What is PayPal and Is It Safe?

Have you seen the PayPal logo when you made an online purchase? Maybe you’ve skipped over it because you’re not sure what it is, or whether it’s safe. PayPal is an electronic payment service that lets anyone with an email address securely send and receive online payments.

If you’re worried about whether it’s safe to purchase a product or service from someone you don’t know, PayPal provides a layer of security. Only PayPal—not the merchant–has access to your credit card or personal information, so you lessen the risk of credit card fraud or identity theft.

If you’re a seller, you don’t have to worry about whether the buyer is using a stolen card or whether a check from a buyer will bounce.

How PayPal Works for Buyers

It takes just a few minutes to set up a PayPal account. You can choose to link PayPal to a card—credit or debit—or a bank account. If you link to your card, every time you pay with PayPal the purchase is charged to your card. If you link to your bank account, the purchase triggers an electronic payment. Once you’ve set up a PayPal account, you can pay for your online purchases on eBay, Etsy or just about any online merchant with a few clicks. That’s because you don’t have to enter billing and shipping information every time you make a purchase. For buyers, there is no charge for a PayPal transaction.

How PayPal Works for Sellers

After setting up a merchant account, you can accept payments from buyers without having to set up a shopping cart. If you already have a shopping cart, you can add PayPal as a payment option.

When a buyer makes a purchase, the funds are transferred to your PayPal account, and you will receive an email notifying you of the transaction. You can then transfer the funds to your bank account electronically or request payment by check. As a seller, you pay a fee for using PayPal, typically a small monthly fee and a fee per transaction.

How Else Can You Use PayPal?

PayPal is not limited to online transactions. You can receive or send money to anyone who has an email address. PayPal is an easy way to send money to college students, grandchildren or other family members. If you’re running a business, you can offer PayPal as a bill paying option. You can make Paypal transactions in over 25 currencies.

Resolving Disputes

What happens if you purchase a product using PayPal and the order doesn’t arrive or the item is not as advertised?  PayPal has a resolution process for handling disputes. But it’s slow and cumbersome. First, you must  try to resolve the issue with the merchant.

I’ve used PayPal for many transactions, and I’ve only had one problem with a merchant sending a defective item. Because I linked my PayPal account to a credit card, I contacted the credit card company and disputed the payment. The credit card company then contacted PayPal to resolve the issue. Linking your account to a credit card or debit card adds another level of security.