Opening a PayPal account enables you to accept payments, send money, and pay for products or services online.

PayPal is among a few digital payment providers who offer robust payment solutions for individuals and business alike. Many merchants prefer PayPal over other online payment processors because it is secure, timely, and quick.

Moreover, you only need a few personal details to set-up a free PayPal account.

This definitive guide will help you understand why you need a PayPal account – I will also discuss PayPal personal and business solutions.

How Does Paypal Work?  

PayPal is an American based digital payment intermediary. PayPal allows you to make online payments using your debit/ credit card or  PayPal account balance. 

PayPal was among the first digital payment intermediaries when it was launched in 1999. Today, it is the most successful online payment processor and is the largest in terms of coverage.

There are over 200 million PayPal users in 202 countries and more than 700, 000 websites accept payments made via the company – Current trends suggest that this number will continue to grow exponentially.

Paypal’s success over the years is partly attributed to the company’s amazing founders, who even after leaving the company have gone on to create successful businesses.

A good example is LinkedIn’s founder, Reid Hoffman. Youtube founders Jawed Karim and Steve Chen are also former Paypal employees.

There is also the famous Elon Musk who owns Tesla and Space X.

In summary PayPal users can do the following :

  • Send and receive mobile money
  • Pay for domain registration and website hosting
  • Pay for products on stores like Jumia or Alibaba.  
  • Pay for online courses
  • Pay for software licenses
  • Pay for membership on online dating sites
  • Make donations 
  • Pay bills   
  • Transfer money to a friend or family member via their bank account – and more. 

Based on the numerous cashless transactions that PayPal supports, one may mistakenly label it as a bank. However, Paypal founders insist that the company is a deposit broker. Uncleared funds in PayPal accounts are held in one or more interest-bearing checking accounts. 

Perhaps the most distinguishing feature is the fact that Paypal does not hold an account with any Central bank which is a mandatory requirement for banks. In essence, Paypal works a middleman between sellers and buyers, accepting and transferring payments for a commission.

How Safe is PayPal? 

PayPal is undoubtedly among the safest online payment brokers. The company states that “When you send a payment using PayPal, the recipient won’t receive sensitive financial information like your credit card or bank account number. This way, you don’t have to worry about paying people you don’t know.”

Paypal is keen to safeguard data through the latest anti-fraud technology such as two-factor authentication and encryption. In addition, email autoresponders send notifications to the user as soon as a transaction is completed.

Paypal has implemented extra measures to protect buyers from fraudsters- most notably is the “payback” option which allows buyers to request a refund if products fail to meet the expected standards.

To enhance security, Paypal users are advised to follow all the security measures offered by the company, e.g., by activating two factor -authentication. 

You should also add your own level of privacy and secure data using updated software, especially when using a public network (such as Wi-Fi) to access PayPal.

Benefits of Using Paypal  

  • Paypal is easy to set up and use.
  • Low transaction fees ( the current fee is 2.9% + $ 0.30 USD for purchases made with a credit card)
  • It is easy to integrate Paypal with multiple shopping carts  
  • Most customers/clients are already aware of Paypal. 
  • Your customers/clients can pay you even if they do not have a Paypal account.  
  • Paypal makes it easy to track transactions through easy to create invoices. 

Limitations of Using PayPal  

  • Some people may refuse to use PayPal. 
  • PayPal is restricted in certain countries, e.g. Iraq and Afghanistan.   
  • While Paypal has strong seller protection, its policies fail to cover digital goods adequately.   
  • Your Paypal account is initially limited in terms of the funds limit.  
  • Failure to verify account ownership may result in a six months suspension or account closure.  
  • Withdrawing from PayPal to a bank account usually takes a minimum of  2 business days. 
  • At times PayPal customer service may be unreachable. 

How to Open a Paypal Account

You can either create a personal or business PayPal account.

Regardless of the option you choose, PayPal signup is free in all countries.

The first option (personal account) is best suited for people who want to pay online. PayPal Business account, on the other hand, is ideal for businesses and individuals who receive regular payments online.

With a business account, more than one person is allowed access to the account. Access levels can be set up according to individual accounts.

How to Create a Paypal Personal Account 

Step 1: Go to the PayPal Website for account selection

PayPal Account
Click Here to Get Started

 

Step 2: Click “Sign up for a PayPal Personal account”  and Enter Your Basic information.

Create Paypal account

 

Step 3: Fill in advanced Personal details and Agree with terms and conditions to create your Free PayPal account.   

PayPal business Accouht

Step 4: Log into Your Account and Link A Card.

How to create Paypal business account

Here is a short video of how to open a Paypal personal account  

How to Open a PayPal Business Account  

If you already have a PayPal account, all you need to do is upgrade to a Premier or Business account. 

Here is how to do it:  Start by visiting the account upgrade Page and sign in to your PayPal account. 

Next, locate the “Upgrade Now” button at the bottom and click on it to get started. The next page will prompt you to fill in your business details.  

Watch the short video below if you are a new Paypal customer and who would like to open a business account.  

 

Paypal Business Solutions 

Paypal offers several solutions for small and large businesses. Here are the most popular business solutions available to PayPal customers.   

