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Using PayPal to Send or Receive Funds Online

by Ron Kurtus (26 November 2011)

PayPal is a popular online financial service that allows you to securely send or receive payments over the Internet. There is no charge to open a PayPal account, and PayPal only charges a nominal fee to the recipient of a transaction. There are several levels of a PayPal account, depending on what sort of transactions you plan to do.

You can send money when you are purchasing goods, making online donations, or sending money to family members. You can also receive payments through PayPal if you are selling items or someone is sending you money. Most online services accept payments through PayPal.

Questions you may have include:

This lesson will answer those questions.



Open a PayPal account

In order to use the PayPal service, you first need to open a PayPal account. From the PayPal home page, click on the Sign up link at the top of the page.

To create your PayPal account, select your country and language. You then have a choice of opening a Personal, Premier, or Business account. For a Personal or Premier account, you simply enter your email address (which you later use to log in), password, address, phone number and credit card number.

Note: You can send your credit card number, since the PayPal website is secure, as indicated by the https:// before the web address ("s" for secure).

However, do not be so foolish as to send your information from an unsecured WiFi, such as from a coffee shop.

There are several additional steps for setting up a Business account.

Once set up, you will receive an email from PayPal asking you to activate your account. Then you're ready to shop, send money, and accept payments using PayPal.

Types of PayPal accounts

The type of PayPal account that you open depends on how you want to use the service. You always have the option to upgrade the type of account that you have, if the need arises.

Personal account

A Personal account is for individuals who only want to shop online. It is the easiest to set up. You enter your email address, password, address, phone number and credit card number. You can then start online shopping right away, with your credit card being charged for your purchases.

PayPal is free whenever you use it to buy something. The seller pays a small fee to securely handle your payment. As a buyer, you never have to pay a fee to use PayPal.

Premier account

A Premier account is for individuals who both buy and sell online, such as through eBay. There is no extra charge for a Premier account, although you must pay a fee when selling items and receiving payments through PayPal.

Besides being able to buy things through PayPal with your credit card, you can also send money to friends and family for free when you fund the transfer with your bank account.

You can also use a debit or credit card or make an international transfer for 2.9% of total amount sent plus $0.30 per transaction (the sender decides who pays this fee).

With the Premier account, you are able to accept all payment types for low fees and set up a PayPal Shopping Cart on your website.

Business account

A Business account is for merchants who use a company or group name. Business accounts include all the benefits of Premier accounts, plus you can:

PayPal fees mainly apply to sellers, who pay a 2.9% transaction fee on the total sale amount plus a $0.30 fee per transaction. If you're a business, see PayPal Merchant Fees for discounted rates and other pricing info.

There are other merchant services that charge a monthly fee.

Sending and receiving money

There are several ways to send and receive money through your PayPal account.

PayPal payment option to commercial sites

If you are making an online purchase, most commercial websites provide PayPal as a payment option by displaying the PayPal icon. Once you select what you want to purchase, you can click on the PayPal icon and follow the instructions. Your payment will be sent directly to the vendor, taking it from your credit card or bank account, as per your PayPal account.

Sending money to someone

If you want to pay or send money to someone, you can login to PayPal and enter their email address, which must be linked to a valid PayPal account. The money will then transferred from your account to the other person's PayPal account. You must have funds linked to your PayPal account to cover the cost of your purchases or payment.

If you link your PayPal account to a bank account, then PayPal will automatically withdraw the funds from your bank account to pay for your purchases. Alternatively, PayPal will charge your purchases to the credit card that you link to the PayPal account. You can set up your PayPal account in either manner.

Receiving money into your PayPal account

If you want to receive money into your PayPal account, you can do this by asking the other party to send you a payment using your email address. You can link multiple email addresses to one PayPal account, so there is no need to open multiple accounts if you regularly use more than one email address.

If you have a Premier or Business account and have a PayPal Shopping Cart on your website, the person can click on the PayPal icon and make a purchase or send you money through their service.

Transferring funds

You can link your PayPal account to your bank account so that you can transfer funds between your personal or business bank account and your PayPal account. PayPal charges no fees to transfer money in or out of your bank account.

You can link your PayPal account to your bank account so that you can transfer funds between your personal or business bank account and your PayPal account. The PayPal website provides instructions for how to do this. PayPal charges no fees to transfer money in or out of your bank account, and most banks do not charge for this service, either.

You can also link your PayPal account to a credit card, although many websites will not accept this form of payment because the website must pay higher fees for this service.

Summary

PayPal allows you to securely send or receive payments over the Internet. There is no charge to open a PayPal account, and PayPal only charges a nominal fee to the recipient of a transaction.

It is easy to open a PayPal account. You need to give an email address, password and credit card number, along with some other information. You can open a Personal, Premier, or Business account, depending on what sort of transactions you plan to do.

You can pay for goods you are purchasing, make online donations, or send money to family members. You can also receive payments through PayPal if you are selling items or someone is sending you money. Most online services accept payments through PayPal.



Resources and references

Ron Kurtus' Credentials

Websites

How Does PayPal Work? - From eHow.com

How Does PayPal Work on eBay? - From Dummies.com

What is PayPal? - From HowStuffWorks.com

PayPal Help

Finances Resources

Books

Top-rated books on Personal Finances


Questions and comments

Do you have any questions, comments, or opinions on this subject? If so, send an email with your feedback. I will try to get back to you as soon as possible.


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