How Does PayPal Work?

Before you get into the details of how PayPal works, you should know that for most individuals and small business it does work quite well. Essentially it’s a trouble-free method of sending and receiving funds on the Internet.

Here are the basics, in PayPal’s own words, “PayPal can be used to send and receive payments through the internet. Once you sign up for a PayPal account, you can send and receive money online. When you send money, you can choose to fund your payments from your PayPal account balance, a credit card, or your bank account. Recipients are then notified via an email from PayPal that they have received a payment from you.”

If that sounds very easy, rest assured it is. When shopping on the Web, if you want to buy something using PayPal you usually just have to choose that option and then decide if you want to deduct the amount from your PayPal account or from a credit card or bank account. You must supply all the details of the credit card/bank account and have that method established first. PayPal transfers the money electronically from the source you choose. It is deposited into the account of the merchant or individual seller.

If you are to receive a payment from someone the buyer simply has to choose PayPal as their option on your Web site. The buyer can do this with a credit card, bank account or some other electronic-funding source. The funds will be deposited in your individual or business PayPal account.

One of the nice things about PayPal is that you can transfer money from the PayPal account into a bank checking account as well as use it to purchase items from Web sites. PayPal also offers an actual debit card that can be used to purchase items when you walk into a retail store.

All of these options mean that PayPal can be a good place to keep “all your financial information in one place,” according to the company’s site. The PayPal platform allows you to designate different credit cards and bank accounts for different types of purchases. The company assures users that detailed account information is never visible to others.

There is still some debate on how secure money is when using PayPal. One of the things that assure people is that PayPal has been the leader in online-commerce services for some time. Keep in mind, however, that PayPal is not subject to many of the banking regulations that apply to financial institutions in various countries and states. There has been some difficulty with access to funds because of credit-card problems, bank-balance problems etc.

For those who wish to try other e commerce services, there are a number available. But this doesn’t mean that other online financial companies will be any more reliable or secure than PayPal. It’s always a good idea to study the issue as closely as possible before making use of any fund-transfer service. Protect your money and your credit by being an informed consumer.

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