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PayPal Marketplaces: An update for PayPal "Direct To You" payments

A topic by leafo created Dec 30, 2019 Views: 13,773 Replies: 91
Viewing posts 1 to 22
Admin (12 edits) (+4)

We’ve deployed a new PayPal integration designed specifically for marketplaces. This change only affects people who use or wish to use the “Direct to you” payout mode.

The old API we used to handle “Direct to you” payments has been closed off by PayPal for many years now. Although we were continuing to let people use it, recently we’ve been seeing more and more failures & issues with payments handled through it. Including issues like stuck payments, missing payment options, and instantly refunded payments. It’s been downright broken for many sellers. For this reason, we’ve integrated PayPal’s new Marketplaces API to allow you to continue to sell directly into your PayPal account. The legacy API may be fully closed down in the future so we’re asking all sellers to migrate to the new system if they are using the legacy PayPal integration.

In late 2017, we also disabled “Direct to you” for PayPal for all new accounts, leaving it available only for people who had already activated it. Starting today, all accounts can use “Direct to you” with PayPal once again!

Set up your payment processors here →

The requirements for using this new PayPal integration have changed, it is no longer possible to just type in a PayPal email address to receive payments. You must complete an onboarding process with PayPal, and it will most likely require you to have a business PayPal account (no longer, see below). There may also be regional restrictions. We’ve opened this thread so you can give feedback about the process, and tell us if you encounter any issues.

We’re still keeping the older system running during the transition phase if you are unable to migrate at this time, but please plan to migrate as soon as possible. If you continue to use the old system it’s very likely you will experience issues with payments failing, and the checkout flow is limited in a way that will negatively affect your conversion rate.

To close up, here’s a quick recap of the two payout modes supports:

  • Direct to you – Each transaction is handled directly through your PayPal or Stripe account. You are the merchant of record
  • Collected by, paid later –’s Stripe and PayPal accounts handle all transactions, you can request a payout to collect you earnings in bulk at a later time

Note: there are now two different ways to connect a PayPal account to for each of the payout methods. With “Direct” you are connecting to the new PayPal for Marketplaces system, with “Collected by” you are doing only a basic connection that reveals your account information but does nothing else.

Learn more about the payout modes →

Note 2: If you need to contact us about any private account information please use our support page.


Pinned ReplyAdmin (2 edits) (+3)

Update 2: We have heard from our PayPal rep we now support a “Casual Seller” option when setting up your PayPal account with This means that it may no longer be necessary for you to have a business account to connect to for direct payments. Availability of casual seller may be region specific, so we recommend trying it out and seeing if it works for you.

(1 edit) (+1)

Hello! I just found out that we've been disconnected to Paypal and I reconnected today. If some donations happened (we had 28 downloads last night) during the time we were disconnected, are those lost?  
(I'd also like to know how to downgrade to "Casual Seller" on Paypal. Thanks.)

Pinned ReplyAdmin (2 edits) (+6)

If you’re having issues with the business account requirement and you’re not located in the United States please reply here with the country your account is located in. I’m working with our PayPal rep to see if we can implement an alternate solution that doesn’t require a business account, but would only be available in some countries. I need to collect a list of countries where people have had issues. You don’t need to reply if I already have your country listed here: Brazil, Poland, Russia, Portugal, Germany

Yes! This will be awesome!


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks

(3 edits)

Yes, it works - I had two options to choose - private and business account, ofcourse I choosed private and it is succesfully connected, thanks!

EDIT: I see there is a bug - I still see "Connect to Paypal" button in payment processors and when I click it, error appears:

"We had some trouble connecting your account You already have a PayPal account connected"


That issue has been fixed. Thanks


Same here in Germany. My games are free but users are allowed to grant me a donation. I wanted to reconnect now Paypal advised via the new method but Paypal wanted to force me to either create a separate business account or upgrade my own private account to a business account. I'm sorry but this is unacceptable. I don't have a business here and I can't found one just to get a few quid of donations which barely make me buy a coffee.


