PayPal
paypal.com › us › digital-wallet › how-paypal-works
What is PayPal and How Does it Work | PayPal US
PayPal enables you to securely make payments to individuals or businesses worldwide. Our app provides a simple and secure way to pay anyone, anywhere.
Factsheet
Company type Public
Traded as Nasdaq: PYPL
Nasdaq-100 component
S&P 100 component
S&P 500 component
Nasdaq-100 component
S&P 100 component
S&P 500 component
Industry Financial technology
Company type Public
Traded as Nasdaq: PYPL
Nasdaq-100 component
S&P 100 component
S&P 500 component
Nasdaq-100 component
S&P 100 component
S&P 500 component
Industry Financial technology
PayPal
paypal.com
PayPal: Send Money, Pay Online or Set Up a Merchant Account
Transfer money online in seconds with PayPal money transfer. All you need is an email address.
What exactly is, and how do you use paypal
If you have not done so, Read our FAQ! which answers most questions. I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns. More on reddit.com
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January 24, 2020ELI5: What is PayPal, and why does it need to exist?
Paypal is essentially an organized and trusted middleman between two parties. Back when eBay started out, believe it or not, it ran on the honor system and did okay, but not great for the most part. You won an auction then actually sent the seller a money order. S/he would get it and send you your item. Of course you could make a fake account sell something that never existed and wait for your money order and then disappear. So Elon Musk, (the guy you hear about in the news a lot with Tesla cars and South African scientist/businessman) creates PayPal as a secure way of moving money between parties on the internet. Buyers stopped getting ripped off because they offer buyer protection and eBay becomes secure. Why eBay didn't think of this at first is anyone's guess. eBay did make their own payment system but by then PayPal became so popular eBay bought Paypal and made Mr. Musk a billionaire. What does paypal do? It essentially acts as not only a middleman, but a virtual bank (but not a real bank at all) with real money linked to your real bank account. You can put money in, and take money out. You can pay with a credit card, you can pay with the funds in the account, you can pay with checks. It's effective as a third party between buyers who are not businesses. Say you, Edigi135 wants to sell me your cats and I want to pay with my credit card. Since you don't have a credit card machine, we use Paypal and it handles the transaction for us. Since Paypal is a trusted name, we both think there is no chance of either of us ripping each other off or me running away with your cats. I pay with my credit card, you see that the paypal transaction goes through then you send me the cats. Easy. PS-There are some problems with Paypal and I'm just going to use this space to devote some text to it. The inherent problem with Paypal is that it favors the buyer far far far more than the seller in terms of protection. There are thousands of scams, mostly on craigslist. If you sell an item these scammers will pretend to overpay you for an item. Sounds good so far. They claim to live far away so they want the item shipped. So the seller ships it and then the scammer says "wait I never got it/it's broken/this isn't what you said it was". They contact paypal and paypal refunds their money because they always side with the buyer. So not only are they getting their money back, you lost your item. On top of that, if you withdrew the money and refuse to refund it you could damage your credit! That's three strikes against you for one transaction. eBay doesn't have this issue because they offer seller protection. Outside of eBay, you are on your own. And as another user pointed out below, PayPal monitors accounts more harshly than banks. If I sell some stuff for $3000 then PayPal might go whoa! you haven't used your account in 5 years, hold on buddy while we check this out and hold your account for review. It's frustrating at times and they will often call you to confirm transactions. It gets cumbersome when really a money order becomes more attractive in that regard. Another thing that holds PayPal back is that you can not withdraw money quickly from the virtual account. For some reason it takes a whole five business days unlike a real bank. This makes transactions slow and tedious if you need money right away. I have sent money owned to friends via PayPal and they aren't particularly happy because now that money is stuck in their system for over a week. As of now, PayPal has become a tool for eBay and isn't used so much out of that context. You might see some cheaper and startup online vendors use it to take credit cards and that's about the extent of its usefulness today. More on reddit.com
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July 7, 2013What's the purpose of PayPal? - Personal Finance & Money Stack Exchange
When purchasing through PayPal it draws funds from my linked bank account in the amount of purchase price and applies it as payment to the merchant. This is exactly what my debit card does, so what... More on money.stackexchange.com
What happens if there is insufficient funds in my bank account for paypal to withdraw?
They’ll try 3 times.
Most banks a charge $35 NSF fee
35x3 = 105
You’re looking at potentially $105 in fees
PayPal doesn’t charge the fee. It’s your bank.
More on reddit.com 16
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September 21, 2019What are the different ways to pay with PayPal?
