diff --git a/modules/ppcp-api-client/src/Factory/AmountFactory.php b/modules/ppcp-api-client/src/Factory/AmountFactory.php
index d0079f1a9..b021d8965 100644
--- a/modules/ppcp-api-client/src/Factory/AmountFactory.php
+++ b/modules/ppcp-api-client/src/Factory/AmountFactory.php
@@ -124,6 +124,27 @@ class AmountFactory {
 		$currency = $order->get_currency();
 		$items    = $this->item_factory->from_wc_order( $order );
 
+		$discount_value = array_sum(
+			array(
+				(float) $order->get_total_discount( false ), // Only coupons.
+				$this->discounts_from_items( $items ),
+			)
+		);
+		$discount       = null;
+		if ( $discount_value ) {
+			$discount = new Money(
+				(float) $discount_value,
+				$currency
+			);
+		}
+
+		$items = array_filter(
+			$items,
+			function ( Item $item ): bool {
+				return $item->unit_amount()->value() > 0;
+			}
+		);
+
 		$total_value = (float) $order->get_total();
 		if ( (
 			CreditCardGateway::ID === $order->get_payment_method()
@@ -160,14 +181,6 @@ class AmountFactory {
 			$currency
 		);
 
-		$discount = null;
-		if ( (float) $order->get_total_discount( false ) ) {
-			$discount = new Money(
-				(float) $order->get_total_discount( false ),
-				$currency
-			);
-		}
-
 		$breakdown = new AmountBreakdown(
 			$item_total,
 			$shipping,
@@ -251,4 +264,29 @@ class AmountFactory {
 
 		return new AmountBreakdown( ...$money );
 	}
+
+	/**
+	 * Returns the sum of items with negative amount;
+	 *
+	 * @param Item[] $items PayPal order items.
+	 * @return float
+	 */
+	private function discounts_from_items( array $items ): float {
+		$discounts = array_filter(
+			$items,
+			function ( Item $item ): bool {
+				return $item->unit_amount()->value() < 0;
+			}
+		);
+		return abs(
+			array_sum(
+				array_map(
+					function ( Item $item ): float {
+						return (float) $item->quantity() * $item->unit_amount()->value();
+					},
+					$discounts
+				)
+			)
+		);
+	}
 }
diff --git a/modules/ppcp-api-client/src/Factory/PurchaseUnitFactory.php b/modules/ppcp-api-client/src/Factory/PurchaseUnitFactory.php
index 37c371fb0..303b7bc6a 100644
--- a/modules/ppcp-api-client/src/Factory/PurchaseUnitFactory.php
+++ b/modules/ppcp-api-client/src/Factory/PurchaseUnitFactory.php
@@ -107,7 +107,12 @@ class PurchaseUnitFactory {
 	 */
 	public function from_wc_order( \WC_Order $order ): PurchaseUnit {
 		$amount   = $this->amount_factory->from_wc_order( $order );
-		$items    = $this->item_factory->from_wc_order( $order );
+		$items    = array_filter(
+			$this->item_factory->from_wc_order( $order ),
+			function ( Item $item ): bool {
+				return $item->unit_amount()->value() > 0;
+			}
+		);
 		$shipping = $this->shipping_factory->from_wc_order( $order );
 		if (
 			! $this->shipping_needed( ... array_values( $items ) ) ||
@@ -153,7 +158,12 @@ class PurchaseUnitFactory {
 	 */
 	public function from_wc_cart( \WC_Cart $cart ): PurchaseUnit {
 		$amount = $this->amount_factory->from_wc_cart( $cart );
-		$items  = $this->item_factory->from_wc_cart( $cart );
+		$items  = array_filter(
+			$this->item_factory->from_wc_cart( $cart ),
+			function ( Item $item ): bool {
+				return $item->unit_amount()->value() > 0;
+			}
+		);
 
