What is PayPal and How Can You Use It?

What is PayPal and How Can You Use It?

PayPal is a safe way to transfer money online. Using either a browser or app, you can access a PayPal interface that allows you to send and receive money from other PayPal users, whether it’s between friends or in a business transaction. But what is PayPal? And is it safe to use for everyday payments? In this article, you can learn everything you need to know about PayPal, how safe it is, and how you can use it to send or receive money. 

What is PayPal?

PayPal is a company with a long-standing reputation as a secure way to send and receive money. As businesses and private sellers began selling products and services online in the late 90s and early 00s, PayPal emerged as a streamlined solution that eliminated the need for buyers and sellers to exchange credit card information or paper checks. Using PayPal, the money could be quickly and easily transferred on the internet. 

Today, PayPal remains one of the most popular methods of money transfer, along with its subsidiary Venmo, an app-based money transfer service primarily used for transfers amongst friends and family. Internet auctioneers, e-commerce shop owners, and boutique businesses use PayPal as their preferred payment route. It’s easy to integrate PayPal with your website as a way to accept payments from customers. Because it’s a commonly-used method of payment, customers will likely already know how to use PayPal and trust that you will receive their money instantly and securely. 

How to Use PayPal: 4 Easy Steps for Using PayPal

Whether it’s because you want an added layer of safety and convenience when purchasing items from your favorite e-commerce retailers, need an easy way to transfer money amongst people you know, or are starting your own e-commerce website and want to set up a way to receive payments, creating and using a PayPal account is simple. Follow these steps on how PayPal works from buyers and sellers to help you get started sending or receiving money in a matter of minutes.

Once you create a PayPal account, you’ll find that the service is integrated into e-commerce shops and other websites all across the internet, making it a convenient way to safely pay for just about anything.

1. Create a Business or Personal Account

Before you can start using PayPal, you’ll have to create a PayPal account. Go to PayPal.com and click the Sign Up button in the upper right corner of the page. You will then need to choose whether you want to start a personal account or a business account. If you plan on mostly using PayPal to make purchases and send money, choose the Personal Account option. If you need to change it to a Business Account later, you can do that in the account settings. Business owners should choose the Business Account option at this step. Click the Next button to proceed.

create a business account

2. Enter Your Personal or Business Information and Address

After choosing an account type, enter the personal or business information that you would like to be associated with your PayPal account. If you are signing up for a personal account, enter your legal first and last names, your email address, and a password for your account. After inputting the information, click the “Next” button and you will be prompted to enter your address. Follow the instructions to “use the one that’s on your bills.” Then, enter your phone number, check the box to agree to PayPal’s user agreement, and then click the button at the bottom to create your account.

If you have chosen to create a business account, the process is more or less the same, except instead of entering your personal information, you’ll enter business information. Use your legal first and last names as the business contact, then enter the legal name of your business, its address, and its phone number. Check off the user agreement box then click the blue button at the bottom of your screen to create your PayPal business account.

paypal address

3. Connect Your Bank or Credit Card Account

If you have just created a new PayPal account and would like to use it to complete a buyer transaction, you will need to connect a bank account, credit card, or debit card to your account. It’s possible to use PayPal without connecting any cards or bank accounts, however, you will need to have some money in your account already if you want to use the account to send money. If you only want to send and receive money using your PayPal account, there’s no need to connect any bank accounts or card. However, as a seller you will most likely eventually want to transfer your PayPal account balance to a bank. As a buyer with a new PayPal account, you will need to connect a bank account or a card so you can have funds with which to make purchases.

So long as you have online banking set up for your bank or credit card account, it’s easy to connect your account to PayPal. If you’re connecting a bank account and you don’t have online banking set up, do that first on your bank’s website or app. Then, access your PayPal account in an internet browser or using the PayPal mobile app. If you are using a browser, click on “Wallet” in the menu bar on the top of the screen. Select either “Link a bank” or “Link a card” then follow the steps and enter your online banking login information when prompted.

connect your bank account or credit card

If you’re using the PayPal mobile app, click on your profile icon in the top center of your screen to access your personal profile. Then, select “Banks and Cards.” Here, you can see any bank accounts, credit cards, or debit cards that are already connected to your account. Click on the plus sign icon in the top right corner of your screen to add a new bank account or card, and follow the steps as prompted. Bank accounts must be connected using online banking, but credit and debit cards only require card information to be connected.

