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Does the payout amount include shipping costs?

No, the payout amount is calculated out of the cart subtotal, so, it does not include shipping costs.

Does it work only with payments coming through PayPal?

No, you can receive payments from any payment gateway you’ve set up on your WooCommerce-based store. So, users can pay with card, cash, bank transfer, PayPal etc.

Yet, your receivers must have a PayPal account in order to get payments through PayPal Payouts.

Do you need a PayPal business account?