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks


I confirm this is working for Germany. Upon connection request, I’ve been asked if I use the connection primarily for private or for business purposes. All fine, thanks a lot! 


PS: I think a few hobby-devs like me use the "Direct To You" feature solely to get a few donations, thus without any commercial intent. Which is fine in my country. Now when Paypal forces business accounts, I suggest you guys should consider alternatives, like implementing Ko-Fi for donation-based models. I actually thought that having a Ko-Fi integration here would be wonderful feature anyway.

Admin (1 edit) (+2)

As far as I know Ko-Fi is not a payment processor, but a platform like us that aggregates payment processors to give creators a way to get paid. I think we would only integrate with payment processors so creators get the lowest fees.


Feel free to add Portugal to said list.
An alternate solution would be most welcome!


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks


Splendid, it works exactly as intended! No business account necessary. Thank you for your hard work on this!

(1 edit) (+3)

can you add Philippines to the list? we don't have a proper sole proprietorship system in place yet, (hell I cannot get my TIN number unless if I actually work for a company)


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks

philippines - still asking if I want to convert to a business account


Thanks for following up. I don’t believe there’s anything we can do to allow you to use direct payments without a business account. You may want to consider switching to our payouts mode. We recently added Payoneer as a payout option on top of PayPal. More information about our payout modes here:



I'm from Argentina!


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks


Apparently it works in Argentina.



This is a tremendous change for creators from countries like Russia, where you need to register a company or a sole proprietorship for a business paypal account (which is not even a guarantee they won't just block your paypal account after the application). This simply means you're destroying the whole donation environment for our free-to-play games.

Admin (1 edit) (+3)

My understanding is that with Russia there were already many issues preventing using PayPal generally. Were you successfully using direct payments into a PayPal account previously? For Russian users to avoid PayPal they’ll have to use our “Payouts” system to have us collect funds, then receive payments through something like Payoneer.


I think we registered our PayPal account on the US side long ago and then unlocked some privileged tier, providing additional personal info. Maybe that's why we had no problems with the Direct Payment method...
We will see how it goes with the Payout method, hope there will be no problems with that!

Switching to the Payout system doesn't require the PayPal business account when reconnecting though!
So this might be the only available option in this case.

(1 edit) (+2)

This is not true, I now trying to reconnect and it asking me to change my paypal account to business.

Actually I dont know what to do...I worked so hard to make my game and sell it on, and now they are removing me ability to sell my game? Im from Poland, and I hope I dont have to register any business. We will see.

We are sorry to hear that this option doesn't work for you!  

 @leafo please look into this problem and find a possible solution for everyone! 


When I want to connect my paypal account to it ask me to convert or login my current paypal account to business account or create new business account. Like I said Im from Poland, I dont have a business and I cant register one since I dont earn that much money, and it can be a real problem for me when I will have to.

Please help!


There are two different locations where you “connect to paypal” now:

  • On our Payment processors” page where you configure your account to direct sell through PayPal
  • On our payouts page, where you set up a PayPal account be used to receive payouts

They are separate connection methods that request separate permissions. Which one are you referring to?

(1 edit)

Hello, here is a screenshot what I click and have at my account:

Then I login to my paypal account and it saying to me to convert to business account, make one or login to existing one.

Admin (1 edit) (+1)

That’s the tool to connect to “PayPal for Marketplaces” allowing you to sell directly through your PayPal account. If you wish to use’s payouts system then you need to go to and change your account mode. Then you can add a PayPal account for payout on your dashboard here: (after completing the tax interview)

(3 edits) (+1)

You only complicated things for us developers. It was good when was earlier, where I just had to only connect my paypal account, now I must do some tax crap at your site which I dont understand and have no help at all from anyone.
You really disappointed me, I think I will look for other place, where it will be less complicated to me to post my game and earn money.
Not mentioning I must give my personal data to someone who I don't know.

