What is PayPal used for? How to make a PayPal account? PayPal dominates the digital payment scene. It has upwards of 360 million active users in more than 200 countries and facilitated four billion payment transactions in Q3 of 2020 alone.
Since 1998, PayPal has been giving 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. It also makes sending money easy and, in most cases, free. PayPal has essentially made checks and costly wire transfer services obsolete.
Decades since its founding, PayPal remains a top choice for online shopping and money transfers. Here’s what you need to know to get started with PayPal.
What is PayPal used for?
PayPal is an online payment system that makes paying for things online and sending and receiving money safe and secure.
When you link your bank account, credit card or debit card to your PayPal account, you can use PayPal to make purchases online with participating stores. PayPal serves as a middleman between your bank and merchants and keeps your payment information secure.
You can also use PayPal to securely send money 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 PayPal Credit?
PayPal Credit is PayPal’s credit line 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 lets you defer payments.
What is PayPal Pay in 4?
PayPal also offers a buy now, pay later program called Pay in 4, which lets users split up purchases into four equal payments over six weeks. There is no interest or fees associated with this program, and you can pay off purchases between $30 and $1,500.
Why use PayPal?
When you use your debit or credit card to pay for things online, merchants can sometimes access 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 two-factor account logins and email confirmations for transactions.
Easy and convenient
PayPal is now the fifth most accepted payment option after Visa, Mastercard, American Express and Discover and is available at millions of stores online. Have you ever wanted to make an online purchase but couldn’t because you didn’t have your credit card handy? You can use PayPal to make a payment via cards that are linked to your account, without having to retype your card numbers. All you need to do to make a purchase via PayPal is memorize (or save) your PayPal login information.
Is PayPal free to use?
Creating a PayPal account is free and online purchases and most personal transactions are also free. PayPal does, however, charge fees for certain types of transactions.
Fees for purchases
There are no fees for making purchases online with retailers that accept PayPal as long as there’s no currency conversion involved. There is a 3 percent or 4 percent foreign transaction fee for purchases made in a foreign currency.
Fees for personal transactions
When you send money to or receive money from friends and family for personal reasons, and not for any sort of commercial reason, PayPal considers this a personal transaction. PayPal has a special “Friends and Family” tab you can click when making personal transactions. Some of these transactions attract fees while others don’t, mostly based on where you’re drawing the funds from and where you’re sending them.
If you use your PayPal balance, bank account, or Amex Send™ Account, there is no fee for a domestic personal transaction and a 5 percent fee (between $0.99 and $4.99 USD) for an international transaction. If you send money using a debit or credit card, you’ll be charged 2.9 percent if it’s domestic and 5 percent if it’s international, plus a fixed fee that varies depending on your country ($0.30 USD for payments originating in the U.S.).
Is there a fee to receive money through PayPal? Generally speaking, no. It’s free to receive money from a friend through PayPal as long as there’s no currency conversion involved.
Fees for withdrawing money
There are some other fees you might encounter when using PayPal. While there’s no fee to transfer your PayPal account balance to a local account, you’ll have to wait for the funds to go through. If you want instant access, you’ll have to pay a 1 percent fee. In addition, drawing 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 kind of account you want. PayPal offers two types of accounts: personal and business.
Personal PayPal accounts
A personal PayPal account is the most common account for individual use. It’s all you’ll need to send and receive money or to use PayPal to make purchases online. This account also lets you access your purchase history, link new bank accounts and add credit cards to your account.
Business PayPal accounts
PayPal also offers accounts that allow businesses to accept PayPal payments online as well as credit cards and debit cards online or in person, even if your customers don’t have PayPal accounts. Service-based businesses and professionals can also send invoices to clients and receive PayPal online payments securely.
How to create a PayPal account
You can create a PayPal account from your computer or mobile browser or directly through the PayPal app. Here are the steps you’ll need to follow:
- Go to paypal.com or download the PayPal app from the App Store or Google Play.
- Click the blue “Sign Up” button.
- Select “Personal Account.”
- Add your phone number and you’ll receive a text 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 to friends and family
Whether you want to send money to a roommate for your share of the rent or shower your niece with cash on her birthday, follow these instructions for paying friends and family via PayPal:
- From the PayPal app or your online PayPal account, hit the “Send” button.
- Enter the name, email address or phone number of the person you want to send money to. You can also scan your friend’s PayPal QR code for a quick start. If the person doesn’t already have a PayPal account, they’ll be able to claim the money by making a free account.
- Enter the amount you want to send. You have the option to add a message, which could be a useful reminder to you and the recipient what the money’s for. For example, you could enter “July rent” or “Happy birthday, Georgia!”
- You’ll be asked what your PayPal online payment is for: “Friends and Family” or “Goods and Services.” The latter triggers a fee that the receiving account has to pay, so make sure you select the right option.
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