PayPal offers a wide array of payment options for flexibility and convenience. You can use your popular debit and credit cards—including Visa, Mastercard, Discover, and American Express—or your bank account. This includes options like the PayPal Debit Card and PayPal Cashback Mastercard. Additionally, PayPal Pay Later provides an option to split your payments, catering to various financial preferences and needs.
paypal.com
paypal.com › us › digital-wallet › how-paypal-works
What is PayPal and How Does it Work | PayPal US
What are the main features of PayPal?
With PayPal you can send and request money, shop online or in stores with the PayPal Debit Card, manage bank and card info, get cash back offers, and enjoy flexible payment options. Please note PayPal services may vary from country to country. Learn which services are offered by country or region.
paypal.com
paypal.com › us › digital-wallet › how-paypal-works
What is PayPal and How Does it Work | PayPal US
Is my account with PayPal secure?
PayPal works to protect your financial data, payments, and eligible purchases. Your transactions are encrypted to ensure your full financial information remains private. We don't share your full financial details.
With early fraud detection on many PayPal transactions and app alerts, we're proactive about your security. Plus, PayPal Purchase Protection offers peace of mind by covering eligible purchases.
paypal.com
paypal.com › us › digital-wallet › how-paypal-works
What is PayPal and How Does it Work | PayPal US
Videos
08:03
What Is PayPal & How Does It Work? (2025) - YouTube
05:18
What Is Paypal And How It Works? (2025) Complete Tutorial - YouTube
15:19
How To Use PayPal | PayPal Tutorial for Beginners (Quick & Easy ...
09:16
What Is Paypal And How It Works? (2025) Complete Beginners Tutorial ...
15:25
How to Use PayPal - Full Course - YouTube
Wikipedia
en.wikipedia.org › wiki › PayPal
PayPal - Wikipedia
2 weeks ago - PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support online money transfers; it serves as an electronic alternative to traditional paper methods such as checks and money orders.
Wise
wise.com › us › blog › what-is-paypal-and-how-does-it-work
What is PayPal and how does it work? [Complete guide] - Wise
February 10, 2023 - PayPal business accounts are popular with online sellers, and people collecting funds through marketplaces sites — but you can also use them for offline sales, too. Once your account is set up, your business has access to checkout services, a customer service email alias, and other business perks.
Reddit
reddit.com › r/paypal › what exactly is, and how do you use paypal
r/paypal on Reddit: What exactly is, and how do you use paypal
January 24, 2020 -
I do realise that they have a website for this, however i’m hoping that someone here could explain to me, almost like ELI5, what paypal is and how you use it.
EDIT; I have read the FAQ, question still stands.
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Paypal is a payment service that enables you to pay or send money, and also accept payments. You can add a credit card or link a bank account to your paypal account to fund online purchases. Its safer than sending a money order through the mail as long as you use Goods and Services when sending a payment you have buyer protection should the item not arrive or is different than what you ordered.
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Back in the day when I sold stuff on eBay I actually waited for people to mail me money orders or cashier check. PayPal came along and said link us to your bank account, let us verify you are real and we will be a "Switzerland" for your financial transaction. People can even pay with a credit card and we will convert to cash and give it to you. PayPal would decide (judge and jury) on fraudulent complaints. Today you can use PayPal without a full blown PayPal account. Meaning you can just create an account and link it to a credit card. Why do this though? Well PayPal gives the buyer 6 months to dispute a deal and some sellers only take PayPal because they aren't big enough to deal with a credit card processor on their website. This is becoming rarer though. Competition is making it easy to take credit cards without PP i.e. "Stripe" is a competitor. Venmo is the hipster Paypal. More about smaller personal transactions. Like a digital purchase or in person deal like paying someone back for lunch because people don't carry cash anymore. It works similar to PayPal. Hope that helps.
PayPal
about.pypl.com › who-we-are › history-and-facts › default.aspx
PayPal, Inc. - Who we are - History & facts
PayPal has remained at the forefront of the digital commerce revolution for more than 25 years, growing into a two-sided network that connects people and businesses in approximately 200 markets around the world.
FreshBooks
freshbooks.com › hub › payments › what-is-paypal
What is PayPal & How Does It Work?
July 5, 2024 - PayPal is a payment processing platform that’s available to regular users, consumers, and merchants who want to accept or send money online or in person.
Reddit
reddit.com › r/explainlikeimfive › eli5: what is paypal, and why does it need to exist?
r/explainlikeimfive on Reddit: ELI5: What is PayPal, and why does it need to exist?
