I’ve read their webpage but didn’t quite understand it, I would appreciate it if someone could explain it to me in small words and simple concepts as if I were an idiot (which I quite obviously am!).
I’m just more than a bit leery of using it, would it be safer to set it up to a debit card rather than a bank account?
Danke! 
Think of it like a bank where you can send people money if you know the account number. Paypal is a bank IIRC. It also provides a layer of isolation for internet transactions. You don’t have to give them a bank account number, you give a paypal address. They have no idea where your real bank is or what your account numbers are plus you can challenge the transaction with paypal in the event of fraud without involving your bank.
for example, you can send money to me by loading money into paypal and sending it to my business email. Several customers pay me that way.
I’ve never had a problem with it, but others have complained. Basically, you provide Paypal with a bank account number and a credit card number (although I believe it’s optional). You can transfer funds to other Paypal accounts, and you can receive funds from other users. Ebay requires you to have Paypal (they own it now), and whacks you a percentage of the funds you receive in payment for items sold. They don’t charge you to MAKE payments for items purchased, however. Money coming into your account may be withdrawn to your bank account at any time and in any amount that doesn’t exceed the balance.
When you make a payment, the money comes out of your Paypal cash balance first, then out of whatever payment instrument you have set up (credit card or bank account).
drachillix: I’ve never heard of Paypal operating like that. I thought the money had to go from Paypal account to Paypal account. How do you get money in an email account? You never know someone else’s account number, and they don’t know yours.
Unless something has changed in the last few years, Paypal is NOT a bank. This is not pedantry, it’s the root of the flood of consumer and vendor complaints about Paypal. They are not a bank, and so are not regulated as a bank. Sure, you can complain to them if/when they put an unannounced hold of indeterminate duration on your funds…but there’s no one else to complain to if/when their answer is, “tough titties” (paraphrased.)
Yeah, I’ve had lots and lots of problems with Paypal. Far more than any actual bank.
They’re more like an escrow account.
The email recipient is assumed in this context to also have a paypal account. Using the recipient’s email simply tells paypal to send it to the paypal account attached to that receiving email. I send money to my daughter this way vs giving her a check.
I’m an eBay seller and a huge Paypal user. While Paypal regulations can occasionally be a huge PITA for buyers and sellers overall they are a very safe method to send money. Paypal is very convenient when conducting foreign sales as ti handles currency conversion transparently.
I am not fan of their seller fees which are (IMO) borderline abusive, but if you want to play they are the main game in town.
Though if there was an issue, I probably wouldn’t know about it because of #1.
They’re also a bit like the Mafia, they take a big cut of your action.
To reiterate what others have said, PayPal is, or was, an escrow service: You send them money, they tell the vendor your payment is valid, the vendor sends you the product, you verify the product’s okay, and PayPal releases the payment to the vendor. PayPal makes a profit both from fees and from the interest on all the monies they ‘float’.
At least, that’s how they originally worked. eBay purchased them about ten years ago and since then they’ve essentially become the de facto payment method for the majority of all online merchants (if you plan on using eBay you basically *have *to have a PayPal account!) Depending on the type of account & transaction sometimes money becomes available immediately, sometimes there are percentage fees, sometimes not. I’ve used them for 10+ years, mostly for small transactions but also occasionally for four-figure ones and have never had a problem.
They are most certainly not a small, fly-by-night company. They’re a huge, well established, multi-billion dollar organization, one of the most successful dotcoms ever.
If you’re extra concerned about password security (and a PayPal account is most definitely the one online service whose password you don’t want compromised) they offer a hash code generating security key. It generates codes that will only work with your account (and each code will only work once). You can also get it as an app on your smartphone. I got mine way back before eBay bought them and they were only like $5, now it seems they’re $30 (though the app is free). Like I said, PayPal is the one online service that I feel using a hardware dongle is worth the trouble.
Paypal to my knowledge doesn’t normally work like escrow. There are some buyer guarantees but once the money goes in your account it’s yours.
Also, fraudsters hit me up weekly, emails from “Paypal” asking for password verification etc. Paypal kills the links pretty quickly.
It may be a slight hijack, but I’ll point out that this is not true for all PayPal accounts.
I don’t remember the exact language PayPal presented me with when I opened an account 7 years ago, but I was given the option to give them my credit card number and get a “full-featured” account. I declined.
