Tech - Internet
By: - at May 23, 2013

Examples and Benefits of Using Paypal

pay pal logoIntroduction
PayPal is a powerful money transfer service that serves as a convenient and fast alternative to traditional cash, paper checks, and money orders. PayPal accounts come in a few different types and you'll have the ability to fund your PayPal account with an electronic debit from a bank account, a credit card or a debit card.

Send And Receive Money From Anywhere with PayPal
You can also receive money from other PayPal users, and then turn around and spend that money immediately. PayPal is often considered an eBay payment service, but millions of individuals and companies use PayPal everyday for settling all types of debts. There is a ton of ways to use PayPal, and I would never begin to cover every possibility in this tutorial, but let us explore some real world examples.

Examples of PayPal Uses
Let's say you are sending your son to college, and he would like to buy some college textbooks, but he has run out of cash. You can instantly transfer money to his PayPal account, and he will have the funds in a few seconds. He can then use his PayPal debit card that's linked to this PayPal account, and buy those books from the college bookstore. Perhaps you have decided that you would like to buy a new computer, and you have some money sitting in your PayPal account balance that you have received for some old antiques you have sold on eBay.

shopping with paypal debit card

You are browsing around on and you find the perfect computer bundle with a monitor, a printer, and a keyboard, and a mouse; all the right things that you need just for the right price. You see the PayPal logo, and you realize that you have just enough money to buy that computer, so you add it to your shopping cart, and you pay for it immediately with those eBay auction proceeds.

More Examples
One fun Friday night, you are out with friends, and you realize you have left cash at home, and there is no ATM insight. Your co-workers suggest that you bump the funds using the smartphone money transfer feature on your PayPal iPhone app, and in seconds, you have $50, and your fun continues well into the night. Another great example would be for your business. You have been after your best client to pay for an old invoice that has been lingering around for way too long. He mentions that he is prepared to use a credit card but you do not have one of those expensive merchant accounts. and you are not about to get one just for this invoice.

businessman holding credit card

You suggest to him that you will send him a PayPal invoice through e-mail and he can enter his credit card details. He can then pay for that invoice in a few minutes without ever having to sign up for a PayPal account.

PayPal Provides Real Benefits
These are some of the very real and likely ways that PayPal can integrate into your daily life. You also have the ability to create payment buttons that can be added to your Web site for selling individual products, or receiving money for virtually any reason.

For The Business User
shopping onlineSetting up a shopping cart is a very simple step for a programmer, so that you can sell online, and offer PayPal as a method of payment for your online store. You can subscribe to a virtual terminal, and then offer charge by phone, fax, or e-mail options to your clients and customers so that you will have the same credit card processing capabilities that larger companies have, without investing one dime in equipment. You can create recurring subscriptions for your clients and customers so that monthly charges are automatically collected from their PayPal account without ever having to remember to bill them.

You can also accept donations for your charity if you operate one. Your imagination is the only limitation here. PayPal is a super convenient cash alternative for many situations. If you have a programmer, or you are one yourself, you can accomplish many more cool tricks with PayPal and integrate it into your applications.

The Different Types Of PayPal Accounts

PayPal offers different account types for different types of people. I will discuss each of the PayPal account types, and why you would use that particular account type for your personal or business activities. To find the account types, you can click on Sign Up button on the PayPal Web site, and you will be presented with the main account types.

Personal PayPal Account
Let's first talk about Personal Accounts. PayPal offers a Personal Account for individuals who shop online. A Personal Account allows you to send money to individuals and businesses using their e-mail address. A Personal Account allows you to receive payments from others, but the fees would be higher than with the other account types that I will cover later.

A Personal Account would be ideal for someone who might wish to settle a private debt, such as splitting a dinner check, paying rent, or any one of a multitude of other reasons that you might need to pay someone. By adding a credit or debit card, or using a bank account, you will be able to add funds to your PayPal balance that you can then turn around and spend.

Premier PayPal Account
A Premier Account is designed for online sellers who are non-businesses, who want to be paid online and make online purchases. This account also permits you to receive payments from buyers who wish to be paid with a credit or a debit card, but who do not already have a PayPal account.