July 7, 2013 -
Why can't you just enter your debit/credit card info? Seems pointless and excessive, but probably because I don't understand how it works.
Top answer 1 of 6
41
Paypal is essentially an organized and trusted middleman between two parties. Back when eBay started out, believe it or not, it ran on the honor system and did okay, but not great for the most part. You won an auction then actually sent the seller a money order. S/he would get it and send you your item. Of course you could make a fake account sell something that never existed and wait for your money order and then disappear. So Elon Musk, (the guy you hear about in the news a lot with Tesla cars and South African scientist/businessman) creates PayPal as a secure way of moving money between parties on the internet. Buyers stopped getting ripped off because they offer buyer protection and eBay becomes secure. Why eBay didn't think of this at first is anyone's guess. eBay did make their own payment system but by then PayPal became so popular eBay bought Paypal and made Mr. Musk a billionaire. What does paypal do? It essentially acts as not only a middleman, but a virtual bank (but not a real bank at all) with real money linked to your real bank account. You can put money in, and take money out. You can pay with a credit card, you can pay with the funds in the account, you can pay with checks. It's effective as a third party between buyers who are not businesses. Say you, Edigi135 wants to sell me your cats and I want to pay with my credit card. Since you don't have a credit card machine, we use Paypal and it handles the transaction for us. Since Paypal is a trusted name, we both think there is no chance of either of us ripping each other off or me running away with your cats. I pay with my credit card, you see that the paypal transaction goes through then you send me the cats. Easy. PS-There are some problems with Paypal and I'm just going to use this space to devote some text to it. The inherent problem with Paypal is that it favors the buyer far far far more than the seller in terms of protection. There are thousands of scams, mostly on craigslist. If you sell an item these scammers will pretend to overpay you for an item. Sounds good so far. They claim to live far away so they want the item shipped. So the seller ships it and then the scammer says "wait I never got it/it's broken/this isn't what you said it was". They contact paypal and paypal refunds their money because they always side with the buyer. So not only are they getting their money back, you lost your item. On top of that, if you withdrew the money and refuse to refund it you could damage your credit! That's three strikes against you for one transaction. eBay doesn't have this issue because they offer seller protection. Outside of eBay, you are on your own. And as another user pointed out below, PayPal monitors accounts more harshly than banks. If I sell some stuff for $3000 then PayPal might go whoa! you haven't used your account in 5 years, hold on buddy while we check this out and hold your account for review. It's frustrating at times and they will often call you to confirm transactions. It gets cumbersome when really a money order becomes more attractive in that regard. Another thing that holds PayPal back is that you can not withdraw money quickly from the virtual account. For some reason it takes a whole five business days unlike a real bank. This makes transactions slow and tedious if you need money right away. I have sent money owned to friends via PayPal and they aren't particularly happy because now that money is stuck in their system for over a week. As of now, PayPal has become a tool for eBay and isn't used so much out of that context. You might see some cheaper and startup online vendors use it to take credit cards and that's about the extent of its usefulness today.
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Something else that makes Paypal attractive (to sellers) is the fee structure of PayPal vs. credit cards. Visa and other card companies charge 3-4% of each transaction as a fee, but more importantly in this context, they have a minimum transaction fee of like a dollar- meaning that it is not cost effective for a seller to accept a $5 purchase via credit card payment. This is where PayPal offers an advantage vs. a credit card. Paypal charges a small percentage transaction fee as well, but no minimum fee means they're fine getting $0.05 on a one dollar transaction- making it cost effective for a seller on eBay, etsy, wherever to offer you something for $2.00 where it wasn't before.
Investopedia
investopedia.com › terms › p › paypal.asp
Understanding PayPal: How It Works and Benefits for Users
October 1, 2025 - PayPal is a leading online payment platform enabling money transfers and other financial transactions. Users connect their PayPal accounts with a checking account or credit card, or both, in order to facilitate their transactions online.
CNET
cnet.com › money › credit cards › how does paypal work?
How Does PayPal Work? - CNET
September 14, 2023 - Our recommendations are based on ... offers. How we rate credit cards ... PayPal lets you check out securely online, send and receive money, and also offers financing options....
NerdWallet
nerdwallet.com › back to nerdwallet homepage › banking › how does paypal work?
How Does PayPal Work? - NerdWallet
July 21, 2017 - ... PayPal is a method for selling and buying things online and transferring money to friends and family in a convenient and inexpensive way, without requiring that you share financial information.
GCFGlobal
edu.gcfglobal.org › en › online-money-tips › what-is-paypal › 1
Online Money Tips: What is PayPal?
