Complete Guide What is PayPal?
dominate PayPal On the digital payment landscape, it has in excess of 360 million active users in over 200 countries and facilitated four billion payment transactions in the third quarter of 2020 alone.
Since 1998, PayPal has offered consumers alternative ways to make purchases and send and receive money online.
PayPal lets you pay for things online with a bank account instead of a credit card and keeps your payment information hidden from merchants , and it makes sending money easy and in most cases free.
PayPal has essentially eliminated checks and costly wire transfer services.
Decades since its inception, PayPal is still the best choice for online shopping and money transfer.
Here’s what you need to know to get started with PayPal:
- What is PayPal and how does it work?
- Why use PayPal?
- Is PayPal free to use?
- How to make a PayPal account
- How to send money via PayPal
- Receive payments through PayPal
- PayPal alternatives
What is PayPal and how does it work?
PayPal is an online payment system that makes paying for things online and sending and receiving money secure.
When you link your bank account, credit card, or debit card to your PayPal account, you can use PayPal to make online purchases with participating stores.
PayPal acts as an intermediary between your bank and merchants and keeps your payment information secure.
You can also use PayPal to send money securely to friends and family as well as receive money from people.
This feature is useful for splitting rent with roommates, for example, or receiving money for your birthday.
What is a PayPal balance?
PayPal Credit is PayPal’s line of credit program.
It’s like a virtual credit card, but it can only be used to make online payments on websites that accept PayPal.
Just like a traditional credit card, PayPal Credit allows you to defer payments.
Why use PayPal?
When you use your debit or credit card to pay online, merchants sometimes have access to your payment information.
PayPal provides an extra layer of protection by ensuring that merchants never see your sensitive data.
PayPal also uses a number of features to keep accounts secure, including end-to-end data encryption, optional binary account logins, and email confirmations for transactions.
Easy and convenient
Have you ever wanted to make a purchase online but couldn’t because you didn’t have your credit card handy?
You can use PayPal to make payments via cards linked to your account, without having to retype your card numbers.
All you need to do to make a purchase with PayPal is save your PayPal login information.
Is PayPal free to use?
Creating a PayPal account is free, online purchases, and most in-person transactions are also free. However, PayPal does charge a fee for certain types of transactions.
There is no fee for making online purchases with retailers that accept PayPal as long as there is no currency conversion involved.
There is a foreign transaction fee of 3% or 4% for purchases in a foreign currency.
Personal transaction fees
When you send money or receive money from it for personal reasons and not for any commercial reason, PayPal considers this a personal transaction.
PayPal has a special “Friends & Family” tab that you can click on when making personal transactions.
Some of these transactions attract fees while others don’t, mostly depending on where you’re withdrawing money from and where you’re sending it.
If you use a PayPal balance, bank account, or Amex Send account, there are no fees for domestic in-person transactions and a 5% fee (between $0.99 and $4.99) for an international transaction.
If you send money using a debit or credit card, you’ll be charged 2.9% if domestic and 5% if international, plus a flat fee that varies depending on your country ($0.30 for payments originating in the US).
Is there a fee for receiving money through PayPal?
In general, you cannot receive money from a friend for free through PayPal as long as there is no currency conversion.
Funds withdrawal fees
There are some other fees that you may encounter when using PayPal.
Although there is no fee for transferring your PayPal account balance to a local account, you will have to wait for the money to go through.
If you want instant access, you will have to pay a 1% fee. Additionally, withdrawing a check from your PayPal account comes with a $1.50 fee per withdrawal.
How to make a PayPal account
Before you open a PayPal account, you need to decide what type of account you want.
PayPal offers two types of accounts: personal and business.
Personal PayPal accounts
A personal PayPal account is the most popular account for individual use.
All you need is to send and receive money or use PayPal to make online purchases.
This account also allows you to access your purchase history, link new bank accounts and add credit cards to your account.
PayPal business accounts
PayPal also offers accounts that allow businesses to accept PayPal payments online as well as credit and debit cards online or in person, even if your customers don’t have PayPal accounts.
