What is PayPal and how does it work?
This page was translated using AI and machine learning.
(Pocket-lint) – PayPal is one of the most established and widely used digital payment systems.
It is an online financial service that allows you to pay for items using a secure internet account. You just need to add your bank account, credit card or debit card details and whenever you pay with PayPal you can choose which of your cards or accounts it pays with. You can also set a default payment method, which will be used unless you decide otherwise.
Many online retailers allow you to pay with PayPal, even in three monthly installments.
Besides paying for items using PayPal, you can also receive money through this service. Money received stays in your PayPal account and can be used to pay for an item, with the balance topped up through your assigned cards or bank account.
You can also transfer the money to one of your bank accounts or cards. Fees may apply when you receive money in your PayPal account, but it’s largely free to use for purchases.
Transferring money to friends or family members through PayPal accounts is also free, provided no currency conversion is required.
There are also PayPal accounts for businesses, which you can learn more about here. PayPal allows many businesses to accept card payments that they couldn’t before.
PayPal also offers users its own credit card system, with the ability to pay for products on credit and refund them later.
Why use PayPal?
Although there are many online payment systems today, such as Apple Pay and Google Pay, PayPal offers a few additional benefits that others do not.
For starters, its age means it’s well-established and widely accepted, even by smaller online retailers. You’ll find a PayPal payment option on thousands of websites that don’t offer the same for Apple Pay or other digital financial services.
Its buyer protection guarantees will also allow you to be refunded if an item purchased online does not arrive or does not match the seller’s description.
People who sell items personally or professionally and are paid by PayPal are also protected. For example, if you can provide proof that you mailed an item and the buyer claims they didn’t receive it, you keep the full payment.
Another reason to use PayPal is that it provides an extra layer of payment security. As you do not have to enter your card details or your CCV number with each purchase, only your PayPal ID and password or your mobile number and PIN, the online store does not have your details in its database.
Sometimes you can also use OneTouch Payments, where PayPal keeps you signed in if you activate the service and you don’t have to enter your details with every purchase, regardless of store. This is because this service is device and browser specific. For example, if you enable OneTouch on your PC, it will only work if you are using that specific computer and the same browser.
There are dedicated PayPal apps for iPhone and Android devices, each with biometric security for added protection.
How can I get a PayPal account?
Opening a PayPal account is very simple. Go to PayPal.com and click on the Register button. You’ll be asked if you want to sign up for a personal or business account and away you go. Don’t forget to bring your bank details and your credit or debit card.
How to pay with PayPal?
PayPal works online and in-store through a browser or mobile app. There are dedicated apps for Android and iOS.
When paying online, simply search for the PayPal symbol and proceed to checkout by following the simple on-screen instructions. But the apps don’t stop there.
Thanks to many partnerships with stores and restaurants in your area, you have different options to pay for products, food or gasoline, and you can even order in advance to avoid lines in some restaurants and cafes. The app shows you a list of all nearby sellers that accept each of the different PayPal options.
You can also add loyalty cards to your PayPal account, so you can earn loyalty points every time you pay for something using the app.
What is PayPal Credit?
PayPal also operates its own credit service, which allows you to pay for items using PayPal and refund them later. It’s a lot like a credit card, although you don’t need a real card.
It charges a typical annual (variable) interest rate for purchases, like any credit card or loan, but as an incentive, you get 0% interest on purchases over 99 euros for four months. So if you refund your purchase within that time, it won’t cost you more than the original purchase price.
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Some stores offer special offers for paying for products using PayPal Credit, with reduced interest rates depending on the retailer.
Written by Rik Henderson.