How Does PayPal Work?


PayPal helps you send, receive and store money. Popular online stores like eBay, Walmart and Best Buy all support PayPal as a payment processor. By linking a credit card, debit card or bank account to your PayPal account, you can transfer payments online to retailers or other PayPal users. Upon receiving money, you can elect to send it directly to your bank account as well. Signing up is free on PayPal's website.

Link Bank Accounts and Cards

  • Linking your bank account and credit or debit cards is not only crucial for making and accepting payments, but it's one of PayPal's requirements for verifying your identity.

    To add a bank to your PayPal account, log in to the service and click Wallet. Choose Link a bank and select your bank from the list provided. These banks allow for instant verification just by logging in with your online account. If you don't see your bank here, click I have a different bank to enter your routing number and account number. PayPal supports either checking or savings, and will make two small deposits within three to five business days. After checking your bank statements, log back in to PayPal to enter the amounts for verification.

    To link a card, choose Link a card on the Wallet page. Select either debit, prepaid or credit, then enter in your card number, expiration, security code and billing address. Click Save when you're done.

Sending Money

  • All that's required to send money is the recipient's email address or mobile phone number. On your PayPal dashboard, click Pay or send money. Choose whether you want to send money to friends or family or in exchange for a good or service. Enter the email address or mobile number of the recipient as well as the transfer amount. After clicking Next, PayPal outlines the amount you are sending and asks for your billing address. Sending money is free if it comes from a bank account or your PayPal balance. Otherwise, for sources such as a card, a 2.9 percent fee plus $0.30 processing charge applies. The sender chooses who pays this amount.

    Using the PayPal mobile app, tap Transfer and fill out the information for sending money provided on the Send tab.

    If the recipient doesn't have a PayPal account, he will receive the money immediately upon creating one with the credentials you used to send him the money.

Receiving Money

  • To receive money, instruct the sender to transmit the funds to the email address or phone number associated with your PayPal account. The transfer appears in your PayPal balance the same day it's authorized.

    You can keep your money there, or elect to transfer the funds to a bank you have linked to your account. On PayPal's website, click Transfer to your bank to begin a transfer. In the mobile app, tap Wallet and choose Withdraw. Fill out the amount and select the bank account that will receive it. There is no fee to move money to your bank, but it could take three to five business days to process. To receive your withdrawal in the form of a check, the fee is $1.50.

Online Shopping with PayPal

  • Many online shopping destinations support for PayPal. Some examples include eBay, Walmart, Best Buy and Overstock. The benefit with paying through PayPal is the efficiency of logging in to your account and selecting a payment method, rather than filling out contact and card information on the seller's website.

    To check out with PayPal, look for the logo on the checkout or cart page of a seller website. Click the appropriate PayPal indicator to open PayPal's website to log in, choose a payment method and confirm your payment.

    When you pay with PayPal, the seller does not receive sensitive information like your credit-card or bank-account numbers.

Types of PayPal Accounts

  • PayPal offers three different types of accounts: Personal, Business and Student. All are free to use but serve different functions. A Personal account carries all of the features most users need: sending and receiving money, linking accounts, holding a balance, etc. A Business account lets you use your PayPal account under your business name, plus grant limited access to up to 200 employees. Business accounts can also accept payments for commercial purposes for a fee. Finally, Student accounts are for teenagers ages 13 and above. They are linked to a parent's Personal or Business account and parents can monitor spending activity. (Ref 5)

    To upgrade from a Personal account to a Business account, click the Settings icon on the top right. Under Account options, click Upgrade to a Business account. Fill out your business information and click Continue to finalize the upgrade.

Related Searches


  • Photo Credit Ridofranz/iStock/Getty Images
Promoted By Zergnet



You May Also Like

  • How Does a PayPal Money Market Fund Work?

    Once you have a PayPal account, you can invest in the PayPal Money Market Fund. Although investing in the fund involves some...

  • How Does PayPal Confirm You?

    PayPal continues to reign supreme as the top online payment processor for millions of users. Before sending and receiving payments, you must...

  • How Long Does It Take for a PayPal Withdrawal?

    PayPal offers several ways to access your funds once you’ve been paid via that service. You can spend your cash instantly with...

  • How to Sell With PayPal

    PayPal is a powerful and trusted name in online commerce. With PayPal, you can sell on its affiliated auction site eBay, as...

  • How Does "Bill Me Later" Work?

    When shopping online, many people pay with a credit card or with a third-party processor like PayPal. Another option available with some...

  • Can Paypal Charge Your Credit Card?

    PayPal is an online commerce banking system that allows users to make online transactions, whether for personal purchases and sales or business...

Related Searches

Check It Out

Geek Vs Geek: Robot battles, hoverboard drag race, and more

Is DIY in your DNA? Become part of our maker community.
Submit Your Work!