PayPal was one of the first online payment systems, and it's generally seen as one of the most trustworthy. As a result, you can use it to make payments to many online stores. PayPal is also an easy way to send money to a friend or family member, ...
Rocket Money
rocketmoney.com › home › learning center › personal finance › banking › what is paypal
What Is PayPal, And How Does It Work? | Rocket Money
October 10, 2022 - PayPal is an online payments company that allows its users to easily send money to friends, family, business associates and more. Founded in 1998, PayPal is one of the original web payment companies and was purchased by eBay in 2002.
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PayPal, initially, was designed to allow easy online transfers between people who are not established merchants (hence the name).
It very quickly became a payment processor of choice for eBay, which in turn was also designed for ad-hoc transactions between people who are not established merchants.
Since then online marketplace has evolved significantly, and there are a lot of ways to transact between non-merchants, and the entry barrier to become an established merchant is now significantly lower (to the point of not being existent altogether in many places). As the result, PayPal is "just another" payment processor at this point.
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When Paypal launched over 20 years ago, it wasn't easy to set up a merchant account as a small seller. You'd need to set up full business banking, then get a credit/debit card machine. Card fees were higher as well. Bank transfers were also far harder to arrange than they are now. Don't forget, we're talking about 1999:
- No smartphones.
- Online banking existed but was pretty basic.
- To pay money into someone else's bank account meant a visit to a bank in person.
- Transfers were slower than they are now and/or expensive (at least here in the UK, where I can send up to a few thousand pounds without a fee to any other UK bank account, within 2 hours).
So the alternative was cash or cheque (check). Cash is fine if you're meeting up and not worried about robbery. Cheques are slow, especially if you have to post them, and open routes to fraud.
So Paypal targeted small transactions, including in ways similar to Venmo these days (which isn't as popular in the UK as in places where bank transfers are more hassle).
But Ebay made a big difference: They bought PayPal soon after its IPO and owned it for over 10 years, that's how integrated they were, when other options were few and far between. I did buy things by cheque on eBay, and once or twice with cash (even in the post for very small amounts). And if you wanted to sell online in small volumes, perhaps as a hobby project, eBay was the most likely way to do so. This was before Amazon Marketplace or Etsy, and while off-the-shelf web sales packages existed, they were cumbersome and required sysadmin and security skills.
Now eBay supports credit card payments directly, but still has PayPal integration for buyers. There's Stripe for small sellers with their own sites - but many of them support PayPal as well. With no pressing reason to migrate off it, I use PayPal on eBay and to pay for a few other things (like training sessions and sports club events), though the latter seem to be moving more towards Stripe; I'm told it's less hassle and cost for the organiser.
Tipalti
tipalti.com › blog › what is paypal and how does it work in 2025?
How Does PayPal Work for Businesses and Consumers?
March 14, 2023 - PayPal acts as a trusted intermediary, keeping your financial details private from sellers during transactions. You can use PayPal online, through its mobile apps, or even for in-person payments using certain services. The company is headquartered in San Jose, California, and allows users to transact in over 100 currencies.
PayPal
paypal.com › pk › home
Send Money, Pay Online or Set Up a Merchant Account - PayPal
PayPal is the faster, safer way to send money, make an online payment, receive money or set up a merchant account.
Stilt
stilt.com › home › how does paypal work?
THIS is how PayPal works for online transactions [2024]
April 10, 2024 - Stilt is backed by Y Combinator ... Rohit Mittal · PayPal is a widely used online payment method enabling secure digital transactions and money transfers for personal or business purposes....
Stripe
docs.stripe.com › payments › paypal
PayPal payments | Stripe Documentation
PayPal is a payment method that enables customers in any country to pay using their PayPal account.
Dummies
dummies.com › article › business-careers-money › business › e-commerce › paypal › how-does-paypal-work-142881
How Does PayPal Work? | dummies
Putting your PayPal purchases on a credit card is a good idea. Not only are you protected by PayPal, but your credit card company also backs you up in case of fraud. You can register multiple credit cards on your PayPal account and select a different one for different types of purchases. That way, you can place personal purchases on one account and business purchases on another. It makes end-of-year bookkeeping a lot easier! PayPal breaks types of payments into categories based on what you’re paying for.
Swaplance
swaplance.com › news › what-is-paypal-and-how-does-it-work-80.html
▶ What Is PayPal and How Does It Work? | Swaplance Guide
August 20, 2024 - Your PayPal account is your digital wallet that you can use to make and accept payments while working with the swaplance.com platform. It stores your financial information securely, making it easy to pay for goods and services online without ...