 		$shipping = null;
 		$customer = \WC()->customer;
diff --git a/tests/PHPUnit/ApiClient/Factory/PurchaseUnitFactoryTest.php b/tests/PHPUnit/ApiClient/Factory/PurchaseUnitFactoryTest.php
index 0450c1a90..72c664c91 100644
--- a/tests/PHPUnit/ApiClient/Factory/PurchaseUnitFactoryTest.php
+++ b/tests/PHPUnit/ApiClient/Factory/PurchaseUnitFactoryTest.php
@@ -6,6 +6,7 @@ namespace WooCommerce\PayPalCommerce\ApiClient\Factory;
 use WooCommerce\PayPalCommerce\ApiClient\Entity\Address;
 use WooCommerce\PayPalCommerce\ApiClient\Entity\Amount;
 use WooCommerce\PayPalCommerce\ApiClient\Entity\Item;
+use WooCommerce\PayPalCommerce\ApiClient\Entity\Money;
 use WooCommerce\PayPalCommerce\ApiClient\Entity\Payee;
 use WooCommerce\PayPalCommerce\ApiClient\Entity\Payments;
 use WooCommerce\PayPalCommerce\ApiClient\Entity\PurchaseUnit;
@@ -21,7 +22,19 @@ class PurchaseUnitFactoryTest extends TestCase
 	private $wcOrderId = 1;
 	private $wcOrderNumber = '100000';
 
-    public function testWcOrderDefault()
+	private $item;
+
+	public function setUp(): void
+	{
+		parent::setUp();
+
+		$this->item = Mockery::mock(Item::class, [
+			'category' => Item::PHYSICAL_GOODS,
+			'unit_amount' => new Money(42.5, 'USD'),
+		]);
+	}
+
+	public function testWcOrderDefault()
     {
         $wcOrder = Mockery::mock(\WC_Order::class);
         $wcOrder->expects('get_order_number')->andReturn($this->wcOrderNumber);
@@ -37,13 +50,11 @@ class PurchaseUnitFactoryTest extends TestCase
         $payee = Mockery::mock(Payee::class);
         $payeeRepository
             ->shouldReceive('payee')->andReturn($payee);
-	    $item = Mockery::mock(Item::class);
-	    $item->shouldReceive('category')->andReturn(Item::PHYSICAL_GOODS);
         $itemFactory = Mockery::mock(ItemFactory::class);
         $itemFactory
             ->shouldReceive('from_wc_order')
             ->with($wcOrder)
-            ->andReturn([$item]);
+            ->andReturn([$this->item]);
 
         $address = Mockery::mock(Address::class);
         $address
@@ -79,11 +90,67 @@ class PurchaseUnitFactoryTest extends TestCase
         $this->assertEquals($this->wcOrderId, $unit->custom_id());
         $this->assertEquals('', $unit->soft_descriptor());
         $this->assertEquals('WC-' . $this->wcOrderNumber, $unit->invoice_id());
-        $this->assertEquals([$item], $unit->items());
+        $this->assertEquals([$this->item], $unit->items());
         $this->assertEquals($amount, $unit->amount());
         $this->assertEquals($shipping, $unit->shipping());
     }
 