Admin (1 edit) (+2)

I’m sorry, but the way things are going with PayPal, they require more identity verification to enable you to collect money for distributing goods. Sending money is a high risk activity so it’s going to be very rare to find a platform that lets you get paid without providing any information about who you are. You can continue to use the old system, but we can’t guarantee it will be around forever (it has already been deprecated by PayPal), and we can’t guarantee customers will have an easy time using it. We’ve gotten countless reports of the old system breaking down, rejecting payments, and other oddities that are outside of our control. When something like that breaks, people blame and it looks bad on us, despite it not being something within our control. I hope you understand that we have to migrate developers off this old system.

Not mentioning I must give my personal data to someone who I don’t know

You’re sharing our tax information with our third party tax processor who we have used for thousands of developers. This is the same company that Steam uses for their tax processing. The majority of our sellers use the payouts system and work withing our legal requirements for tax collection. This part of is not new, as we launched it a few years back.


I just went through the paypal reconnect process on and also was prompted to upgrade my paypal account to a business account. I don't know about potential complications from being outside the US, but I don't think you need to register or incorporate a business. When it asks what type of business organization you have, once of the options is "sole proprietorship" which just means a business you own that's not incorporated, which is what you have if it's just you selling stuff or doing contract work (I registered as an LLC but that's taxed as a sole proprietorship since it's just owned by me). I didn't have to change anything else in my paypal account. The only glitch I ran into, which is more of a UI bug, is that the second question about what kind of products/services you provide lets you type in anything, but it doesn't let you proceed if you don't select from the autocompletion list, so I wasted some time figuring that out.


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks


Yes, it works for Russia now! Thank you!

(2 edits) (+3)

All the content I created and posted is free to use and all the money I get is from donations that helps me a lot. Now to keep receiving donations throug I need a PayPal business account? This is so bad. 

To create a business account in PayPal Brazil I need a CNPJ (National Registry of Legal Entities), a code that can only be obtained by registering a company, that includes paying fixed taxes and fees based on the company's profit to the government.  Everyone knows that brazilian fees and taxes are one of the most expensive in the world. I already pay high fees to PayPal (for each U$ 1,00 donated I only receive ~ U$ 0,60), and adding a company's costs to this earning makes everything inviable. This change is a huge impact for me and other brazilian creators.

(2 edits) (+2)

Not only you mate, but me and my country Poland too have similar regulations. For me it's unbelievable that they run for such long time paypal legacy, I even sold one copy of my game without problems regardless what they are saying about reports and now they simply want to remove for so many developers ability to earn money. I also was filling that damn tax review, had so many problems with it and when I finally signed it and sent to their email, I see they will take also 30% of my earnings, not mentioning I had to give my personal data to people who I don't know.
In my country if I earn less than 1000 PLN (that's over 260 dollars) I don't have to pay any taxes at all and register it anywhere, but ofcourse some USA geniouses choose to complicate things for developers from other countries rather than make things easier, saying that my money it's not safe, when using paypal legacy cuz you dont know to whom of from who you get money.
If this problems won't be fixed, I think I try make my own www, cuz this will be the best choice for me as a developer from other than USA country.


Many thanks Leaf, I think I've forwarded to you dozens of such issues :)

However after years on "Direct to you" in EUR, I think using "collected by" in $ makes sense too as it deals with the EU+VAT for us and also most of US consumers expect a price in US dollar.

So I urge anyone not using "Collected by" to at least try :) makes being legal easier I think.


In light of this change, I am considering switching to "Collected by"
But I can't for the life of me find out where to switch the Payment Mode?!

The documentation goes into depth on each one, but (unless I'm missing something)  it doesn't actually tell you how/where to set the mode. 🤷‍♂️




Go to your Account / Settings ( and then click Publisher / Payout Mode

You will pass a tax interview because selling to US consumers on the Internet requires a tax identification number with the US tax system.

Ah... perhaps this explains why I'm so confused.
Seems like I'm missing an option here! 🤔

My bad - it was because I'd not yet clicked to accept the updated terms! 🤦‍♂️
I can now see the options y'all been talking about. 😅

Hi Leaf,
Am I missing something here - it seems I don't have the option to administer my Payout Mode?

