Introduction to How PayPal Works
The idea behind PayPal is simple: Use encryption software to allow people to make financial transfers between computers. That simple idea has turned into one of the world's primary methods of online payment. Despite its occasionally troubled history, including fraud, lawsuits and zealous government regulators, PayPal now boasts over 100 million active accounts in 190 markets worldwide [source: PayPal].
PayPal is an online payment service that allows individuals and businesses to transfer funds electronically. Here are some of the things you might use PayPal for:
- Send or receive payments for online auctions at eBay and other Web sites
- Purchase or sell goods and services
- Make or receive donations
- Exchange cash with someone
You can send funds to anyone with an e-mail address, whether or not they have a PayPal account. To receive the funds, though, the recipient must have a PayPal account associated with that e-mail address. Basic PayPal accounts are free, and many financial transactions are free as well, including all purchases from merchants that accept payments using PayPal [source: PayPal].
If you have a PayPal account, you can add and withdraw funds in many different ways. You can associate your account with bank accounts or credit cards for more direct transactions, including adding and withdrawing money. Other withdrawal options include using a PayPal debit card to make purchases or get cash from an ATM, or requesting a check in the mail.
In this article, we'll show you how to use PayPal, find out how the transactions are made, and learn something about the company's history. Let's start with how to sign up for your own PayPal account.