
- Conversions: a conversion shows as money leaving one currency balance and arriving in another. Record it as a transfer between the two PayPal accounts. The gap between PayPal's rate and Xero's rate is a foreign exchange difference.
- Holds: money on hold is not available to withdraw. It still belongs in your PayPal balance, so don't remove it from the books.
Month-end PayPal reconciliation checklist
Fifteen minutes at month-end saves days at the GST quarter or year-end.
PayPal month-end checks
The same clearing-account method works for card gateways; our guide to Stripe and HitPay fees in Xero walks through it, and the HitPay to Xero guide covers PayNow payouts.
Do it yourself or get help?
If PayPal brings in a handful of payments a month in one currency, the steps above are enough. Once you have daily orders, several currencies, or PayPal alongside Stripe and a shop integration, a wrong set-up creates doubled sales and unexplained balances that are slow to unpick.
Our Sales & Payout Sync (S$490) connects up to three channels, such as Shopify, Stripe and PayPal, to your accounting software with sales, fees, refunds and payouts split out, then checks one month of payouts against your bank with you. If the accounting software itself isn't set up yet, Accounting Software Setup (S$490) does that first. Neither includes bookkeeping; your accountant still reviews the accounts.
Frequently asked questions
Add PayPal as a bank account in Xero and connect the PayPal feed. Each payment comes in at its gross amount and each fee appears as its own line. Code the fee lines to a PayPal fees expense account and match the payments to your invoices or sales. Never record only the net amount as a sale.
No. A withdrawal moves your own money from your PayPal balance to your bank. In Xero or QuickBooks it is a transfer from the PayPal account to the bank account. The income was already recorded when the customer paid. Recording the withdrawal as income counts the same sale twice.
PayPal's Singapore fees page, last updated 28 September 2026, lists a standard rate of 3.9% plus S$0.50 for domestic sales and 4.4% plus a fixed fee for international ones. Currency conversion carries 3.0% above the base rate, and withdrawals to a Singapore bank are free above S$200. Approved merchants can get lower rates.
No. PayPal's fees page says there is no fee to make a refund, but the fees you paid to receive the original payment are not returned. Record the refund against the original sale and leave the original fee as an expense in your books.
An Intuit reply on the QuickBooks Community says connecting PayPal Singapore as a bank feed is unavailable, and Intuit's Connect to PayPal app is documented for the US. Singapore users usually import PayPal's activity report each month or use a connector app. Check what your QuickBooks region offers before relying on a feed.