Thanks in advance!


My bad - it was because I'd not yet clicked to accept the updated terms! 🤦‍♂️
I can now see the options y'all been talking about. 😅

Can you guys add a new payment partner like payoneer or something (they pretty much a competitor to paypal and stripe.


We will be adding Payoneer, but this is not the right topic for that. Payoneer is not a system for accepting payments for buyers, but something we would use for money transfers for payouts. Thanks

This is a bit scary for me as I've had my Paypal account since 2001; it was actually started out originally connected to my Mom's bank account when I was in high school. I've heard some very worrying things over the years about how Paypal can suddenly freeze accounts for what they arbitrarily deem as "suspicious activity" so I try not to change anything about how my account is handled. Kind of an "if it ain't broke, don't fix it" thing. Neither Youtube or Patreon requires this business account stuff, either, so forgive me if I keep my distance for the time being. I know I'm being a bit paranoid, but this sounds like a big change for a Paypal account that's very old and basically gets used more than a bank account.

Admin (2 edits) (+1)

We’re working with our PayPal rep to look if we can remove the business account requirement. Hopefully I’ll have an update about that soon.

Do keep in mind that if you receive payouts from then you do not need a business account, the payouts system uses something different. (It would be similar to how you get paid by Patreon and YouTube most likely)

This topic is specifically for those who wish to sell directly from their PayPal account, where they are the merchant of record. If you’re already selling out of your PayPal account directly then you would be responsible for reporting income tax, and PayPal would be required to generate documents, so I would imagine PayPal already has your tax information.

Well, I'm speaking from the perspective of checking my dashboard here on Itch and it telling me I need to reconnect my Paypal, and doing so starts the process of converting me over to a business account. I do have a couple things listed on Itch as "Pay What You Want," but to date they've barely made more than $100 in, gosh, what, three years? Four? But I do hope to change that some day.

''If you’re having issues with the business account requirement and you’re not located in the United States please reply here with the country your account is located in. I’m working with our PayPal rep to see if we can implement an alternate solution that doesn’t require a business account, but would only be available in some countries. I need to collect a list of countries where people have had issues. You don’t need to reply if I already have your country listed here: Brazil, Poland, Russia, Portugal, Germany''

leafo, yes, I am from Brazil, and I can confirm that Paypal in this new way will not work well. There is some things like ''CNPJ'' that would make Inviable to a very small developer maintain his sales. So, I hope you can fix that. Thank you for the hard work. 

Thanks, I already have Brazil listed above. We’re still waiting to hear back from our PayPal rep about the update.


Could you please try again, we’ve heard that our account will now allow “casual sellers.” Report back here so we can keep track of what countries it works and doesn’t work for. Thanks

The message ''Your PayPal account needs to be reconnected'' stills appears, but I think I am still connected to the old PayPal thing. But I am not totally sure.


Did you go through the connection again? Please click “Return to” after you complete it to ensure we are notified that you completed it.

Thanks for setting this up. These things change all the time as usual. Although i don't particularly like some of the new T&C i have to now agree with:


Allow PayPal to connect your account with

By clicking "Agree and Connect" you instruct to access your transactional data from PayPal and you allow us to communicate with so that we can process your customer's payments. Automatically deduct their fee from each PayPal transaction prior to the remaining balance settling to your PayPal account. The fee amount is subject to your agreement with Share my PayPal dispute data with, which I manage in the PayPal Resolution Centre Allow to manage PayPal disputes and chargebacks, and to furnish any information and supporting documents to PayPal on my behalf.

I agree that PayPal may rely solely on the information and supporting documents provided by to adjudicate the dispute or resolve a chargeback. Treat's decisions in favour of my buyers in buyer disputes adjudicated by, to be used as a basis for reversing payments made to me

Transfer data to PayPal which enables PayPal to process transactions. may also confirm to PayPal that transactions are to be processed. Transfer data to PayPal which enables PayPal to process the transaction, which includes specific amounts for transactions previously authorised by the buyer. Instruct PayPal to return transactions on my behalf. Search through and access PayPal transaction-related data


So much for being the "merchant of record" !!