Subsequently I learned that, although I could receive funds into the account, I could not use or disburse those funds. (Perhaps I’d have been allowed to spend them on E-bay; I didn’t try that.)
It wasn’t just a matter of waiting for the payment-in to be verified; we waited quite a while, with payer writing PayPal and asking that I be paid. It wasn’t the inconvenience to PayPal of writing a check: all I wanted was to pay money into someone else’s PayPal account.
To recover my money from my PayPal account I needed to provide Paypal with my U.S. mailing address or a bank account which permitted itself to be tested with very tiny transactions. I had neither, and decline the third option: credit card details.
(The nuisance went on and on. Eventually I wrote “Just give the $135 to your favorite charity, but first explain why it is in PayPal’s interest to waste $135 of their time sending me useless e-mails instead of just paying me my money.” Still no explanation. Eventually, via Google, I got a hint that PayPal’s strict rules might have been to comply with Federal anti-laundering rules.)
I wouldn’t link Paypal to my bank account if you’re only buying. They’ve been known to freeze funds (in your Paypal account) or withdraw from your bank account without good reasons. If you’re selling, however, that’s pretty much the only way to get the money.
Paypal is also almost a near universal way to donate money to random individuals. You can start a Paypal account, and then beg for money on your blog saying you’re a broke college girl with an anemic cat or whatever, and watch the money roll in. Not that I would know!!!
Paypal would be perfect if your computer never gets compromised, but I’ve yet to meet the person who’s NEVER gotten a virus. It’s only as safe and reliable as your password. FWIW, I had years of nothing but good experience as a buyer. Never sold with them. Then one day, I either got a virus or someone skimmed my password via MITM attack… then used my checking account to buy $50 worth of currency in some online game. Paypal pegged the transaction as fraudulent very quickly, but not quickly enough to stop it from going through. They eventually reversed the charges, but it took over a week to get the money back into my account.
So after that, I canceled my Paypal account and haven’t missed it. There’s nothing I need Paypal for that I can’t just use my credit/Visa debit card for instead. Those methods have better protections, since they’re backed by enormous federally-regulated banking institutions.
Or hey, this could just be paranoia talking, I really don’t know for sure that Paypal is less safe than conducting transactions via credit card numbers. I just know that my Paypal got hacked, and my credit cards never have been.
Thanks for the answers everyone!
Not very often, but on occasion a charge will appear on my AX statement that is not familiar to me. When this occurs I go to the AX website, login and pull up my current statement. From there I can initiate an investigation of any particular transaction. The process is 100% on-line and works very well.
Just last week a $244.00 PayPal charge appeared. I do not have a PayPal account. So, I attempted to initiate an on-line hold/investigation and was not allowed to do so. I was instructed to call AX. The hold/investigation initiated, I asked why I wasn’t able to do so in the normal fashion. I was informed that PayPal was a high risk vendor on one that is the source of numerous problems.
I did have a PayPal account a few years ago. I needed it to purchase something on ebay. I closed it in very short order after receiving numerous and annoying emails and having some problems. It’s a legit company, but in my opinion subject to fraud.
I don’t think the OP was clear on why he wanted to use Paypal. It’s always been easy make a payment to a company, by using a credit or debit card. So one of the things that Paypal was useful for was sending money directly to another individual. But there are alternatives now. I bank with Citibank and they work with a company called Popmoney, through which you can send money to someone even if you only know their mobile phone number or email address. Wells Fargo, Bank of America and others have similar services.
I mostly stopped using PayPal when I heard about the problem with linked accounts being frozen or cleaned out. If I have to use it for some reason, I’ll link my account, make the transfer, and then immediately remove the account.
In most countries PP is not a bank, in a few countries, it IS a bank.
But in the USA it is not. It’s registered as a bank in Luxembourg so it’s allowed to operate through EU countries that way.
The best way to use PP is ONLY repeat ONLY use transactions that are funded with a credit card.
PP will default to your bank account so you must change it every single time, or remove your bank account. The reason you want to use a credit card is so you can do a charge back, not a debit card but a CREDIT card.
This way if there is an issue and your not satisfied you can also get help from, not only PP but your credit card company as well.
There are different types of PP accounts. When you engage in business at a certain volume you must upgrade.
Also if you have a change in spending they may freeze your funds, this is normal. I use mine for small purchases typically under $50. Once I bought something for $400 and they froze it. I got it straightened out in two weeks, but I can see them doing it, as it seemed out of place to go that high suddenly.