PayPal 101

Home & Family, Technology
on November 23, 2011

In the early days of Internet commerce, consumers paid for products and services in conventional ways, such as checks and money orders. As buying online became more common, people wanted quicker and safer ways to transfer money. Today, PayPal has become a solution for literally millions of buyers and sellers who want to conduct business via the Internet. According to the Pew Research Center, two-thirds of Americans have purchased something online, and PayPal is a key part of paying for many of those purchases.

Online account. In simple terms, a PayPal account is like an online bank account. According to the PayPal website, the account acts like a “digital wallet,” which can be handy in a world where individuals want to buy and sell while on the go. The account is typically free to set up, and you can put money into it by transferring cash from a checking or savings account. Depending on the type of account, you may earn a small amount of interest on the balance. You can also get a PayPal credit card that links to your account.

Multiple options. PayPal does not necessarily require you to have money in the account in order to pay for products and services. You can also link a PayPal account to a bank account or credit card. This allows you to utilize the PayPal service on countless sites while also maintaining some level of control in terms of funding sources. If the PayPal account itself does not have enough money, you can have other sources automatically fund the balance.

Varied accounts. The PayPal site allows for different types of accounts, such as individual consumer accounts and more complex business accounts. Consumer accounts allow people to do their usual shopping online, while business accounts are a way for organizations to accept credit cards and email invoices to customers. Pricing for business accounts depends on monthly turnover, and PayPal also has options for nonprofit organizations.

Fees and services. As with any other website, it is important to read the rules and the fine print before starting to conduct business. PayPal does charge fees for certain types of transactions, which is how the company make its money. You can send money to other people via PayPal through the PayPal website or with various types of smartphone apps.