Admin (2 edits)

That’s correct, this new API allows us to facilitate disputes for payments that come through your account. This is good for two main reasons:

  1. It protects from scammers who show up, sell something stolen, then disappear without giving us any ability to refund the buyers. This is one of the primary reasons why we disabled direct payments on PayPal a few years back.
  2. We can manage customer support for you related to payments. We already do this for most of our sellers, but it lets our team respond timely is issues and dispute from buyers to make sure all parties are happy. A common issue with the old system is someone would sell something, it was broken, the buyer would reach out to us for a refund, and the seller would be unavailable. The only thing we could tell them was “Open a dispute on PayPal.” This makes it hard for people to trust when they can encounter scenarios where they feel ripped off. This way we can prevent a purchase from escalating to a dispute. You can review our refund policy here: If you feel like your products need special handling with refunds then you can reach out to our support team and we can leave a note one your account.

Also, all of this functionality provided by the new PayPal API matches what we have had available with Stripe Connect since we launched it many years back. So we aren’t introducing any new process here, only making what we normally do available for PayPal direct payments.

Hope that explains

(2 edits)

Does anyone use "direct to you" with PayPal successfully?

I tried to use "direct to you" and use PayPal.  I'm using PayPal business. The money goes to my Paypal but the user who paid the asset can't access the asset and I does not have any notification.

here is the log I got.
"payment code P-3507457"

"There was a problem executing your payment (201)"

Could you check this issue for me?

Admin (1 edit) (+1)

A lot of people are using it successfully. I’m looking closer at the payment you mentioned and PayPal is reporting it as “PENDING_REVIEW”.

I don’t know if this a review period that PayPal has to do, or you have to do. Maybe you can check the transaction page for that payment on your account.

Once the payment leaves pending review state then then buyer will be able to access the files.

PayPal may be putting a hold on your buyer account because you just created it, and it maybe was flagged.


(4 edits)

Yes, I just created the paypal business account.  

But the payment I got on masked as completed. You can see details here:


So the money actually goes to my PayPal and marked as completed but the buyer can't download and access to the asset. As well as my seller account does not have any notification.

So I guess there are something wrong with your Paypal system. Maybe the script wrong when decide payment review and account review? Maybe if the payment type is checkout then it will process to allow the buyer access the file.



Sorry for taking a bit to get back. PayPal’s API is very clearly marking the payment as pending, we are not misinterpreting the transaction. We don’t credit pending payments with access to files. When the payment does clear it should trigger a webhook update that will automatically mark the payment as completed on our end and authorize access to the files.

The status message is PENDING_REVIEW, which according to the PayPal docs, is described as “Authorization is pending manual review.” Maybe you can contact PayPal support for more information.


Thank you for detail comment. I just do a research and it look like this problem is from Paypal itself and it happen many times before so there is no way to work around.

Admin (1 edit) (+1)

I don’t know if you learned anything else, but we recently encountered a similar issue on our end with a recent seller selling with our payouts system. A large number of payments from China were forced into PENDING_REVIEW. In our experience, after 24 hours the payment will clear, and PayPal will send a webhook to that will allow us to mark the payment as completed. The buyer will receive a purchase email with their download link at that time.

We did notice thought hat when the buyer completes a purchase that goes into pending, we show a message that looks like an error. We’re updating that screen to account for this case to instruct the buyer that their payment is being delayed by PayPal. Hopefully that will clear up some confusion.


Thank you for details. I found no issue now. The payment process is great for now! 

I think maybe my PayPal business account was just created and it needs to wait for 21 days before it becomes trusted and has no more pending review status. 

any update on this issue? 

Good afternoon, can you view and check my account is everything correct or do I need to change something?

Payments have not been made for 10 days...


