What is PayPal? | U.S. News




PayPal Holdings Inc. (ticker: PYPL) is a leading financial technology company that operates several digital payment platforms that serve as intermediaries between users’ bank accounts and online merchants.

PayPal users can also send and receive payments to and from friends and family members free of charge. In addition to personal accounts, PayPal offers several other account types along with several financial products and services. As of the end of 2021, PayPal had more than 426 million active accounts, and its total payment volume was $1.25 trillion. Because of its size and age, PayPal is one of the most trusted online payment services.


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The majority of money transfers on PayPal by individuals to friends and family members are free. Users simply access their accounts via PayPal’s website or its mobile app and enter the other party’s name, PayPal username, email address or cell phone number. Once they have chosen the appropriate recipient, users select “sending to a friend,” and choose whether they want the money to be transferred from their PayPal account balance or another bank account or card. There is no fee charged for domestic personal transactions using a PayPal balance or a bank account as long as those transactions do not involve currency conversion.


Customers can transfer up to $10,000 in a single PayPal transaction and up to $60,000 total in a single day if they have provided bank account information or other identifying information. Standard PayPal money transfers to friends and family take a few days to process, but users can also choose to pay a 1.5% fee for an instant transfer.

In addition to personal transfers, PayPal users can complete online purchases from more than 30 million global merchants that accept PayPal, including former PayPal parent company eBay Inc. (EBAY). Qualified PayPal users can also shop online using PayPal Credit and purchase items in person at brick-and-mortar stores by scanning PayPal QR codes using the PayPal app on their phones.

Personal PayPal accounts are for anyone who wants to use PayPal to make online purchases or send money to friends and family. For example, personal accounts allow users to reimburse a friend for a dinner expense free of charge. If you want to keep a balance in your PayPal account and not just use it to make payments from your bank account, you must have a PayPal Balance account.


A PayPal Balance account allows you to maintain and send money from your PayPal balance and can be used for transactions in Google Pay and Samsung Pay. It also allows users to use a PayPal debit card to make in-store purchases, set up direct deposits to their PayPal accounts and deposit checks into their PayPal accounts.

Finally, a PayPal business account is ideal for anyone using PayPal as a professional payment processor. A business account allows users to operate under their company name, accept payments from customers, provide limited access for employees and utilize PayPal’s other business-oriented products.

To open a personal or business PayPal account, go to PayPal’s sign-up page and choose which type of account you would like to create. You must then enter personal information, such as a full email address, and create a password to log into your account. Finally, you must read and agree to the terms and conditions.

To verify your account and unlock more of PayPal’s services, you must log into your account and add and confirm a bank account, debit card or credit card.

PayPal lists its fee structure on its website, though it can be somewhat complicated. PayPal charges sellers 3.49% plus 49 cents per transaction to process transactions through its proprietary products, such as Pay with Venmo, PayPal Checkout and PayPal Credit. Sellers pay 2.59% plus 49 cents for PayPal to process online payments made using Visa Inc. (V) and Mastercard Inc. (MA) debit and credit cards. Sellers pay 1.9% plus 10 cents per transaction for QR code transactions of more than $10 and 2.4% plus 5 cents for transactions of $10 or less.

PayPal charges no fees to buyers making online or in-store purchases that do not involve currency conversion. Fees for buying Bitcoin (BTC) or other cryptocurrencies in your PayPal account range from as low as 50 cents to as high as 2.3% depending on the amount of cryptocurrency purchased or sold. The standard fee for receiving domestic donations is 49 cents plus 2.89%. PayPal charges a 5% fee plus a flat rate of between 99 cents and $4.99 for international personal transactions.

PayPal is one of the most widely accepted digital payment options in the world. Because PayPal serves as an intermediary between your bank account and merchants or customers, it provides an extra layer of security. PayPal also uses end-to-end data encryption, two-factor account logins and email confirmations to ensure secure transactions.

PayPal makes it easy to complete transactions online or in person if you don’t have your credit card handy. Instead of entering your 16-digit credit card number and additional personal information, buyers can complete a PayPal transaction using their PayPal username and password.

It’s easy to open a PayPal account and easy to use the service to send money to friends and family free of charge. PayPal gives users an extra layer of security and fraud prevention and prevents merchants and customers from interacting directly with your bank account. PayPal also offers several advanced products and services for merchants who have online businesses, including those with international customers.

While most personal transactions among friends and family are free, many business transactions using PayPal are subject to fees. Free personal transactions also may take several days to process. PayPal has been sued multiple times by its users for allegedly freezing accounts without explanation. Finally, while PayPal is accepted by more than 30 million global merchants, it is still not nearly as commonly accepted as major credit cards.

PayPal was originally called Confinity when it was founded by Peter Thiel and Max Levchin in 1998. In March 2000, Confinity merged with X.com, an online banking company founded by Tesla Inc. (TSLA) CEO Elon Musk. Confinity was re-named PayPal shortly thereafter. Musk was initially the CEO of the combined company but was replaced by Thiel less than a year later.

PayPal went public in February 2002 and was fully acquired by eBay in October 2002 in a $1.5 billion merger deal. PayPal was spun off into a separate public company in July 2015. Today, PayPal has a $148 billion market capitalization.


Yes. PayPal secures and encrypts all information sent between your device and PayPal servers, and it provides a layer of security between your bank account and merchants.

Once you have linked your PayPal account to a bank account, simply log into your account and click “transfer money” and then “transfer to your bank.” You can transfer money instantly for a fee or for free via a standard transfer, which may take a few days.

No. You don’t need a bank account to open a personal PayPal account and receive payments, but PayPal accounts connected to a bank account, debit card or credit card have much more functionality.

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