How Paypal Works: FAQs

Paypal is probably something you’ve heard of. You might even use it. But, this article is for the scores of people who ask me very frequently how it works and what exactly is it. I will try to outline and answer the most popular questions I get.

I often recommend Paypal to customers that want a way to receive money online because it is cheap and easy to set up. But, once recommended there is usually a slew of questions that come afterwards.

What is Paypal?

Paypal is an online account that will let you send and receive payments for goods and services. You can also pay for things with a credit card through Paypal. You can get paypal accounts for personal use, business use, and non-profits.

How long does it take to get a paypal account?

Less than 5 minutes.

How much does it cost?

Signing up for a Paypal account is free. Making payments is free. When you receive money Paypal takes a small fee based on the transaction (1.9% – 2.9% + $0.30 USD per transaction). Here is a link to the current Paypal fees.

What if I am a non profit organization?

You can find the non-profit pricing here.

Why does Paypal charge me?

You are using their service and their merchant account. Anytime you receive money on-line you must have a Merchant Account. You can purchase your own merchant account for approximately $100 per year plus monthly fees starting around $20 a month. Unless you are selling a lot of product online on a monthly basis, Paypal is a good option to keep costs down.

How do I accept payments?

You can place payment buttons on your website for people to click to make payments. The buttons can include options (like colors or amounts). You can have as many buttons as you need.

Do I have to know how to write HTML?

No. However, you may need some help to implement it on your site. To create a button, you can log into your Paypal account and create a button and choose your options. Paypal will spit out the code for you to insert into your HTML pages.

Is it secure?

Yes. Feel free to read up on all the current details from their website on their Security Center.

Lots of people use Paypal. Unfortunately, lots of scammers try to take advantage of this. It is important to note there are a lot of scammers that will send out blanket Paypal emails saying things like “You’re account has a problem. Please click this link and login to your paypal account”. Once you click on the link you will be taken to a website that LOOKS like a Paypal site, but is not. If you enter in your login/pass, the scammer now has them. If you look in the URL area, you will see it does not say “https://www.paypal.com”

Paypal does not send out emails with links in them. If you get one, throw it away and don’t click on anything.

What if I pay for something with Paypal, but don’t have enough money in my account?

Your will either not be able to complete your transaction.

How do I access my money?

You can do any/all of the following:

• Request a free Paypal (Debit type) Credit Card. This is the easiest option for me. I have a MasterCard through Paypal that I can use like any other branded debit card.
• Purchase online with Paypal to sites who offer it as a payment option – or use your Paypal (Debit Type) Credit Card.
• Log on to your Paypal account and request a money transfer

Wait! Paypal sends you a credit card? So, I’ll be getting a monthly credit card  bill?

No. It’s a debit card, but uses a Visa or MasterCard logo so you can use it like a credit card. If you don’t have enough money in your account, it won’t complete the application. Just like a debit card you get from your bank.

Can I set up an overdraft of some sort in case I don’t have enough money to make my purchase?

Yes. You can attach a bank account or normal credit card to your Paypal account. If there is not enough money on your Paypal card, it will take the excess from the account/credit card you specified.

Where can I transfer the money to?

You can transfer money to one or several banks accounts of your choosing. You will need to set them up individually after logging in to your Paypal account.

Does the person who is paying the money have to have a paypal account?

No. They can use their own credit card to pay if they don’t have a Paypal account.

Do they have to sign up for Paypal to make a payment?

Nope. Years ago they did, but not any more.

Does money go automatically into my account?

No. You must request the transfer.

Can I have multiple emails assigned to my Paypal account?

Yes.

Can I use someone else’s email address?

Yes. But it must be assigned to your Paypal account.

What if I want to accept donations/payments on my website for another institution?

You can do this. You will just need the email address they use to accept payments. The money will go to their Paypal account.

Do all the emails have to come from the same domain?

No. When you add emails to your Paypal account, they will need to be verified by sending an email to the email account you are adding. So, make sure you have access to that email account.

How do I know when I’ve gotten money?

A notification of payment goes to the email address that the money was sent to.

How will the person who paid know that I got their payment?

A notification of payment will go to the email address that the person paying listed as their email address.

If someone ordered something, how do I know what they ordered and where to send it to?

Each button has information associated with it such as payment amount, color, product, etc. (whatever you need) as well as whether you need their physical address. This information will be emailed to you when a transaction has been processed.

Can I accept donations?

Yes. There is a special button for that.

Will my email address be posted on the website?

No. Your email address is hidden from visitors to your site.

Can I have a shopping cart? And can people add/remove things from the shopping cart?

Yes.

What if I already take physical credit cards from my place of business? Can’t I just do that online?

Yes. You will need to purchase a merchant account (Approximately $100 per year) and buy a service based on the amount of transactions you expect per month – low end plans are about $20 per month.