Payment Processing. 

You need some sort of payment processing in order to make money online. 
There are many choices, but PayPal is the best solution.PayPal comes with all the tools you need to process payments on your website or eCommerce site.
From fraud protection to a seamless checkout experience and excellent customer service, Paypal is definitely the way to go.  
As I pointed out earlier, Paypal has over  260 million customers, and over 20 million are merchant accounts. 
This popularity and strong brand image create a sense of trust; therefore, more customers will be willing to pay you.
In fact, including Paypal as a payment option on your website improves conversion rates by up to  45 %. You clients do not even need a PayPal account to make payments. 
 
PayPal is an excellent choice for businesses of all sizes. And setting up Paypal as a payment gateway is an easy process (Visit this link to watch a short video of how to do it)
Looking at the transaction fees, freelancers and other small business owners are likely to save several bucks with PayPal.

Paypal Payouts  

 Paypal payouts enable business owners to make mass payments. 

According to the company’s representatives, “The account holder can easily send money to multiple people at the same time, and the recipients will receive the funds in their PayPal account. You can send up to 15,000 payments at once with the API or 10,000 with batch upload and a single click, saving you a lot of time.”  

One of the advantages of using PayPal Payouts is it reduces the likelihood of an error when making payments to multiple accounts at once. 

Another advantage is recipients are not charged anything and the sending fees are also relatively low. 

Some of the industries that can use PayPal Payouts include:

  • Financial services providers
  • The gig industry
  • Not-for-profit companies
  • Media companies
  • E-commerce and Retail

PayPal Business Loans 

Paypal Business loans, as the name suggests, are for online businesses that need funding to keep going.  

To check your eligibility for a business loan, PayPal requires applicants to complete an online survey – alternatively, applicants can call 1-800-941-5614 to talk to a Paypal Business funding expert.

Applicants who qualify typically receive the funds in their Paypal account in less than 48 hours after approval.

Paypal offers two types of business loans; a fixed-term loan and working capital. The amount that a merchant can receive depends on your sales history; therefore, you must be a merchant to receive funding.

Business owners who qualify for Paypal business financing program can acquire working capital of up to  $125,0000  fixed-term loans of up to  $ 500, 000 – the size of the loan is determined by your monthly revenue and the duration of time you have been in business.

The repayment fee for all Paypal Business financing options is based on three things:  Sales history, your desired repayment percentage, and the size of the funding.

 

PayPal Account

Here is a breakdown of Paypal Business financing options:

Fixed-term Business Loan   

  • Funding time: Funding in as fast as the next business day.
  • Pricing: One competitively-priced, fixed fee that you know in advance.
  • Repayment: Predictable, weekly payments are automatically made from your business bank account.
  • Credit check: Checking eligibility will not affect your credit score.

Working Capital  

  • Funding time: Application, approval, and funding can take just minutes.
  • Pricing: One affordable fixed fee that you know in advance.
  • Repayment: Repay automatically with a percentage of each PayPal sale until your balance is paid in full. The minimum payment required every 90 days.
  • Credit check: Does not affect your business or personal credit scores.

Note that specific industries – such as including religious organizations, independent writers, attorneys, and financial services –  cannot acquire PayPal business loans. Here is the full list of industries that are ineligible for PayPal business loans.  

PayPal Business Invoicing 

PayPal Invoice is a business solution that allows you to receive and bill payments from your clients via email. 

This services gives Paypal customers the ability to send customized- professional invoices and is an ideal solution for anyone who needs to generate one time invoices, including small business owners, freelancers, and contractors. 

Invoicing using Paypal saves you time because it allows you to save client details, item details and tax rates for regular use. 

Also, managing and sending PayPal invoices is free. You only pay PayPal’s regular processing fees once you receive payment to your account.

PayPal invoices contain the following information: 

  • Merchant’s contact details, including email address, company logo, company name, merchant’s name, phone number, and street address.  
  • Item details: Price, quantity, name, shipping amounts, tax, unit price, and discount details shipping amounts, terms and conditions, and notes to the recipient.
  • The recipient’s details: business name, billing address,  email address, and shipping address. 
  • Memo: Text to track with the invoice
  • Paypal Invoice information: invoice due date, payment terms, and the invoice number. 

How Do PayPal invoices Work?  

This service works more like traditional paper invoice except; in this case, clients pay directly using funds in their PayPal accounts or credit cards.

Here is a simple flow diagram demonstrating invoicing- end-to-end for both you and your customers.  

PayPal Invoicing

To start sending PayPal invoices you need to register for a business account, then you customize an invoice template via your PayPal account and send it to your customers. 

Clients receive email invoices instantly in their inbox.  The email sent out to your customers includes a link for them to securely pay with their PayPal account balance, Credit card, or debit card. 

Once they expedite the payment process, you receive the funds within minutes in your PayPal account.

PayPal Customer Care 

Eliud is a WordPress Website Designer, Content Creator (copywriter) and SEO-Expert living in Nairobi, Kenya. He is a fan of technology, design, and entrepreneurship. Eliud’s other interests include writing, reading and innovation.

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