4. Make a Transaction 

Your PayPal account is now ready for you to use, either to send money or receive it. You may already have an online merchant or e-commerce store where you want to use PayPal in mind. If you don’t, you will find that there are many online sellers of all sizes, from large retail corporations to small-scale independent online shops, that are set up to accept PayPal as a method of payment. 

For example, The Magical Unicorn Store is an e-commerce shop that accepts PayPal as its primary method of payment. Customers can browse the site and add multiple items to their carts, then checkout using PayPal. Alternatively, you can simply click on the “Buy with PayPal” button to use your PayPal account to purchase a single item. Clicking on the button will open a popup window prompting you to login, select which account you would like to use to pay (either your PayPal balance, a bank account, or a credit card you have connected), and confirm the payment and shipping addresses. 

paypal transaction

How Does PayPal Work When Sending Money?

When sending money, PayPal users pay from their PayPal accounts but have the option of choosing where the money they send will come from. It could be from their PayPal balance — money that has been sent to their PayPal account from another user or buyer, or money that they have transferred into the account from their own bank account — or it could come directly from their bank account. 

PayPal users also have the option to send money from a credit card account or as a debit card transaction. Regardless of the source of the money, the PayPal payment process when sending money is relatively the same — just make sure to select the correct option for how you intend to pay. To make the process even easier, you can set a method of payment as your default, so all transactions can automatically process from either your PayPal balance or other method of choice.

How Does PayPal Work When Receiving Money?

When receiving money, individual users only need to share the email address associated with their PayPal accounts. This could either be your personal email address or your business email address, depending on how your account is set up — just make sure to give the correct one to whomever is sending you money. You may receive an email notification when the money is transferred into your PayPal account, but you can always login and double check as well. 

The money will be automatically available in your PayPal account balance, but if you want to deposit it into your bank account, there’s an extra step. First, make sure your bank account is connected. Then, from your PayPal account, you can either transfer money from your balance directly to your bank account, which could take one to three days, or transfer it as a debit transaction and have it instantly available, although you will have to pay a 1% fee. Users also have the option to request a paper check to redeem their PayPal balance. 

Is PayPal Safe?

Yes, PayPal is safe when it comes to transferring money on the internet. Personal and banking information is encrypted on the PayPal platform, adding an extra layer of security that bank transfers or traditional credit card transactions cannot provide. Additionally, PayPal users receive an email confirmation of each transaction, allowing them to verify each one and alerting them to any suspicious account activity. 

Another optional security measure that PayPal users can take is to enable the PayPal Security Key, PayPal’s two-factor authentication function. Users who take this measure must enter a second, temporary code after they enter the login email and password in order to access their accounts. A new code is generated after each login, and is sent via text message to the phone number associated with the account, ensuring that only the user is able to access it.

While encryption and two-factor authentication make PayPal relatively safe compared to direct credit card transactions on the internet, there’s still a possibility of scams or fraud when buying or selling using PayPal. When using PayPal, make sure to only send and receive money from people you trust, and never share your account information with anyone.

Is PayPal Safe for Buyers?

In addition to encryption and authentication security, PayPal also offers PayPal Purchase Protection to users. In the event that a buyer made a purchase using PayPal but never received the item, the item arrived damaged or with missing parts, or the item arrived but did not appear as expected based on the seller’s description (as in, an inauthentic item or a different item altogether), they may be eligible for a refund from PayPal. In any of these scenarios, buyers must open up a dispute with PayPal in order to start the refund process.

Is PayPal Safe for Sellers?

Eligible sellers can use PayPal Seller Protection to boost security on seller transactions. This protection entitles the seller to keep the full amount of money from the eligible sale and have any related fees waived. In order to be eligible for PayPal Seller Protection, sellers must have their primary PayPal address located in the U.S., the order must be a physical product as opposed to an intangible download or donation, and the seller must meet time and documentation requirements. As a PayPal seller, make sure to keep organized documentation of proof of shipment and delivery to enable you to address buyer disputes more easily.


Now that you know all about PayPal and have set up your own PayPal account, it’s time to get started buying or selling using it. You can rest assured that PayPal is one of the safest ways to send or receive money on the internet, considering its encryption measures and buyer and seller protection features. The best part about using PayPal, however, is the convenience. It won’t take long for you to get used to the ease of purchasing from your favorite e-commerce sellers with just a few clicks, or receiving money from customers or clients securely using PayPal. You may never have to enter your credit card information on a website ever again!