Want to open one of these accounts that are supposed to make on-line purchases safer and easier. Could anyone tell me how they work and how to open such an account?
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"How Does A Paypal Account Work?" was posted on Monday, February 8th, 2010 at 7:33 am.
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Hi mermaid,
PayPal today is not a payment system: it’s a suite of many different payment systems. Paypal is located in San Jose, California. It was founded in 1998 and was acquired by eBay in 2002.
Paypal is one of the most popular trade names in ecommerce. There are over 50 million users who utilize the services of Paypal.
Here the payment transfers are done via e-mail payments.
The parties between whom the payment is exchanged cannot see each others credit card or bank information. It is somewhat similar to an escrow payment because it holds the money for the two parties thereby acting as a middleman.
Paypal keeps the information of its customers in an encrypted form. No one can decrypt the confidential information.
This specialty makes Paypal one of the safest gateways of transactions. Paypal is ideal for money transactions between strangers. It doesn’t matter which part of the globe you are sitting in.
Only two main requirements are essential to open a Paypal account, a valid e-mail address and a valid credit card or bank account.
Though Paypal is free for the buyers, the sellers have to give a fee of 1.9% to 2.9%.
The money is withdrawn from the buyer’s credit card or the bank account and there is no cost involved in paying the money to the Paypal users. Paypal will charge only if you receive funds in your account.
Paypal also works when you want to make payments to an online store apart from making payments to friends or business associates.
There are three types of paypal accounts; Paypal Personal account, a Paypal Premier account and a Paypal business account.
The features of the personal account are limited. Even though you can send and receive money to and from other Paypal account, you cannot receive money from credit cards or debit card payments. To activate this facility, you have to upgrade your status to a Premier account.
The fee structure is slightly different and you can get the details on the Paypal website. The Business account is best suited for people who are having huge business set-ups or are running large online stores.
It is useful if your transactions involve complex deals. You can always upgrade your existing Paypal account to the Business account. The process is very simple but you have to check the site to have a look at the fee structure.
Indeed, Paypal has become one of the most significant tools in eCommerce today.
You sign up for an account with a valid email address and password. As a way of sending and receiving money, you will attach a checking or savings account to the PayPal account; you’ll enter your account number and routing number, and PayPal will deposit two small amounts into the account within a few business days. After you receive them, you’ll validate the account by reporting what amounts they deposited. This lets them know that the account is yours, and is valid. After that, you’ll have the ability to transfer money from your bank into the PayPal account, pay for online purchases via a direct withdrawl from your bank account by way of PayPal’s payment system, and can deposit money sent from other PayPal users into your bank account. This is generally more secure than using a credit or debit card, as these numbers can easily be stolen and used illegally. It’s much tougher for someone to get anywhere simply using your account and routing numbers. PayPal’s system is quite secure, and I’ve never had a problem doing business with them. One caveat: if you send/receive lump sums of money between yourself and another PayPal user, they will deduct a small percentage in fees that can be noticeable if you send large sums of money.
I see you have two answers already but here is the easy version. You link your debit card, and later your bank account to paypal account and they take the risk away from shopping online when you use paypal (they take the risk for you, if someone scams you, they’ll pay you back) you can also use it to send and receive money to fellow paypalers just by having their email addresses