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IT Help Desk => Online Money Earning => Topic started by: Golam Kibria on August 11, 2012, 10:01:42 PM

Title: What is PayPal and How Does it Work?
Post by: Golam Kibria on August 11, 2012, 10:01:42 PM
For an Internet user who actively participates in online shopping, PayPal must not be a new term. However, for the uninitiated, knowing what is PayPal and how does it work can be an interesting task. PayPal is an online money transaction facility that you're entitled to, once you get registered for it on the official website of PayPal.

In the era of E commerce websites, it is possible to purchase anything online and hence issues about safer money transactions are of paramount importance. PayPal is hailed to be the world's most popular online transaction account and many online purchases are made through PayPal. It has evolved to become one of the safest and hence, most popular mode of money transfer via emails.

What is PayPal: How Does PayPal Work?

PayPal has emerged to be the most trusted medium for online money transactions. You can log in to PayPal's official website and sign up with a valid email account. After that, you can get access to nearly thousands of online stores that will allow you to carry out transactions. Even on sites of Internet biggies like eBay, most of their transactions are through PayPal. Now, that we're aware about 'what is PayPal', knowing about how does it work will give us more insight about this excellent money transfer option, spread over 190 markets in 24 currencies.

Working of PayPal

Once you visit the official website of PayPal, you've to sign up for your account type. On the official website, there are three account options available for customers viz., personal, premier and business. Personal accounts are for those, who wish to pay their money online while premier accounts are for those who wish to get paid after selling their products online.

For merchants and traders, who operate under a group or company, there is a separate account that they can get registered under and that is known as business account. In case, you've registered for personal accounts, you'll have to choose your payment method. Generally, people use credit cards and even online traders and shop managers recommend the use of credit cards. Similarly, for business accounts, you have to link and confirm your credit cards registration on the website. After all this, you'll be required to reply to an email send to you for confirmation and once you accept it, you can start the online transaction.
Title: Re: What is PayPal and How Does it Work?
Post by: Golam Kibria on August 11, 2012, 10:03:28 PM
Why Use PayPal Services?
As we now know 'what is PayPal and how does it work', knowing the value of this service will help us decide, if we should go for this option. Some of the simple benefits of PayPal services are as follows.

Global Presence
PayPal is by far, the single most popular mode of Internet money transaction. And besides that, it has a global presence with 153 million accounts all over the globe.

High Protection

One of the biggest advantages of PayPal is that transactions on it are safe and secured. Owing to the high protection, PayPal has been a recipient of several awards in the Internet Industry.

Faster and Easier
PayPal services have been fast and customers are really happy to be associated to such a simple and safe money transaction system. Also, operating and managing PayPal accounts is easy. There are no complexities in transferring the money.

For buyers and for sending money to others, PayPal is absolutely free. PayPal only charges you for receiving money. Based on a specific formula, PayPal will give you a bill, whenever you get some payments from a buyer.
Title: Re: What is PayPal and How Does it Work?
Post by: Golam Kibria on August 11, 2012, 10:07:42 PM
Types of PayPal Account

Before we get down to the types , it is important to know about the core services that PayPal offers. These include:

→ Sending money
→ Requesting money
→ Access to eBay Tools
→ Merchant services
→ Accepting payments via credit and debit cards
→ PayPal debit cards
→ Multi-user access
→ 24-hours check on fraudulence
→ Customer service

Personal PayPal Account
As the name suggests, this account is meant for personal use. Through this account, the person is able to send money, receive money from other PayPal users, and can have access to Auction tools. The transactions via this account incur no charge for the user. The PayPal account holder is eligible for customer services. However, he is eligible to accept payments only from other PayPal accounts but not from any credit or debit card. Although for this account type, holding money in it and transaction using it are free, it has a set limit for receiving payments in a month. This account has limited access to merchant services and PayPal debit card, and does not offer the benefit of multi-user feature. In short, the personal account fits the bill for people who do online shopping more often.

Premiere PayPal Account
Users having this PayPal account type, have access to all the core benefits offered by PayPal, except for multi-user access. They have the advantage of receiving unlimited credit or debit card payments, and bank account payments, as well. They get a PayPal debit card, and green flag to buy or sell on merchant websites as and when they wish. Unlike personal account, this type allows the user to access to varied merchant services like invoicing, procession of credit cards, and has features such as shopping cart, and payment reporting tools. Users do not get charged for creating the account, holding money, or sending money. However, there would be a nominal fee incurred for withdrawal of funds and receiving funds.

Business PayPal Account
The business PayPal account includes all the core features mentioned above; meaning, the user can enjoy all the benefits. This account fits the bill for people who intend to run or are running a large-scale online business. The person can operate the account under the name of his/her business, and can create multiple users for a single account. There is no set limit to the amount or size of transactions. Similar to other accounts, creating the account, holding money and sending money is free, but withdrawal and receiving are not.

Charges Incurred

    In the United States, PayPal has kept the fees structure the same for all the three types of PayPal account. If an item is purchased online then, sending money is free, but getting paid incurs a standard charge of 1.9% to 2.9% + $0.30 USD.
    And in case of personal transfer, when the money comes in through a PayPal account or bank account, fee is waived off. However, receiving payments from debit or credit card, or a PayPal credit, the standard fee is 2.9% + $0.30 USD.

Making transactions via PayPal is as easy as sending an email. But most importantly, it offers an extra security measure for the user, as the transaction can be done without giving out any sensitive information related to the account. To add to this, even for merchants, this service ensures security as the buyers are verified individuals.
Title: Re: What is PayPal and How Does it Work?
Post by: Golam Kibria on August 11, 2012, 10:08:56 PM

PayPal Fees for Receiving Money

For Receiving Money
To pay or not to pay? Well, you ought to! After all, PayPal offers you a safe mode of transaction of money to whichever part of the world you belong to. Currently, PayPal charges its clients somewhere around 3-4% of the received money, depending upon whatever you are paid. As far as the exact figures from the PayPal official website go, the standard rate for receiving payments is 2.9%. However, if a user receives more than $3,000, he is eligible to apply for PayPal's Merchant Rate, which drops down his fees to as low as 1.9%. Note that fees for receiving payments from buyers who do not belong to the United States ranges between $2.9 to $3.9 plus $0.30.

For Sending Money
Tadaa! You don't have to pay even a cent for sending money to your friends or relatives. Even business transactions are free of cost when you send money to your clients via PayPal. However, if you use a credit or a debit card for sending payments for any kind of goods or services, fees will apply. PayPal also makes its users happy by charging no monthly fees for setup or maintenance of the account, and no money for more than one eBay or merchant implements.

How does PayPal Make Money?
If you know how a local bank in your area earns money, you will easily understand how does PayPal work. However, if you don't know even that (this is bad!), then allow me to explain. Akin to any other bank, PayPal earns from managing the funds their users receive. Now, a user won't sign up for fun on PayPal, would he? He would definitely entertain some transactions in to and from his account. Hence, PayPal earns interest against the money that the users have put into their account. Even with an interest rate of as low as 1.5% annually, PayPal manages to earn wonders even from the money that's not been touched by the users(thanks to its popularity among world masses!). What's more, it charges you a sum every time you receive money, doesn't it? All in all, it varies for different types of PayPal accounts.

So, this is all about PayPal, and a slight idea of the charges it implies on its members for receiving as well as sending money to a third party. PayPal acts as an effective mediator for online money transactions, and is, undoubtedly, a supreme power. The best thing about PayPal is its name. It has gained eminence across the globe to such an extent, that now you can put money into your account from anywhere, and forget it. PayPal will take care of the rest!