What Is A PayPal Account?

A PayPal account is similar to other financial accounts such as checking and savings in that it allows funds to be deposited or withdrawn and can be used to make or receive payments online. Once an account has been created, funds can be deposited and then used to pay for items on popular auction websites like eBay. Account holders can also send and receive funds to other accounts electronically using only an e-mail address.

PayPal Account Types

PayPal.com offers three types of accounts depending on your needs such as processing additional forms of payment like credit cards. The most common is a Personal PayPal account which is typically used to make payments at online auction sites or receive funds from other PayPal account holders. A Premier PayPal account is more likely to be used by individuals who buy and sell items online but not necessarily as a merchant. The final type is a Business PayPal account which is more appropriate for merchants who operate under a company name and need to accept credit card payments and send online invoices.

Buying With PayPal

Once an account has been created and funds have been transferred or deposited into the account you can then start buying items online. The most common use for PayPal is to make payment for products purchased on the popular auction site eBay. Once you have won an auction you will have the opportunity to pay using a PayPal account or using a credit card or bank transfer. Given the ease of use to both fund a PayPal account and pay an online merchant, PayPal is generally accepted by thousands of merchants and websites for payment processing.

Selling With PayPal

All types of PayPal accounts can receive funds between each other. A common situation is to create a Business PayPal account which can be used to process credit card payments, create custom payment pages and send online invoices. Payments can be made either directly with another PayPal account or using a credit card or bank account. Funds can be received directly between PayPal accounts using an e-mail address only which helps simplify the process. Once payment has been received it can either be left in the account or withdrawn using a wire transfer.

PayPal Fees

For most users who create a Personal PayPal account there are no fees to open the account, send funds between accounts, withdraw funds or add additional funds. Fees kick in when processing credit card payments, which of course always have their own merchant fees from Visa and MasterCard, or when requiring additional services such as custom payment processing pages and online invoicing. Personal PayPal accounts looking to process credit card transactions must upgrade to Premier or Business PayPal accounts. If payments are made internationally there are also additional fees for currency conversion relating to the transaction.

PayPal History

PayPal was initially founded in June 1998 and later acquired by eBay as a wholly owned subsidiary on October 3, 2002. There are currently more than 230 million PayPal accounts in 190 markets and PayPal can handle transaction processing in 26 different currencies. The company is located in San Jose, California and had revenue in 2012 of $5.6 billion.