+	public function testWcOrderWithNegativeFees()
+    {
+        $wcOrder = Mockery::mock(\WC_Order::class);
+        $wcOrder->expects('get_order_number')->andReturn($this->wcOrderNumber);
+        $wcOrder->expects('get_id')->andReturn($this->wcOrderId);
+        $amount = Mockery::mock(Amount::class);
+        $amountFactory = Mockery::mock(AmountFactory::class);
+        $amountFactory
+            ->shouldReceive('from_wc_order')
+            ->with($wcOrder)
+            ->andReturn($amount);
+        $payeeFactory = Mockery::mock(PayeeFactory::class);
+        $payeeRepository = Mockery::mock(PayeeRepository::class);
+        $payee = Mockery::mock(Payee::class);
+        $payeeRepository
+            ->shouldReceive('payee')->andReturn($payee);
+
+		$fee = Mockery::mock(Item::class, [
+			'category' => Item::DIGITAL_GOODS,
+			'unit_amount' => new Money(10.0, 'USD'),
+		]);
+		$discount = Mockery::mock(Item::class, [
+			'unit_amount' => new Money(-5, 'USD'),
+		]);
+
+        $itemFactory = Mockery::mock(ItemFactory::class);
+        $itemFactory
+            ->shouldReceive('from_wc_order')
+            ->with($wcOrder)
+            ->andReturn([$this->item, $fee, $discount]);
+
+        $address = Mockery::mock(Address::class);
+        $address->shouldReceive('country_code')->andReturn('DE');
+        $address->shouldReceive('postal_code')->andReturn('12345');
+        $shipping = Mockery::mock(Shipping::class);
+        $shipping->shouldReceive('address')->andReturn($address);
+        $shippingFactory = Mockery::mock(ShippingFactory::class);
+        $shippingFactory
+            ->shouldReceive('from_wc_order')
+            ->with($wcOrder)
+            ->andReturn($shipping);
+        $paymentsFacory = Mockery::mock(PaymentsFactory::class);
+        $testee = new PurchaseUnitFactory(
+            $amountFactory,
+            $payeeRepository,
+            $payeeFactory,
+            $itemFactory,
+            $shippingFactory,
+            $paymentsFacory
+        );
+
+        $unit = $testee->from_wc_order($wcOrder);
+        $this->assertTrue(is_a($unit, PurchaseUnit::class));
+        $this->assertEquals([$this->item, $fee], $unit->items());
+    }
+
     public function testWcOrderShippingGetsDroppedWhenNoPostalCode()
     {
         $wcOrder = Mockery::mock(\WC_Order::class);
@@ -100,12 +167,11 @@ class PurchaseUnitFactoryTest extends TestCase
         $payee = Mockery::mock(Payee::class);
         $payeeRepository
             ->expects('payee')->andReturn($payee);
-	    $item = Mockery::mock(Item::class, ['category' => Item::PHYSICAL_GOODS]);
         $itemFactory = Mockery::mock(ItemFactory::class);
         $itemFactory
             ->expects('from_wc_order')
             ->with($wcOrder)
-            ->andReturn([$item]);
+            ->andReturn([$this->item]);
 
         $address = Mockery::mock(Address::class);
         $address
@@ -155,12 +221,11 @@ class PurchaseUnitFactoryTest extends TestCase
         $payee = Mockery::mock(Payee::class);
         $payeeRepository
             ->expects('payee')->andReturn($payee);
-	    $item = Mockery::mock(Item::class, ['category' => Item::PHYSICAL_GOODS]);
         $itemFactory = Mockery::mock(ItemFactory::class);
         $itemFactory
             ->expects('from_wc_order')
             ->with($wcOrder)
-            ->andReturn([$item]);
+            ->andReturn([$this->item]);
 
         $address = Mockery::mock(Address::class);
         $address
@@ -208,13 +273,11 @@ class PurchaseUnitFactoryTest extends TestCase
         $payeeRepository
             ->expects('payee')->andReturn($payee);
 
-        $item = Mockery::mock(Item::class);
-        $item->shouldReceive('category')->andReturn(Item::PHYSICAL_GOODS);
         $itemFactory = Mockery::mock(ItemFactory::class);
         $itemFactory
             ->expects('from_wc_cart')
             ->with($wcCart)
-            ->andReturn([$item]);
+            ->andReturn([$this->item]);
 