You can also use a PayPal Debit Card to spend your money, and PayPal offers you a large variety of merchant services to enhance the payment process for your business. You would use this account type if you were not trading under a business name, but that you use PayPal for a business of any size.

Business PayPal Account
A Business Account has all the same features as a Premier Account, but it permits you to trade under a company name. If you do business under a name other than your personal name, this is going to be the account type you'll want to set up.

Generally speaking, you will need to be an officer, or have written authorization from the company to set up a business account. For example, if you are a volunteer for a local foundation, you probably would not have the authority to set up a PayPal account for that charity. If you are the president, the vice president, the treasurer, or secretary, or even a sole proprietor doing business, then it would be appropriate to set up a Business Account.

A big plus for Business Accounts is the capability of adding up to 200 employees to your account with various levels of authority to manage your account for you.

Student PayPal Account
A Student Account is not a separate account, and it is actually a sub-account for a parent who would like to provide a teen or child with the ability to receive money through PayPal, and then spend that money using a PayPal Student Debit Card.

The Student Account acts like a Premier Account, but the parent controls the account, the funding to that account, and the access to it.

Micropayments PayPal Account
PayPal also offers a little known Micropayments Account for businesses that receive a very, very large volume of small payments. If your business typically receives a lot of payments under $10 each, you will want to ask a PayPal representative about this type of account. The fees are reduced, and you will pay 5% plus 5 cents per transaction.

The way that the fees are reduced is that the transaction fee is lower than it is with a standard account, although the percentage is slightly higher. So for smaller payments, you will pay less in the end. PayPal has account types to match any situation and needs.

In case you are wondering how many accounts you are allowed to have, PayPal's policy states that you may only have one Personal Account, and one Premier or Business Account at one time. Each account must have a unique e-mail address associated with it, and unique financial information. You can upgrade an account at any time on the PayPal website.

PayPal Fees

PayPal is free to buyers, and generally the seller pays the fees to use the service. There are nominal fees that are in line with what you would expect to find at most banks through their credit card and eCheck programs. PayPal is superior in that you never have to pay a monthly fee unless you use one of the enhanced business services that they offer.

PayPal Fees

The rates depend upon the volume you are doing, and the type of transaction whether it's domestic or international, and the type of account you have set up with PayPal.

No Fees Unless You Use It
The nice thing about PayPal is that you will never have to pay a fee unless you are actually using the service. For purchases, the seller pays between 1.9%, and 2.9%, plus $0.30 per transaction. There are no monthly fees, there are no set-up fees, and there are no gateway fees, so you do not have to pay for an expensive terminal. The lowest discount available is for merchants who sell more than a $100,000 a month and that may be in your future very soon.

Fees Outside The USA
international currencyCross-border rates are a little bit higher. A cross-border transaction is defined as receiving payment from someone who is outside the United States. If you would like to transfer money to a friend or a family member for personal reasons, the Personal Transfer option will be totally free if that money comes directly from your PayPal balance, or a bank account. The cost will be 2.9%, plus $0.30 per transaction if that comes from a debit or a credit card, or is sent to someone who has a PayPal registered address overseas. And at that point, you can decide if you will pay the fee, or the person receiving the money pays it.

I find that paying vendors and friends is quick and easy, and I almost always elect to pay the small transfer fee myself. A good selling point for using PayPal for your business is that it's popular and trusted.

Drawbacks With PayPal?
One of the main drawbacks of PayPal is that it's not available in every country, if you are one of those unfortunate people who does not have access to it, then you can check out these PayPal alternatives.  The other main drawback is that PayPal does have a list of rules one has to follow in order to use their system, while other alternatives may be less lenient in the amount of rules they have.  Overall the uses and benefits far outweigh the drawbacks of using PayPal.

PayPal Can Save You Money
So many of your customers are going to have a PayPal account already. I can assure you from personal experience that setting up a bank merchant account has a lot of costs associated with it.

PayPal Can Save You Money

The machine that you have to buy in order to accept cards can cost many hundreds of dollars, and there are always monthly fees associated with it. You will never incur any of these fees to set up a PayPal account.





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