How Does PayPal Make Money?

 How Does PayPal Make Money?

According to Statista, PayPal’s total payment volume has grown by up to 410% from the first quarter of 2014 to the second quarter of 2020.

Impressive, isn’t it?

It’s not a secret that PayPal makes money by processing shoppers’ transactions and from other services that it offers to business owners. To be more precise, PayPal charges a percentage of the money transferred. Let’s go into details:

Though buyers are free of fees, merchants pay when they receive money from a purchase. When your customers buy products online and pay for their purchase using PayPal, they won’t be charged any fee for transferring money to your eCommerce store. The funds will be withdrawn from your credit card or bank account.

When you transfer money from your PayPal account to your bank account using your debit or prepaid card, you get a fee. There is no cost if you transfer money from your PayPal account directly to your bank account.

How Secure is PayPal?

One of the questions that comes to your customers’ minds is “Can I get scammed by using PayPal?” And it is a good one as both merchants and online shoppers should care about payment security.

And I have some good news for you. Payment security is something PayPal is famous for. Here’s what we know about PayPal’s security:

PayPal does not send customer data to merchants.

All transactions receive 128-bit encryption, fraud, and address screening.

PayPal doesn’t retain customers’ information.

PayPal’s purchase protection policy claims that shoppers get a full refund if their order doesn’t arrive or differs from what they have ordered.

Of course, we can’t say that it’s a hundred percent fraud-proof but they are definitely doing their best.

How to Send Money Using PayPal?

To send money to your friends or family, you just need the recipient’s email address. If your recipient doesn’t have a PayPal account, they can create one after receiving an email message about transferred money.

How to send money through PayPal using your account

1. Start the payment. If you have an invoice or a money request, all you need is to click on the “Pay now” button. If you are looking to start a payment yourself, first you should log in to PayPal and then tap the “Send” button.

2. Choose the type of payment. There are two options: you can make a personal or a business payment. You’ll also have to choose whether it’s a “Friends and Family” payment or you are paying for goods and services, either in the US or internationally. The fees are different for each transaction type, so make sure all the information is correct.

3. Fill in the recipient details. It’s simple — add a telephone number or an email address of the recipient.

4. Confirm the amount of money & currency. PayPal allows transactions in many different currencies, just pick yours.

5. Choose how you want to pay. Usually, there are several funding sources: PayPal balance, a credit, or a debit card, a bank account.

6. Find the receipt in your mailbox. You might have to press the “Confirm” button a couple more times and you are done. Check your mailbox, you’ll find a receipt there that confirms that the transaction was processed.

How to send money through PayPal without an account

Sending money through PayPal without registering an account is possible. You need to have an invoice or a money request to make it happen. There should be a “Pay now” button, which means you can make a payment right away, even without signing up for PayPal.

1. Click on the “Pay now” button.

2. Enter your card details. Select the credit or debit card option and enter the details. Note that the fees for such payments are rather high.

3. Confirm the payment. Revise all the details, edit them if needed, and the payment is ready to be processed. You’ll receive a confirmation email, of course, when the operation is made successfully. Using PayPal for sending money is simple and convenient. And it’s better to have a PayPal account — it’ll save you some money on fees.

How to Withdraw Money from PayPal?

When you make enough sales, you may want to withdraw money from PayPal. Below you’ll find the checklist that will help you transfer money from PayPal to your bank account:

Go to “Wallet.”

Click “Withdraw money.”

Select where you are transferring the money from, and then select the bank account.

Choose the amount you want to transfer.

Click Continue.

Review your request, and then click Transfer.

To withdraw money from PayPal and transfer it to your bank account using your PayPal app:

Tap your PayPal balance

Tap Withdraw Money

Normally it takes 1 business day to transfer the money to a bank account but it might take longer and there are some fees for international conversions.

PayPal Competitors

Founded back in 1998, PayPal has earned quite a good reputation among many businesses and has integrations with… well, everything. Still, PayPal faces quite a stiff competition. The first thing I want to draw your attention to is that Venmo is a subsidiary of PayPal. Venmo allows you to pay and request money from other people. At its core, Venmo can be used for purchasing items directly from participating online stores, as well as for in-store purchases with certain Point of Sale systems.

Over to You

I hope I managed to answer the “how does PayPal work” question, and if anyone asks you this basic question you can be sure you will easily answer it.

It doesn’t matter if you use PayPal for your personal needs or for your eCommerce site, you know it’s one of the most convenient and safest ways to handle online payments.