PayPal

PayPal is an electronic commerce (e-commerce) company that facilitates payments between parties through online funds transfers. PayPal allows customers to establish an account on its platform, 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.

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. In 2015, PayPal was spun off as an independent company.

Throughout its history, PayPal has acquired other companies that serve different parts of the financial transaction, digital money transfer, and payments markets. Some of these acquisitions brought technology enhancements and additional features that were incorporated into the PayPal platform as the companies were absorbed.

PayPal transactions are completed within minutes and the company promises that the money will be available for payment or withdrawal to a bank account immediately. Money is secure, privacy is protected, and, since the customer base is so large, transactions are faster than traditional methods where customers enter their shipping information and payment details on the merchant site.

PayPal’s website advertises a 2.9% + $0.30 transaction fee, which works out to $3.20 for a $100 transaction. This sounds simple until you dig deeper and find all the different packages and services available to merchants.

PayPal's fee structure for merchant transactions is different from its personal account transfers. PayPal charges between 2.5 and 3.2% plus a flat rate of 30 cents on a transfer of $100 in standard fees for merchants selling goods and services online, including eBay sellers and private businesses that use PayPal as a payment option. When the amounts increase, the percentage fee charged does not deviate substantially, going up from 2.5 to 3.2%.

For micropayments, which may be transferred when an online small business owner sells items for prices less than $10, the fee charged to merchants to accept funds from customers is closer to 5%.

Money can be transferred for free internationally if both parties have PayPal accounts. This makes PayPal a competitive force in the world of bank transfers when sending U.S. currency internationally. When foreign currency is accepted into another country, PayPal's fees become more comparable to that of a traditional bank.

The acquisitions and internal development of PayPal have led the company to offer different types of services to its users. For example, PayPal purchased BrainTree in 2013, which owns rival service Venmo. In addition, PayPal users can put funds towards digital gift cards they send to others through the platform.

The PayPal.Me service lets users share a link with others in order to receive payments. This can include splitting a check among people at dinner or receiving payment from customers when a service is provided.

Numerous online stores include PayPal is a payment option alongside taking credit card information directly. Purchases made with a select few online retailers may include a discount from PayPal or a cashback offer of some sort. PayPal also offers its own branded credit, made possible through Synchrony Bank. Those who are approved will be supplied with MasterCard credit cards. The company also offers debit cards, including prepaid cards.

Today, PayPal not only offers payment services, but also finances large purchases, extends lines of credit, and provides customers with debit MasterCard Inc., which use PayPal balances to pay for things in a brick-and-mortar store or to withdraw cash. With PayPal being so widely known, there are stores throughout the world that will accept PayPal payments for goods or services; some even accept contactless PayPal payments.

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.

PayPal even pays hackers if they find vulnerabilities in its systems. According to Dean Turner, director of security intelligence at PayPal, "If you care about the product [and] you care about your customers, you care about your customers' security—this is what you have to do."