PayPal

AAA

DEFINITION of 'PayPal'

An electronic commerce (e-commerce) company that facilitates payments between parties through online funds transfers. PayPal allows customers to establish an account on its website, which is connected to a user's credit card or checking account. Once identification and proof of funds have been confirmed, a user may begin sending or receiving payments to and from other PayPal accounts. PayPal attempts to make online purchases safer by providing a form of payment that does not require the payor or payee to disclose credit card or bank account numbers.

BREAKING DOWN 'PayPal'

PayPal broke into the mainstream when it appeared as a payment facilitator for eBay auctions. The service became so popular that eBay decided to acquire PayPal in 2002, making it the official transfer service for its website.

Although PayPal is not a bank, it is still subject to many of the same consumer protection regulations by which banks are governed. For example, under banking regulations, the extent of your liability for an unauthorized transaction is determined by how promptly you notify the bank that unauthorized activity has occurred in your account. Notifying PayPal quickly when you have concerns will help to limit your liability, and it is recommended that PayPal users check their accounts regularly.

RELATED TERMS
  1. Electronic Commerce - ecommerce

    A type of business model, or segment of a larger business model, ...
  2. Checking Account

    A transactional deposit account held at a financial institution ...
  3. Wire Transfer

    An electronic transfer of funds across a network administered ...
  4. Email Money Transfer - EMT

    A retail banking service that allows users to transfer funds ...
  5. Bank Giro Transfer

    A method of transferring money by instructing a bank to directly ...
  6. Bank

    A financial institution licensed as a receiver of deposits. There ...
Related Articles
  1. Stock Analysis

    4 Reasons Why Snapchat's Business Model Could Work

    Learn about the company Snapchat and how it operates. Understand the Snapchat business model and if it's strong enough to make the company successful.
  2. Stock Analysis

    YouTube Can Be A Real Threat for Netflix

    Understand the similarities and differences between YouTube and Netflix. Learn about three key reasons why YouTube can become a threat to Netflix.
  3. Options & Futures

    Choose To Beat The Bank

    From internet banking to credit unions, it's in your power to cut fees and maximize service.
  4. Personal Finance

    Tips For Keeping Your Financial Data Safe Online

    Find out how to protect your personal information from phishers, scammers and thieves.
  5. Options & Futures

    Top 7 Most Common Financial Mistakes

    Choose fortune over disaster by avoiding these money traps.
  6. Entrepreneurship

    How Does Glamsquad Work and Make Money?

    Learn about what Glamsquad does and how it makes money, including why the rise of the "Uber culture" has made this new luxury beauty business so popular.
  7. Investing

    Top Websites to Start an Online Business

    The Internet offers nearly endless ideas and opportunities for new businesses. Here are some great resources to get your online business up and running quickly.
  8. Economics

    Understanding Forward Integration

    Forward integration happens when a business takes over functions that were originally performed by its partners farther down the supply chain.
  9. Stock Analysis

    What Puts the Dollars in Priceline's Bottom Line?

    The Priceline Group is more successful than it may appear and is on track to enjoy tremendous profits down the road.
  10. Active Trading Fundamentals

    How Groupon Makes Money

    Find out how Groupon makes money, including a rundown of how Groupon works and what benefits it provides to the businesses it partners with.
RELATED FAQS
  1. How did Jeff Weiner get the idea for LinkedIn?

    Jeff Weiner did not actually found LinkedIn or have the idea of starting it. As of March 2015, he has been serving as CEO ... Read Full Answer >>
  2. What are the advantages and disadvantages to dealing with internet-only banks?

    In recent years, large companies have set up internet-only banks as a means of diversifying into the financial sector and ... Read Full Answer >>
  3. How does online banking assist with budgeting?

    Setting up online banking can make a personal budget easier to manage through the use of multiple accounts or expense categories ... Read Full Answer >>
  4. Are credit cards and debit cards considered debt instruments?

    Consumer debt instruments allow people to borrow money at specific interest rates. In recent years, the credit industry has ... Read Full Answer >>
  5. How can I invest in electronic retailing (e-tailing)?

    Electronic retail is one of the fastest growing segments of the economy. Every year, more people are choosing to purchase ... Read Full Answer >>
  6. What countries represent the largest portion of the global retail sector?

    The United States and China are the world's largest and second-largest retail markets, respectively, by total retail sales. ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Depreciation

    1. A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both ...
  2. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  3. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  4. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  5. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  6. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!