What Is a Paypal Account?

By Kent Ninomiya

  • Overview

    Paypal is an online service that acts as an intermediary in financial transactions over the Internet. An account is required to either send money to someone through Paypal or to receive it. Paypal offers the convenience of paying with a credit card or bank account without having to share your financial information with the other party in the financial transaction.
  • Types

    There are three types of Paypal accounts. A Personal Paypal account is for individuals who wish to buy something over the Internet. A Premier Paypal account is for people who both buy and sell items over the Internet. A Business Paypal account is for merchants who use a company name while performing transactions over the Internet.
  • Buying with Paypal

    Once you open any type of Paypal account, you can buy items over the Internet. Paypal is owned by the auction website eBay. It is most commonly used for eBay transactions. Paypal is also a payment option on thousands of different online merchants and can be used to transfer money between individuals. If the Paypal account owner has a balance in their account, those funds will be used for payment. Otherwise they can pay with a credit card or from a bank account. Sending money is always free on Paypal.

  • Selling with Paypal

    Individuals and merchants can receive payments through Paypal. Bills and invoices can be sent through a Paypal account requesting money from anyone with an email account. Payment can be made with a Paypal balance, bank account or credit card. Those funds then go into the recipient's Paypal account. The money can be left there, used to make purchases through Paypal, or can be withdrawn by transferring the money to a bank account.
  • Paypal Fees

    Paypal charges fees to individuals and merchants who receive payments through a credit card, debit card or buyer credit. Personal Paypal account holders must upgrade to a Premier or Business Paypal account to receive payments this way through eBay. The fee is 1.9% to 2.9 % plus 30 cents. This fee also applies to Premier and Business Paypal accounts for payments from a Paypal balance or bank account even though it is free for Personal Paypal account holders. Fees are higher if the transaction involves a currency conversion. There are no fees to open an account, send money, withdraw funds or add funds to a Paypal account.
  • History

    Paypal was founded in 1998 and acquired by eBay in 2002. PayPal handles more online payments than any other company in the world. There are more than 153 million Paypal accounts in 190 markets dealing in 18 different currencies. The company headquarters are in San Jose, California.
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