I don’t see anything wrong with your account, and you also are not using “Direct to you” payments, but our payouts system. Please try avoid posting unrelated topics for help on your account and use our support system. In this case though, there are no issues, sometimes payouts can take that long to be reviewed and sent depending on global volume across the site. Thanks

Thank you very much!:)

Hey, somebody help me for request my payment for paypal, my paypal account is from México, use "direct to you" and i have +$5, somebody help me, please


Payments for “direct to you” show up automatically in your account at the time of the transaction if they are completed successfully. There is no payout involved.

It looks like you first had payouts enabled, sold a copy, then later switched to “direct.” You will have to claim those funds via a payout, we can not change how a payment has happened after the fact.

Hope that helps

(2 edits)

Where do I claim the payment?, in or paypal? how?


The payments that collected on you behalf, that happened before you switched to “direct payments”, can be claimed here:

(1 edit)

So, do i the tax interview?


Yes, in order for us to pay any money collected on your behalf then you will have to complete the tax interview.


Hi Leafo, 

I have sent an email a few days ago regarding lifting the 1GB limit on my account

I have a project that is 1.69gb after compression with win rar. Are you able to help me at all.

Sorry for asking here I literally didn't know how else to reach you other than replying to this.

Kind regards


Admin (3 edits) (+1)

Please do not post in unrelated threads about requests for your account.

It looks like your email was sent 4 hours ago. Please at least wait a day for our support team to reply.




I'm also having trouble receiving payment via "Direct to you" option, for some reason approx. half year ago it worked fine but now I published a new game one month ago and I'm not receiving payment, what could be the problem?



What do you mean “I’m not receiving payment”? Please give us more specifics of the issue you’re having.

I've had "Direct to you" enabled for years and last month I've published a new game and I do receive notifications from itchio that someone bought it but I don't receive this payment in my PayPal account and it's been already almost a month like that.

I’m not a representative of or someone who is selling though them, but I vaguely remember reading there being some kind of threshold that has to be reached (I’d assume in order to keep transaction costs down to a reasonable amount). Is it possible that said threshold has not been reached, yet?

Update : so I've reconnected the paypal and it processes payments correctly now but who do i speak to about the previous payments that didn't go through (though they are visible on my dash and game was downloaded accordingly)? 

Hi from Japan.

I try to use "Direct to you" because I'd like to use JPY as a currency, but creating PayPal payment is failed as below when anyone try to buy my game.

"Failed to create PayPal payment (422)"

Is it related this topic's issue? If not, can I get more detailed error log for investigating my mistake.

I received a payment end of last month, but just set the payout destination to PayPal today.  I know there is a delay from Itch to Paypal and from Paypal to me, but I wonder if there is a menu I missed to see where the money goes or at which state of processing it should be? 

Under payout, I saw

"Initiate new payout

You don't have any payments available for payout"

But on my creator dashboard in the payment tab it indicates I received one.

I seem to be really bad at searching topics on the forum and it seemed that the contact support was for my assets or setting my email.

Admin (1 edit) (+1)

If you are using direct payments then you will not receive payments from us. Buyers will pay directly into you PayPal account each time they purchase.

If you are using our payouts system, then it takes 7 days after a purchase is completed before it is eligible to be requests for payout, as described on the payout page.

Hope that helps

Thanks.  (hope it pass despite linking Paypal on the week.)

Hi! I had payments waiting and just linked my PayPal. Is there a way for me to get the money that was there? I can't find a way to initiate a new payout. Thank you.


“Direct-to-you” payments is a separate system than our payouts system. You can learn more about the payout modes here:

On the payouts tab on your dashboard you can connect a PayPal account for receiving payouts. Any transactions on your account will be able to claimed for payout 7 days after they have occurred.

Ok; I still don't understand how to claim my payment, though. I didn't see anything to that effect on the Payment Modes page.


On the payouts tab on your dashboard you can connect a PayPal account for receiving payouts. Any transactions on your account will be able to claimed for payout 7 days after they have occurred.

Admin moved this topic to Developer Updates