         $address = Mockery::mock(Address::class);
         $address
@@ -251,7 +314,7 @@ class PurchaseUnitFactoryTest extends TestCase
         $this->assertEquals('', $unit->custom_id());
         $this->assertEquals('', $unit->soft_descriptor());
         $this->assertEquals('', $unit->invoice_id());
-        $this->assertEquals([$item], $unit->items());
+        $this->assertEquals([$this->item], $unit->items());
         $this->assertEquals($amount, $unit->amount());
         $this->assertEquals($shipping, $unit->shipping());
     }
@@ -273,13 +336,12 @@ class PurchaseUnitFactoryTest extends TestCase
         $payee = Mockery::mock(Payee::class);
         $payeeRepository
             ->expects('payee')->andReturn($payee);
-        $item = Mockery::mock(Item::class);
-        $item->shouldReceive('category')->andReturn(Item::PHYSICAL_GOODS);
+
         $itemFactory = Mockery::mock(ItemFactory::class);
         $itemFactory
             ->expects('from_wc_cart')
             ->with($wcCart)
-            ->andReturn([$item]);
+            ->andReturn([$this->item]);
         $shippingFactory = Mockery::mock(ShippingFactory::class);
         $paymentsFacory = Mockery::mock(PaymentsFactory::class);
         $testee = new PurchaseUnitFactory(
@@ -312,12 +374,11 @@ class PurchaseUnitFactoryTest extends TestCase
         $payee = Mockery::mock(Payee::class);
         $payeeRepository
             ->expects('payee')->andReturn($payee);
-	    $item = Mockery::mock(Item::class, ['category' => Item::PHYSICAL_GOODS]);
         $itemFactory = Mockery::mock(ItemFactory::class);
         $itemFactory
             ->expects('from_wc_cart')
             ->with($wcCart)
-            ->andReturn([$item]);
+            ->andReturn([$this->item]);
 
         $address = Mockery::mock(Address::class);
         $address
@@ -359,8 +420,7 @@ class PurchaseUnitFactoryTest extends TestCase
         $payeeFactory->expects('from_paypal_response')->with($rawPayee)->andReturn($payee);
         $payeeRepository = Mockery::mock(PayeeRepository::class);
         $itemFactory = Mockery::mock(ItemFactory::class);
-        $item = Mockery::mock(Item::class, ['category' => Item::PHYSICAL_GOODS]);
-        $itemFactory->expects('from_paypal_response')->with($rawItem)->andReturn($item);
+        $itemFactory->expects('from_paypal_response')->with($rawItem)->andReturn($this->item);
         $shippingFactory = Mockery::mock(ShippingFactory::class);
         $shipping = Mockery::mock(Shipping::class);
         $shippingFactory->expects('from_paypal_response')->with($rawShipping)->andReturn($shipping);
@@ -394,7 +454,7 @@ class PurchaseUnitFactoryTest extends TestCase
         $this->assertEquals('customId', $unit->custom_id());
         $this->assertEquals('softDescriptor', $unit->soft_descriptor());
         $this->assertEquals('invoiceId', $unit->invoice_id());
-        $this->assertEquals([$item], $unit->items());
+        $this->assertEquals([$this->item], $unit->items());
         $this->assertEquals($amount, $unit->amount());
         $this->assertEquals($shipping, $unit->shipping());
     }
@@ -411,8 +471,7 @@ class PurchaseUnitFactoryTest extends TestCase
         $payeeFactory = Mockery::mock(PayeeFactory::class);
         $payeeRepository = Mockery::mock(PayeeRepository::class);
         $itemFactory = Mockery::mock(ItemFactory::class);
-        $item = Mockery::mock(Item::class, ['category' => Item::PHYSICAL_GOODS]);
-        $itemFactory->expects('from_paypal_response')->with($rawItem)->andReturn($item);
+        $itemFactory->expects('from_paypal_response')->with($rawItem)->andReturn($this->item);
         $shippingFactory = Mockery::mock(ShippingFactory::class);
         $shipping = Mockery::mock(Shipping::class);
         $shippingFactory->expects('from_paypal_response')->with($rawShipping)->andReturn($shipping);
@@ -454,8 +513,7 @@ class PurchaseUnitFactoryTest extends TestCase
         $payeeFactory->expects('from_paypal_response')->with($rawPayee)->andReturn($payee);
         $payeeRepository = Mockery::mock(PayeeRepository::class);
         $itemFactory = Mockery::mock(ItemFactory::class);
-        $item = Mockery::mock(Item::class, ['category' => Item::PHYSICAL_GOODS]);
-        $itemFactory->expects('from_paypal_response')->with($rawItem)->andReturn($item);
+        $itemFactory->expects('from_paypal_response')->with($rawItem)->andReturn($this->item);
         $shippingFactory = Mockery::mock(ShippingFactory::class);
         $paymentsFacory = Mockery::mock(PaymentsFactory::class);
         $testee = new PurchaseUnitFactory(