Businesses and professionals who rely on the service can also send invoices to customers and receive PayPal payments securely online.
How to create a PayPal account
you may Create a PayPal account From your computer, your mobile browser, or directly through the PayPal app.
Here are the steps you will need to follow:
- Go to paypal.com or download the PayPal app from the App Store or Google Play.
- Click the blue “Register” button.
- Select “Personal account”.
- Add your phone number and you will receive a text message with a security code to enter on the next screen.
- Enter your legal first and last name, email address, and a secure password.
- Finally, add a credit card, debit card, or bank account to your PayPal account.
How to send money via PayPal
There are several ways to send money via PayPal.
The method you choose depends on who you are sending money to, for what reason, and which broker you want to use.
How to send money via PayPal to friends and family
Whether you want to send your roommate money for your share of the rent or send your niece cash for her birthday, follow these instructions to pay friends and family via PayPal:
- From the PayPal app or your online PayPal account, hit the “Submit” button.
- Enter the name, email address, or phone number of the person you want to send money to.
You can also scan a friend’s PayPal QR code for a quick start.
If the person does not already have a PayPal account, they will be able to claim the funds by creating a free account.
- Enter the amount you want to send.
You have the option of adding a message, which can be a helpful reminder to you and the recipient of the purpose of the money.
For example, you could enter “July Rent” or “Happy Birthday, Georgia!”
- You will be asked about the purpose of online PayPal payments:
“friends and family” or “goods and services.”
The latter incurs a fee that the receiving account has to pay, so make sure you select the correct option.
How to send money via PayPal for products and services
Let’s say you’ve hired a lawnmower and want to use PayPal to pay the bill, or you’ve run out of money at a flea market and want to buy something from a PayPal-accepting seller.
This is how to send money for products and services via PayPal:
- If the seller has a QR code, tap “Scan/Pay” in the app to get started.
- Otherwise, from the PayPal app or your PayPal account online, hit the “Submit” button.
Then enter the name, email address, or phone number of the person you want to send money to.
- Enter the amount you want to send.
You can add a note (eg, “Mow the lawn” or “Antique safe”) to remind the merchant and yourself to pay.
- PayPal will ask you if you’re sending money to “friends and family” or paying for “goods and services.”
Receive payments through PayPal
Whether you are wondering how to receive money on PayPal from a friend, how to receive PayPal payments from customers or how to create an invoice on PayPal, getting money through PayPal is simple.
Keep in mind that there are different merchant fees associated with some payment options so make sure you understand which option is best for your situation.
- From the PayPal app or your PayPal account online, hit the “Request” button.
- From here you can choose from the following options:
- Enter the email or mobile phone number of the person paying you
- Create a PayPal.Me link to participate
- Divide a bill
- Create invoices
- Your friend can also initiate a PayPal payment to send you money by entering your email or mobile phone number.
- When someone sends you money, you will receive a notification via email and/or the PayPal app.
The money is deposited into your PayPal account.
- You can keep the money in your PayPal account to apply it to future transactions or transfer it to your bank account.
Venmo It is a convenient mobile app that does not charge a transaction fee when requesting money.
The company makes money by charging fees for sending money via credit card and instant transfers.
Standard transfers are free.
Venmo has a unique social networking feature.
lets apply Cash People send money and make purchases online and in stores from their phones.
You can load your Cash app with money from a bank account, debit card or credit card.
If you do not have a bank account, you can sign up for a cash card debit card linked to your application balance.
You can use the debit card, or its e-wallet version, anywhere Visa is accepted.
Just like its competitors, it lets Skrill For its users send money easily.
Its biggest highlight is that the tool does not charge a foreign transaction fee for sending money abroad from the US.
Just be sure to use your account regularly to avoid the $5 inactivity fee.
Skrill offers its users a prepaid Skrill Visa card with an e-wallet option.
The card has a loyalty program that allows you to earn rewards for every purchase.